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2018 (3) TMI 179 - AT - Central ExciseCENVAT credit - duty paying invoices - main allegation is that in the Cenvat invoices the description of goods (raw material) is HR Coils, HR Sheets, MS Rounds, MS Wire Coil etc., whereas in commercial invoices and other documents the goods (raw materials) are described differently as MS scrap - Whether there is sufficient evidence that SRIPL Unit I & II had availed cenvat credit on invoices issued by dealers declaring despatched items as SS sheets/MS sheets, coils etc. and that actual goods received by SRIPL Unit I & II was only MS/SS scrap? - Whether the proceedings per se are hit by limitation? Held that - the main planks of the department s case against the assessee do not stand to scrutiny. There is also no other cogent or compelling evidence which can prop up department s allegation. Further, even the allegation made by the department that assessees have manufactured their final products by procuring locally manufactured scrap , is also not backed up by any corroborative evidence and can at best be termed as an assumption - there is no evidence of suppliers of local scrap, transporters, payment to such suppliers etc. The case of the department therefore does not sustain on merits. Time limitation - Held that - Appellants have stated that they have not benefited otherwise by taking any irregular credit as alleged by the department. The proviso to Section 11 A (1) would be attracted when there is suppression of facts with intent to evade payment of duty. The department has no case that appellants utilized the alleged wrongly availed credit to discharge duty liability. There is no evidence coming forth in this angle. Tthe proceedings initiated by the department which have resulted in the appeals filed by SRIPL Unit I & II and other co-noticees are not only hit by limitation for the predominant period covered in the SCN, but more particularly cannot be sustained on merits. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether SRIPL Unit I & II availed ineligible cenvat credit on invoices issued by dealers declaring dispatched items as SS sheets/MS sheets, coils, etc., while receiving only MS/SS scrap. 2. Whether the proceedings are time-barred due to a prior CESTAT judgment favoring SRIPL. Detailed Analysis: Issue 1: Ineligible Cenvat Credit on Scrap - Allegations and Department's Stand: The department alleged that SRIPL Unit I & II fraudulently availed cenvat credit on non-duty paid scrap, disguised as HR coil, HR sheet, MS rounds, MS bar rods, etc. Investigations suggested that the actual goods received were only scrap, not the items described in the cenvat invoices. The department relied on statements from various dealers and corroborative evidence indicating that only scrap was received. - Assessee's Defense: The assessees contended that they described the inputs as MS Scrap or Stainless Steel Scrap and never indicated them as HR coils or sheets. They argued that the payments included excise duty, which would not be the case if non-duty paid goods were received. They also pointed out that a significant portion of their goods was exported, and they had substantial credit in their books, negating any motive to avail ineligible credit. The assessees also cited previous favorable judgments and argued that the materials described as HR coils or sheets in invoices were actually cuttings, known commercially as scrap. - Tribunal's Findings: The tribunal found merit in the assessees' contentions. It noted that the statements of key witnesses were retracted, undermining the department's case. The tribunal also emphasized that the description of goods as scrap in commercial parlance was consistent with the nature of the transactions. The previous CESTAT judgment supported the assessees' practice of availing credit on cuttings of plates and sheets, further weakening the department's allegations. The tribunal concluded that the department failed to provide cogent evidence to support its claims. Issue 2: Limitation Period - Department's Argument: The department invoked the extended period under Section 11A (1) of the Central Excise Act, alleging deliberate fraud and suppression of facts by SRIPL Unit I & II. The department argued that the extended period was justified due to the fraudulent nature of the transactions. - Assessee's Defense: The assessees argued that the extended period was not applicable as there was no intent to evade duty. They highlighted that a significant portion of their products was exported, and they had not benefited from any alleged irregular credit. They also referenced the Cosmic Dye Chemical case, asserting that suppression must be willful to invoke the extended period. - Tribunal's Findings: The tribunal agreed with the assessees, noting that the major part of the periods covered in the show cause notices was beyond the normal limitation period. It found no evidence of intent to evade duty, especially given the substantial exports and unused credit. The tribunal also cited the Cosmic Dye Chemical judgment, emphasizing that suppression must be willful. Consequently, the tribunal held that the proceedings were time-barred for the predominant period covered in the show cause notices. Conclusion: The tribunal set aside the impugned orders, allowing the assessees' appeals and dismissing the department's appeals. It concluded that the proceedings were not only time-barred but also lacked merit, providing consequential relief to the assessees as per law.
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