2019 (3) TMI 781 - AT - Central Excise

CENVAT Credit - it was alleged that Ellen received only non-duty paid scrap without any valid cenvat documents - Held that - The Ld. Consultant is correct in his assertion that similar issue had been addressed by the Tribunal in the case of M/s. Ferro Cast Industries 2018 (11) TMI 1203 - CESTAT CHENNAI , where it was held that When the invoices had clearly stated the description of the goods and the duty paid, the appellants cannot be expected to go behind the accounts maintained or transactions made by the first stage dealer so as to ensure whether the credit availed is correct or not - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Allegations of fraudulently availing Cenvat credit on inputs without valid documents
- Imposition of penalties under Cenvat Credit Rules, 2004 and Central Excise Act, 1944
- Confirmation of proposals for recovery of wrongly taken credit
- Similarity of issues with a previous case involving M/s. Ferro Cast Industries
- Admissibility of statements as evidence
- Modus operandi established by investigations
- Applicability of previous Tribunal decision in the current case

Analysis:
1. Allegations of Fraudulent Cenvat Credit:
The case involved allegations against M/s. Ellen Industries for fraudulently availing Cenvat credit on inputs like Pig iron, MS Scrap, Bearings, etc., from dealers who supplied non-duty paid scrap. The department alleged that Ellen wrongly availed credit based on invoices mentioning irrelevant source document numbers. The original authority confirmed the recovery proposals, imposing penalties on Ellen and the dealers involved.

2. Penalties Imposed:
The penalties were imposed under Rule 15(1) and 15(2) of Cenvat Credit Rules, 2004, along with Section 11 AC of the Central Excise Act, 1944 on Ellen, and under Rule 25 of Central Excise Rules, 2002, along with Section 9 of Central Excise Act, 1944 on the dealers. The Commissioner (Appeals) upheld the original authority's order, leading to appeals by Ellen, Meenakshi, and Amman.

3. Comparative Case of M/s. Ferro Cast Industries:
The appellants argued that a similar issue was addressed in a case involving M/s. Ferro Cast Industries, where the Tribunal ruled in favor of the appellants. They sought the deletion of the impugned additions based on this precedent.

4. Admissibility of Statements as Evidence:
The appellants contended that no concrete evidence was presented against them, except statements from dealers. They highlighted discrepancies in the statements and the lack of access to copies. The AR opposed, stating that investigations established a clear modus operandi and that statements were not retracted during adjudication.

5. Applicability of Previous Tribunal Decision:
The Tribunal referred to a previous decision involving M/s. Ferro Cast Industries, where it was held that the appellants cannot be held liable for fraudulent credit without positive evidence of their involvement. The decision emphasized that the appellants had acted diligently in their transactions and were entitled to claim credit based on invoices received.

6. Final Decision:
After considering the contentions, the Tribunal found the issues similar to the M/s. Ferro Cast Industries case. The Tribunal set aside the impugned order, allowing the appeals with consequential benefits as per law. The decision was pronounced on 12.03.2019 by the Tribunal members.