2008 (7) TMI 410 - HC - Central Excise

Cenvat/Modvat - Fraudulent availment of credit - penalty imposed - Whether the Tribunal is correct in rejecting the investigation report which otherwise clearly indicates the wrong availment of Modvat/Cenvat Credit? that - The Tribunal has recorded a finding of fact that the inputs supplied by the respondents were duly received by the manufacturers and the same were used in the goods manufactured, which were cleared on payment of duty. The Tribunal also found that the Department has not been able to prove that any other alternative raw material was received and used in the final products. The Tribunal also held that the findings of the Commissioner (Appeals) in favour of the respondents were not challenged by the Department Representative before the Tribunal. The Tribunal has also noted that the findings of the Commissioner clearly established that the RT-12 returns have been assessed finally by the Range Officer which contains all the documents including the invoices under dispute on the basis of which the Modvat Credit has been availed and utilised and that payments for the purchase of the inputs have been made through cheque/demand draft. Thus, there is no merit in these appeals as no question of law, much less substantial, arises from the order of the Tribunal wherein pure findings of fact have been recorded in favour of the respondents. Appeal dismissed.

Summary

Issues:
Appeals against penalties imposed by the Commissioner of Central Excise (Appeals) set aside by the Tribunal.

Analysis:
The case involved six appeals filed by the revenue against a consolidated order passed by the Customs Excise and Service Tax Appellate Tribunal, arising from the Commissioner of Central Excise (Appeals) setting aside penalties imposed on dealers/assessees. The appeals were inter-related and disposed of by a common order for convenience.

The respondents, registered dealers with the revenue-Department, received duty paid raw material for supply to manufacturers. The payments for inputs were made through cheques/demand drafts, used in manufacturing final products cleared on duty payment, and availed Cenvat/Modvat Credit. An investigation revealed the use of fictitious vehicles for transportation, raising suspicions of fraudulent Modvat/Cenvat Credit claims.

The Adjudicating Authority found the charges established against respondents for defrauding revenue, imposing penalties. However, the Commissioner (Appeals) set aside the penalties, leading to appeals by the revenue before the Tribunal. The Tribunal dismissed the appeals, upholding findings that inputs were received and used in manufacturing, payments were made through valid means, and no evidence of alternative raw material usage was presented.

The revenue challenged the Tribunal's decision before the High Court, questioning the rejection of the investigation report indicating wrongful Modvat/Cenvat Credit claims. The Court, after hearing arguments, found no merit in the revenue's contentions. The Tribunal's factual findings were upheld, stating inputs were received and used in manufacturing, no proof of alternative raw material usage was provided, and Commissioner's findings were unchallenged. The Court concluded no substantial question of law arose, dismissing the appeals.

In summary, the High Court dismissed the revenue's appeals, affirming the Tribunal's decision based on factual findings supporting the respondents and finding no legal issues warranting intervention.