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2018 (8) TMI 1275 - HC - Central ExciseTransfer of CENVAT credit - transfer of capital goods Raw Material/Finished goods etc. - surrender of registration - closure of factory - Rule 10 of CCR - Whether the Hon ble CESTAT was correct in setting aside the applicable interest statutorily required under Section 11AB/Section 11AA of Central Excise Act, 1944 and the equal penalty imposed mandatorily u/s 11AC of Central Excise Act, 1944 on the assessee? Held that - Taking into consideration, the case of the assessee that closure certificate was issued by the Department of Gurgaon and the same was accepted by the Sales Tax Department of the State, the view taken by the Tribunal is correct and having accepted the closure certificate of Gurgaon Unit, it will not be appropriate to reopen the same almost after four years of issuing notice which raises a serious doubt - the issue is required to be answered in favor of assessee against the Department. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Whether the Hon’ble CESTAT was correct in setting aside the applicable interest statutorily required under Section 11AB/Section 11AA of Central Excise Act, 1944 and the equal penalty imposed mandatorily u/s 11AC of Central Excise Act, 1944 on the assessee? Issue-wise Detailed Analysis: 1. Applicability of Interest and Penalty under Section 11AB/Section 11AA and Section 11AC of Central Excise Act, 1944: The appellant challenged the Tribunal's judgment, which allowed the assessee's appeal and set aside the applicable interest and penalty. The case originated from intelligence suggesting fraudulent availment of CENVAT Credit by the assessee, involving the transfer of material from their Gurgaon unit to the Bhiwadi unit without actual goods movement. Investigation Findings: - The Preventive Branch of Central Excise Division, Bhiwadi, observed that the assessee availed CENVAT Credit worth ?36,43,618/- against fifteen invoices issued by their Gurgaon unit, which had surrendered its Central Excise Registration in June 2007. - Verification efforts revealed that the stamps on invoices did not appear genuine, lacking essential details like the check post name and vehicle traffic register number. Tribunal's Consideration: - The Tribunal noted discrepancies in truck numbers on GR forms but found no conclusive evidence of non-transport or improper diversion of goods. - It observed that statutory records maintained at both Gurgaon and Bhiwadi units did not support the Department's allegations of fraudulent credit availment. - The Tribunal emphasized the absence of clear evidence regarding the diversion of duty-paid inputs and found the Department's case unsustainable due to unfilled gaps in the investigation. Assessee's Defense: - The assessee argued substantial compliance with Rule 10 of the CENVAT Credit Rules, 2004, asserting legitimate transfer of CENVAT Credit from Gurgaon to Bhiwadi. - They contended that inputs were duly received at the Bhiwadi unit, supported by contemporaneous records like Material Receipt Notes and statutory entries in RG23 Pt. I and Pt. II registers. - The assessee highlighted the acceptance of their closure certificate by the Central Excise Department at Gurgaon and the Sales Tax Department, arguing against reopening the case after four years. Relevant Case Laws: - Collector of Central Excise, Jaipur vs. M/s. Raghuvar (India) Ltd., 2000(118)E.L.T. 311: Emphasized the specific and special nature of the Modvat scheme, suggesting that general provisions like Section 11A should not override the scheme's self-contained procedures. - Commissioner of Central Excise, New Delhi vs. Hari Chand Shri Gopal and Ors, 2010(260) E.L.T. 3: Discussed the doctrine of substantial compliance, indicating that minor procedural faults should not negate the intent and purpose of statutory compliance. Court's Conclusion: - The court agreed with the Tribunal's findings, emphasizing the substantial compliance by the assessee and the lack of conclusive evidence from the Department. - It was noted that the closure certificate issued by the Gurgaon Department and accepted by the Sales Tax Department supported the assessee's case. - The court dismissed the appeal, answering the issue in favor of the assessee and against the Department, thereby upholding the Tribunal's judgment. Final Judgment: The appeal was dismissed, affirming the Tribunal's decision to set aside the applicable interest and penalty imposed on the assessee under Sections 11AB/11AA and 11AC of the Central Excise Act, 1944.
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