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2018 (7) TMI 673 - AT - Central ExciseCENVAT Credit - The entire case against the appellant is made out on the basis of statement of Shri Satya Narayan Dey and his exercise book - penalty u/r 26 - Held that - . Further records and documents as placed by the appellant no. 1 in support of the contention that the impugned goods were received by them and used in the manufacture of final product cannot be brushed aside merely on the basis of the statement of appellant no 3 and its exercise book. In any event, the weight of the consignments as mentioned in the invoices of the appellant cannot be construed that the said material are related to the consignment of the CONCOR. The Investigating officer failed to recover any material from the appellant no. 1 and 2 in respect of non-receipt of inputs. It is significant to note that the appellant no. 3 stated that his trading business is related to the various persons but the appellant no. 3 could not produce any evidence in respect of alleged involvement of the appellant no. 1 & 2. It is noted that there is no document corroborating the consignment of Pig Iron having fixed weight of 27.5 M.T./28 M.T. loading in the container of Concord is related to the appellant s consignment. On perusal of the statement of the appellant no. 3 it is apparent on the face of record that the appellant no. 3 was engaged in a trading business on the basis of the documents of Cenvat Invoice to take any ineligible benefits to the manufacturer - penalty upheld - However, the quantum of penalty is excessive which is required to be reduced. The appeals filed by the appellant no. 1 and 2 are allowed - Appeal of appellant no. 3 allowed in part.
Issues Involved:
1. Wrongful availing of Cenvat Credit by the appellant company. 2. Imposition of penalties on the appellant company and its director. 3. Imposition of penalty on the proprietor of M/s. Shyam Sons India. 4. Denial of cross-examination request by the adjudicating authority. 5. Lack of corroborative evidence against the appellant company. Detailed Analysis: 1. Wrongful Availing of Cenvat Credit by the Appellant Company: The appellant company was accused of availing Cenvat Credit on inputs/raw materials, specifically Pig Iron, without actually receiving the inputs in their factory. The investigation by DGCEI revealed that the consignment of Pig Iron procured by the appellant was diverted to other places by an agent, Shri Satya Narayan Dey, and not received by the appellant's factory. The appellant contended that they received the goods accompanied by Central Excise Invoices and duly recorded them in their Cenvat Account. 2. Imposition of Penalties on the Appellant Company and Its Director: The adjudicating authority confirmed the demand of wrongly availed Cenvat Credit amounting to ?9,69,053.00 along with interest and imposed an equal amount of penalty on the appellant company. Additionally, penalties of equal amounts were imposed on the director of the appellant company and the proprietor of M/s. Shyam Sons India. The Commissioner (Appeals) upheld these penalties, leading to the present appeals. 3. Imposition of Penalty on the Proprietor of M/s. Shyam Sons India: The proprietor, Shri Satya Narayan Dey, argued that he did not issue any invoices or documents that facilitated the appellant company in availing ineligible Cenvat Credit. He claimed no knowledge of the misuse of Cenvat Credit by the appellant company. However, the tribunal found that Shri Dey's involvement in trading and his exercise book mentioned the appellant company, leading to the imposition of a penalty. The tribunal reduced the penalty on Shri Dey to ?3,00,000/-. 4. Denial of Cross-Examination Request by the Adjudicating Authority: The appellant company requested cross-examination of witnesses, which was denied by the adjudicating authority. The tribunal noted that the department did not conduct any investigation against the supplier of the goods and relied heavily on statements and documents from Shri Satya Narayan Dey without corroborative evidence. 5. Lack of Corroborative Evidence Against the Appellant Company: The tribunal found that the case against the appellant was primarily based on the statement of Shri Satya Narayan Dey and his exercise book. There was no material evidence recovered from the appellant company to substantiate the non-receipt of inputs. The tribunal emphasized that the appellant's records showed receipt and use of the goods in the manufacture of final products, and payments were made by account payee cheques, reflecting in the bank statements. The tribunal cited the Calcutta High Court's decision in Commissioner of Customs (Preventive), West Bengal, Kolkata Vs. Ritu Kumar, which held that the burden of proof was not discharged by the Revenue. Conclusion: The tribunal allowed the appeals filed by the appellant company and its director, setting aside the penalties imposed on them. The penalty on Shri Satya Narayan Dey was reduced to ?3,00,000/-. The tribunal highlighted the lack of corroborative evidence and the improper denial of cross-examination, leading to the conclusion that the Revenue did not successfully prove the allegations against the appellant company. Pronouncement: The judgment was pronounced in the open court on 09-03-2018.
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