2018 (8) TMI 1446 - AT - Central Excise

CENVAT Credit - duty paying documents - denial of CENVAT credit on the imported goods based on certain discrepancy found in the bills of entry against which the appellant procured imported goods - Held that - It is not disputed by the Revenue that the appellant has not received the goods in their factory against the bills of entry in question. When the bills of entry are present against which the appellant has imported the goods and paid duty thereon, mere mention of PAN number of the Director will not disentitle the appellant to take CENVAT credit. After adjustment of cenvat credit if any duty liability arises, the appellant is liable to pay the same alongwith interest - No penalty imposable on the appellants. Appeal disposed off.

Summary

Issues:
- Denial of cenvat credit on imported goods due to discrepancy in bills of entry
- Demand of duty based on discrepancy in imported goods labeling and payment of duty
- Imposition of penalty on the Director

Analysis:

1. Denial of Cenvat Credit: The appellant contested the denial of cenvat credit on imported goods due to a discrepancy in the bills of entry, specifically related to the PAN number of the Director. The appellant argued that despite the discrepancy, the goods were the same for which duty was demanded, and they had not received these goods in their factory. The Revenue did not dispute this fact. The appellant contended that the mere mention of an incorrect PAN number should not disentitle them to take cenvat credit. The Tribunal agreed with the appellant, emphasizing that the crucial aspect was the receipt of goods in the factory, not the PAN number discrepancy. The Tribunal held that the appellant was entitled to take cenvat credit.

2. Demand of Duty and Penalty: The case involved the appellant importing watches, labeling them, and selling them without paying duty initially. Subsequently, the appellant began assembly on watches, leading to a search by the department, which revealed the non-payment of duty on the labeled watches. A show cause notice was issued to deny cenvat credit and demand duty based on the extended period of limitation. The matter was adjudicated, cenvat credit was denied, duty was demanded, and penalties were imposed, including a personal penalty on the Director. However, since the Tribunal ruled in favor of the appellant regarding cenvat credit, no duty liability remained, and thus, no penalty was imposable on the appellants.

3. Final Disposition: After considering the arguments from both sides and examining the documents, the Tribunal concluded that the appellant was indeed entitled to take cenvat credit. The Tribunal also noted that if the duty liability had already been discharged by the appellant after utilizing the cenvat credit, then no case was established against the appellant. Consequently, the appeals were disposed of, and no penalty was imposed on the appellants.

This detailed analysis of the judgment highlights the key issues of denial of cenvat credit, demand of duty, and imposition of penalties, providing a comprehensive overview of the Tribunal's decision in the case.