2008 (7) TMI 412 - HC - Central Excise

Demand of duty,interest and penalties - Tribunal set aside the levy - Held that - On an overall appreciation of the aforesaid evidence applying the test of preponderance of probability vis-a-vis the confessional statements it has been found by CESTAT that the conclusion of the adjudicating authority that Cenvat credit claimed is inadmissible, is an incorrect conclusion not supported by the evidence on record. Thus as seen from the impugned order of CESTAT and the adjudication order, it is a question of appreciating the same set of facts and evidence available on record. The findings recorded by CESTAT summarized hereinbefore would go to indicate that the case put forth by the assessee is a plausible case and in the circumstances, in absence of any corroborative evidence brought on record by revenue, the findings recorded by CESTAT do not call for any interference. Thus none of the questions, as proposed in each of the tax appeals or otherwise, can be termed to be substantial questions of law. The appeals are accordingly dismissed.

Summary

Issues:
1. Admissibility of Cenvat credit claimed by the respondent.
2. Justification of setting aside the demand of duty, interest, and penalties by the Tribunal.

Analysis:

Issue 1: Admissibility of Cenvat credit claimed by the respondent:
The respondent, engaged in the manufacture of dye intermediates, claimed Cenvat credit for certain inputs based on invoices showing duty paid. The adjudicating authority, after investigation, found discrepancies and confirmed a demand of Rs. 1,09,35,008/-, along with penalties and interest. The authority relied on statements from individuals and transporter indicating non-receipt of goods by the respondent. The Tribunal noted conflicting opinions among its members on the demand amount. The Third Member of the Tribunal emphasized the importance of corroborative evidence to support confessions and the need for additional evidence post-retraction of a confession. The Tribunal found discrepancies in the revenue's case, including lack of evidence on fund movements and storage capacity adequacy. Ultimately, the Tribunal concluded that the Cenvat credit claimed was admissible based on the preponderance of evidence.

Issue 2: Justification of setting aside the demand of duty, interest, and penalties:
The appellant-revenue challenged the Tribunal's decision to set aside the demand of duty, interest, and penalties imposed on the respondent. The Tribunal's findings highlighted the importance of admitted facts and the need for corroborative evidence to support confessions. The Tribunal noted that payments for inputs were made by cheques, supported by octroi receipts, and there was no substantial evidence to prove fund diversion. The Tribunal also emphasized the proper maintenance of records and filing of returns by the respondent. The Tribunal found no substantial evidence to justify the revenue's claims and dismissed the appeals, stating that the findings recorded did not warrant interference. In conclusion, the Tribunal held that none of the proposed questions raised by the appellant constituted substantial questions of law, leading to the dismissal of the appeals.

This detailed analysis of the judgment outlines the issues, the arguments presented, and the Tribunal's reasoning behind dismissing the appeals.