2020 (2) TMI 185 - AT - Central Excise

CENVAT Credit - duty paying invoices - duty paid invoices issued by registered dealers namely, M/s. Pranav Metal Mart, Nadiad without receipt of goods covered in the said invoices - penalty - HELD THAT - Though the DGCEI has conducted thorough investigation but that is related to the transportation of goods from Delhi to the registered dealer i.e. M/s. Pranav Metal Mart, Nadiad. Even in the said investigation the only evidence found was that the truck by which the goods were transported from Delhi to Nadiad were carrying some other goods. However, otherwise the movement of vehicle from Delhi to Nadiad is not much in dispute. The appellant have purchased the goods from M/s. Pranav Metal Mart, Nadiad. As regard transaction between the said registered dealer and the present appellant, no discrepancy was found. The investigation did not enquire anything from the appellant and they have not disputed the receipt of goods in their factory, recording the same in the books of accounts and excise records. The use of such goods and the manufacture of final product out of the said input and clearances thereof on payment of duty is not disputed. Entire case was based on the investigation between Delhi importers and the registered dealer i.e. M/s. Pranav Metal Mart - there are no sufficient, tangible and cogent evidences gathered to establish that the appellant have not received the inputs in their factory and fraudulently availed the Cenvat Credit only on the basis of invoice therefore, there are no basis for denial of Cenvat Credit to the appellant. Penalties also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged fraudulent availment of Cenvat Credit without receipt of duty paid inputs.

Detailed Analysis:

1. The case involves the appellant engaged in the manufacture of Copper articles availing Cenvat Credit under Cenvat Credit Rules, 2004. An investigation revealed that some importers were importing remelted Copper ingots at concessional duty rates, which were then consumed by units in Delhi but duty paid invoices were issued to manufacturers in Gujarat and Daman. The appellant was alleged to have availed Cenvat Credit on duty paid invoices without receiving the goods covered in those invoices. Various pieces of evidence were collected including ledger copies, reports from check posts, and statements from transporters, leading to the issuance of a Show Cause Notice confirming the demand of Cenvat Credit and imposing penalties on the appellants.

2. The appellant filed an appeal before the Commissioner (Appeals) challenging the Order-In-Original, which was rejected except for setting aside a penalty imposed on one of the appellants. The counsel for the appellants argued that the allegations were based on reports from the Road Transport Authority and registers maintained by transporters. They contended that the department did not question the transaction or transportation of goods from the dealer to the appellant. The counsel cited various judgments to support their arguments.

3. The counsel further argued that the demand was time-barred as it was raised invoking the extended period. They claimed that proper recording of goods receipt and Cenvat Credit availed was maintained in statutory records, and returns were filed regularly, indicating no suppression of facts. Additional judgments were cited to support this argument.

4. Regarding the penalty imposed on the proprietor under Rule 26, the counsel argued that the transporter's statement was not recorded by the department, and the transporter was not involved in transporting goods from the dealer to the main noticee, thus challenging the applicability of Rule 26. Relevant judgments were cited in support of this argument.

5. The Authorized Representative for the revenue reiterated the findings of the impugned order, while the Member (Judicial) analyzed the investigation and evidence presented. It was noted that the investigation primarily focused on the transportation of goods from Delhi to a registered dealer in Nadiad, Gujarat. The appellant had purchased goods from this dealer, and no discrepancies were found in the transactions between them. The Member found insufficient evidence to establish that the appellant fraudulently availed Cenvat Credit without receiving the inputs, leading to the setting aside of the impugned order and allowing the appeals of the appellant.

6. Consequently, the penalties on other appellants were also set aside as they were consequential to the demand confirmed against the main appellant. Therefore, all appeals were allowed, and the impugned order was set aside, pronouncing the judgment in open court on 03.02.2020.