2019 (3) TMI 853 - AT - Central Excise

CENVAT Credit - whether main appellant herein has correctly availed CENVAT credit or otherwise and whether the allegations of the Revenue that main appellant has availed CENVAT credit without receipt of the material is correct or otherwise? - Held that - There is no allegation as well as any evidence to indicate that the goods have been diverted by the appellant to another party or collection of any amount as payable towards such diversion. Nor there is any allegation in the show-cause notice as to there being buyers of diverted imported goods. It is to be noted that though the factory premises of the main appellant was visited by the officers no physical verification of the finished goods/in process material or raw material was undertaken which could have been a pointer if there is any discrepancy in stock though it may not lead to inference that appellant did not receive the goods in the factory or has cleared their own manufactured goods under the guise of job work The statement received from the Commercial Tax Department as to number of vehicles entering into A.P. needs to be taken with pinch of salt and it cannot be held to be a conclusive evidence of non-transportation of goods. Revenue authorities have also not brought any evidence to show that the vehicles mentioned in the LRs are not vehicles for transportation of goods and are that the said vehicles were during the period of time deployed somewhere else. In view of this the impugned order recording that appellant is ineligible to avail CENVAT credit of 39, 69, 377/- is unsustainable. Revenue has not proved beyond doubt their case of non-transportation of materials from these three parties to main appellant for doing job work on the goods. The only argument adopted by the learned A.R. is that these three persons have discharged the duty liability on being pointed out to them that they have availed CENVAT credit without receipt of the inputs. It is stated that these three parties have in order to end litigation and also the amounts involved were very miniscule settled the matter by paying the disputed amount. Accordingly the demands confirmed against the main appellant on this ground also are unsustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the main appellant correctly availed CENVAT credit.
2. Whether the main appellant is required to discharge central excise duty on the allegation of clandestine manufacture and clearance of goods.

Issue-Wise Detailed Analysis:

1. Correct Availment of CENVAT Credit:
The main appellant was investigated for allegedly availing CENVAT credit on the strength of six bills of entry related to the import of re-melted copper ingots/wire bars from Sri Lanka, which were purportedly purchased on a high-seas sales basis from Delhi-based importers. The investigation revealed that the material inputs did not travel to the appellant’s factory and credit was availed based on fabricated transport documents. The investigating authorities relied on the report from the Andhra Pradesh Commercial Tax Department, which indicated that the vehicles purportedly transporting the goods did not enter Andhra Pradesh.

The appellant contested the demand stating that the reliance on third-party statements and the report from the Commercial Tax Department was incorrect. During cross-examination, several individuals, including the transporter and excise clerk, retracted their statements, claiming they were forcibly recorded. The appellant also provided evidence that the Commercial Tax Department did not maintain proper records of vehicle movements.

The Tribunal found that the statements relied upon by the Revenue were retracted and not corroborated by any independent evidence. The appellant had paid for the goods through banking channels and paid the requisite customs duty. The receipt of goods was recorded in the raw material register and CENVAT credit account, and no evidence indicated that the goods were diverted. The Tribunal held that the demand for credit reversal was incorrect and unsustainable.

2. Allegation of Clandestine Manufacture and Clearance of Goods:
The Revenue alleged that the main appellant clandestinely produced and removed copper ingots to three parties under the guise of job work by fabricating job work records. The demand was based on statements from the directors of the three parties, who initially stated they had not sent any consignment for job work but later retracted their statements during cross-examination.

The Tribunal noted that apart from the retracted statements, no independent evidence was provided by the Revenue to support the allegation. There was no evidence of any other raw material being purchased by the appellant to compensate for the alleged non-receipt of materials. The job work challans were sent by the three parties, and their authenticity was not disputed. The Tribunal held that the Revenue did not prove beyond doubt that the materials were not received by the appellant for job work purposes. Consequently, the demands confirmed against the main appellant on this ground were also deemed unsustainable.

Conclusion:
The Tribunal set aside the demands for ineligible CENVAT credit and the allegations of clandestine manufacture and clearance of goods. Since the demands were set aside on merits, the question of interest and penalties on the main appellant and other individuals did not arise. The appeals of all the appellants were allowed, and the impugned order was set aside.