2018 (10) TMI 890 - AT - Central Excise

CENVAT Credit - denial on the ground that no manufacture taking place - the sole allegation against the appellant-assessee is made on the basis of report of the UAE/Dubai, Customs wherein the goods found to be scrap but the appellant-assessee cleared the goods and the same were found at port in containers and the samples were drawn at port. Held that - On the basis of sample, it was found that the said goods were casting/forging manufactured by the appellant-assessee. Therefore, it cannot be said that the appellant did not manufacture the goods during the impugned period - the allegation of the Revenue against the appellant-assessee that the appellant-assessee is not manufacturer is made on the basis of assumption and presumptions - Demand rightly dropped. Demand of duty on the goods worth of ₹ 58,11,850/- which were destroyed and sold scrap by the appellant-assessee for ₹ 35 lacs on which the appellant-assessee has paid duty of ₹ 5,71,200/- - Held that - The sale value of ₹ 35 lacs is to be considered cum duty price as the appellant discharged duty correctly. Availment of credit of ₹ 4,44,410/- - appellant has conceded the same - Held that - The said demand of ₹ 4,44,410/- is confirmed. Benefit of reduced penalty - Held that - Considering that during the adjudication, no option of reduced penalty given to the appellant-assessee in terms of proviso to Section 11AC of the Act, option given to deposit penalty of 25% of the duty confirmed within a period of one month from the date of receipt of this order, failing which the appellant- assessee is liable to pay penalty equal to the duty. The penalty to ₹ 25,000/- imposed on Shri Viond Kumar Gard, Managing Director of the appellant-assessee also reduced. Appeal allowed in part.

Summary

Issues:
- Allegation of fraudulent exports by the appellant-assessee
- Demand of Central Excise duty
- Allegation of inadmissible credit availed by the appellant-assessee
- Duty payable on goods sold as scrap
- Availment of credit conceded by the appellant-assessee
- Penalty imposed on the appellant-assessee
- Review of penalties imposed

Analysis:

1. Allegation of Fraudulent Exports: The case involved the appellant-assessee, engaged in manufacturing alloy steel forgings, facing allegations of fraudulent exports by the Directorate of Revenue Intelligence. The appellant was accused of exporting goods as scrap through a merchant exporter, leading to a search of their premises and subsequent investigations.

2. Demand of Central Excise Duty: The adjudicating authority confirmed a demand of Central Excise duty amounting to a specific sum from the appellant-assessee under relevant rules and sections. The authority also ordered the appropriation of a partial payment already made by the appellant towards the duty.

3. Allegation of Inadmissible Credit: The appellant-assessee was alleged to have availed inadmissible credit amounting to a significant sum. The authority imposed penalties on the appellant, including a personal penalty on the Managing Director, and ordered the reversal of a portion of the credit.

4. Duty Payable on Goods Sold as Scrap: Goods worth a substantial amount were sold as scrap by the appellant, leading to a duty payment by the appellant. The appellant contended that no further duty demand should be upheld in this regard.

5. Availment of Credit Conceded: The appellant conceded to the availment of a specific credit amount, leading to the confirmation of the demand related to this credit.

6. Penalty Imposed: Various penalties were imposed on the appellant, including a penalty on the Managing Director. The appellant sought a reduction in the penalties imposed, arguing for a lower penalty amount based on the duty confirmed.

7. Review of Penalties: The Tribunal carefully considered the submissions from both sides. It was noted that the allegations of the Revenue against the appellant were based on assumptions and presumptions. The Tribunal upheld the dropping of a significant demand against the appellant and dismissed the appeal filed by the Revenue.

8. Final Orders: The Tribunal dismissed the appeal filed by the Revenue regarding the demand of reversal of credit. It confirmed the demand related to the denial of credit, specified the duty payable on goods sold as scrap, and allowed for a reduced penalty payment within a specified timeframe. The penalty imposed on the Managing Director was also reduced in the final order.