2018 (9) TMI 1494 - AT - Central Excise

CENVAT Credit - fake invoices - denial of credit of Unit-I on the ground that they have taken credit on the basis invoices without receiving PTY (Polyester (Filament) Texturised Yarn) - Held that - It cannot be said that the Unit-I has received invoices and not the goods, when it is a fact on record that PTY was sent by Unit-I to the job worker for fabrication of cloth/garments - Another allegation made by the Revenue for the duty on PTY paid less and therefore Unit-II cleared PY in the guise of PTY. Due to variation in the value of goods, the duty was worked out on which credit has been availed less than the duty paid on PTY, therefore this allegation is not sustainable - demand do not sustain. Clandestine removal - it was alleged that Unit-II has clandestine cleared the goods without payment of duty - Held that - The duty on account of clandestine clearance of PTY of 4015.25 Kg of ₹ 3,11,785/- is payable by the appellant-assessee to the tune of ₹ 25,442/- as the appellant has failed to produce any invoice on record - demand confirmed. Appeal allowed in part.

Summary

Issues:
1. Unit-I's entitlement to Cenvat credit on PTY.
2. Unit-II's alleged clandestine removal of goods.

Issue No.1:
The judgment analyzed the fraudulent credit availed by Unit-I during 2003-04 to 2005-06. The Revenue alleged that Unit-I wrongly availed Cenvat credit on PTY without receiving the goods. However, after examining various statements and cross-examinations, it was found that the statements favored the appellant-assessee. The invoices issued in the name of Unit-I for PTY clearance by Unit-II were explained during adjudication. Job workers confirmed receiving PTY for fabrication, supporting Unit-I's position. The allegation of duty payment discrepancy between PTY and PY was dismissed due to legitimate reasons. Consequently, the denial of credit amounting to &8377; 58,68,003/- to Unit-I was deemed unsustainable, leading to the appeal's success.

Issue No.2:
Regarding the demand for duty due to alleged clandestine removal by Unit-II, the adjudicating authority established that 4015.25 kg of PTY valued at &8377; 3,11,785/- was clandestinely removed to M/s. Abhay Trading Co. without proper invoicing. The duty amounting to &8377; 25,442/- on this quantity was confirmed as payable by the appellant-assessee due to the absence of invoices. Consequently, the demand was upheld, and the appeal by the Revenue was dismissed. The penalty on Unit-II was reduced to 25% of the confirmed duty amount, considering the payment already made by the appellant-assessee. The judgment concluded by disposing of the appeals with the pronounced order on 24.09.2018.

This detailed analysis of the legal judgment from the Appellate Tribunal CESTAT CHANDIGARH highlighted the issues concerning Unit-I's Cenvat credit entitlement and Unit-II's alleged clandestine removal of goods. The judgment meticulously examined the facts, statements, and evidence presented by both sides to reach a reasoned decision on each issue, ultimately providing a comprehensive resolution to the dispute at hand.