2021 (1) TMI 657 - AT - Central Excise

CENVAT Credit - levy of penalty - allegation is that the vehicle in question is not capable of transportation of the goods - HELD THAT - It is a fact on record that during the course of investigation, shortage of inputs was found. Further, duty free goods were also been unloaded which creates doubt that the appellant is procuring duty free goods and procuring invoices to avail the cenvat credit without receiving the goods; therefore, investigation took place. In the annexure to the show cause notice at Sr.No.1 2, the vehicles were found to be auto cycles and transportation of goods has been arranged by the appellant themselves. In these circumstances, the cenvat credit is not admissible to the appellant on the invoices issued by Kanhya Lal Jai Narain at S No. 1 2 of the SCN. Further, with regard to the invoice issued by Ram Parkash Sons, their vehicle found to be Tractor Trailer and it has been alleged in the show cause notice that some of the vehicles were light goods vehicles which were later found to be heavy goods vehicles further the Tractor Trailer is capable of transportation of the heavy goods; therefore, on the invoices issued by Ram Parkash Sons, the appellant is entitled to avail the cenvat credit and to that extent, no penalty can be imposed on the appellant at S.No. 3,4,9-13 of the SCN. Levy of Penalty - HELD THAT - In the case of invoices issued by M/s Madan Industrial Corporation, the ld. Counsel has stated that they asked for D.T.O. report which was not supplied to them. Moreover, it is their statement on record that they have supplied the goods and received the payments and the buyer has arranged for transportation of the goods. In that circumstance, penalty on M/s Madan Industrial Corporation cannot be imposed, but it is also a fact that the transportation has been done by the appellant themselves and as per the D.T.O. report, the vehicles involved are scooters, which are not capable of transportation of heavy goods, therefore the cenvat credit to the manufacturer/buyer is denied. Appeal disposed off.

Summary

Issues:
1. Denial of cenvat credit to the appellant no.1
2. Imposition of penalties on all appellants

Analysis:

Issue 1: Denial of cenvat credit to appellant no.1
The case involved a search at the premises of M/s Prem Steel & Metals Pvt Ltd where a shortage of pig iron was found. The director admitted the shortage and debited the duty. Further investigation revealed that cenvat credit was sought to be denied based on the shortage and the transportation methods of the goods received. The investigation raised concerns about the vehicles used for transportation, with some being deemed unsuitable for carrying goods. The Revenue argued that the appellant was availing cenvat credit without receiving duty-paid goods and procuring duty-free goods for manufacturing. However, the appellants contended that the goods received were used in manufacturing final products on which duty was paid, justifying their entitlement to cenvat credit.

Issue 2: Imposition of penalties on all appellants
The Revenue contended that the shortage of pig iron, admission by the director, and unloading of duty-free goods at the premises indicated irregularities in availing cenvat credit. The investigation also highlighted discrepancies in the transportation methods and vehicles used. However, the appellants argued that penalties should not be imposed as they had supplied goods, received payments, and had the transportation arranged by the manufacturer/buyer. The Tribunal differentiated between different suppliers, allowing cenvat credit for some invoices while denying it for others based on the capability of the vehicles used for transportation. Penalties were reduced for some appellants, and no penalties were imposed on M/s Madan Industrial Corporation, with a reduced penalty for M R Jaidka.

In conclusion, the Tribunal upheld the denial of cenvat credit for specific invoices, imposed penalties on appellant no.1, reduced penalties for some appellants, and completely waived penalties for M/s Madan Industrial Corporation. The judgment provided a detailed analysis of the facts, submissions, and legal principles involved in determining the admissibility of cenvat credit and the imposition of penalties in the case.