2018 (12) TMI 79 - AT - Central Excise

CENVAT Credit - duty paying invoices - it has been alleged that that the manufacturer-buyers had availed inadmissible Cenvat credit on the basis of invoices issued by the dealers who got invoices from M/s. Triveni Castings Pvt.Ltd. without physical movement of steel ingots - Held that - Without contrary evidence placed by the Revenue, credit cannot be denied to the manufacturer-buyers. Moreover, during the course of investigation, no inclupatory statements of the appellants have been recorded by the Revenue. Moreover, M/s. Triveni Castings Pvt. Ltd. has stated that they have manufactured steel ingots and the supplied the same to the manufacturer-buyers through the dealers. Without proper investigation, it cannot be alleged that the appellants have not received duty paid steel ingots manufactured by M/s. Triveni Castings Pvt. Ltd. - the appellants i.e. Manufacturer-buyers have correctly availed Cenvat credit on steel ingots manufactured by M/s. Triveni Castings Pvt.Ltd. Penalty - Held that - As the manufacturer-buyer has received the goods through proper channel, no penalty can be imposed on the dealers as well as manufacturer-buyers. Appeal allowed - decided in favor of appellant.

Issues:
- Demand of duty confirmed against manufacturer-buyer
- Penalties imposed on manufacturer-buyer and dealers under Rule 173Q of Central Excise Rules, 2002
- Allegation of inadmissible Cenvat credit based on paper transactions without physical movement of steel ingots
- Denial of credit on invoices for scrap received by the manufacturer
- Dismissal of appeal for non-compliance with Section 35F of Central Excise Act, 1944
- Contradictory submissions regarding the receipt of scrap and manufacture of steel ingots by M/s. Triveni Castings Pvt. Ltd.
- Reliance on statements of buyers and lack of rebuttal by Revenue
- Imposition of penalties on manufacturer-buyers and dealers justified based on lack of physical movement of goods
- Adjudicating authority's decision to deny credit and impose penalties upheld by Revenue

Analysis:

1. The judgment involves an appeal against an order confirming duty demand, imposing penalties on manufacturer-buyers, and dealers under Rule 173Q of Central Excise Rules, 2002. The penalties were related to inadmissible Cenvat credit based on alleged paper transactions without physical movement of steel ingots.

2. The investigation revealed that M/s. Triveni Castings Pvt. Ltd. did not receive scrap to manufacture steel ingots, leading to the denial of credit on invoices. The case against the appellants was based on the presumption of paper transactions without actual supply of goods. Penalties were imposed on manufacturer-buyers for availing inadmissible credit based on invoices without physical movement of goods.

3. The appellant's counsel argued that M/s. Triveni Castings Pvt. Ltd. admitted supplying steel ingots to manufacturer-buyers through dealers, supported by buyers' statements. The lack of rebuttal by the Revenue regarding the receipt of goods through proper channels led to the conclusion that credit cannot be denied to manufacturer-buyers, and penalties were unjustified without contrary evidence.

4. Conversely, the Revenue contended that as M/s. Triveni Castings Pvt. Ltd. did not receive scrap, no manufacturing occurred, and hence, no goods were moved to manufacturer-buyers. The adjudicating authority's decision to deny credit and impose penalties was supported by the Revenue based on the lack of physical movement of goods.

5. After considering the submissions, the judge found that the manufacturer-buyers correctly availed Cenvat credit on steel ingots supplied by M/s. Triveni Castings Pvt. Ltd. through dealers. The lack of proper investigation and contradictory statements led to the setting aside of the impugned order and allowing the appeals with consequential relief.

6. In conclusion, the judgment highlights the importance of proper investigation and evidence in cases involving the denial of credit and imposition of penalties in Central Excise matters. The decision emphasizes the need for substantiated claims and the proper assessment of physical movement of goods to uphold the principles of law and fairness in taxation disputes.

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