2010 (5) TMI 225 - AT - Central Excise

Cenvat Credit- investigation revealed that the respondent-assessee without receiving the above goods from M/s. Bhilai Steel Plant transferred the said goods to a third party i.e. M/s. Manmeet Steels Bhilai making entry in the record of the respondent issuing accommodation invoices in the name of M/s. Sri Sidhartha Industries Bhilai. Accordingly the Modvat/Cenvat Credit claim was deniable when goods were not received by respondent in their factory. Held that- Commissioner (Appeals) allowed appeal making assumption and presumption that transaction made directly to ultimate buyers to save cost without assessee proving its bonafide. Impugned order suffering from legal infirmity as no such claim made by assessee. Revenue prejudice with intent to evade duty. Revenue s appeal allowed.

Issues:
1. Disallowance of modvat/cenvat credit and imposition of penalties under Central Excise Rules and Act.
2. Allegations of fraudulent availment of inadmissible credit without receiving goods at the factory.
3. Findings of the Adjudicating Authority and the Appellate Authority regarding the receipt of goods and intention to evade duty.
4. Arguments presented by the Revenue and the Respondent.
5. Assessment of evidence regarding transportation of goods and the burden of proof on the respondent.
6. Comparison of findings between the Adjudicating Authority and the Appellate Authority.
7. Legal infirmity in the order of the Appellate Authority and the decision to set aside the impugned order.

Analysis:
1. The judgment revolves around the disallowance of modvat/cenvat credit and the imposition of penalties under Rule 57-I of Central Excise Rules, 1944, and Section 11A of Central Excise Act, 1944. The appellant was aggrieved by the relief granted to the respondent by the ld. Commissioner (Appeals), leading to the appeal before the Tribunal. The penalties were imposed due to the respondent's availing of cenvat credit without receiving the goods at their factory, as revealed by investigations.

2. The Adjudicating Authority found that the respondent fraudulently availed inadmissible credit without actually receiving the goods. Evidence, including the statement of the transporter's driver, indicated discrepancies in the transportation of goods and the falsification of documents by the respondent and the dealer involved.

3. The Appellate Authority below analyzed the situation, noting that while the goods were sold by M/s. Bhilai Steel Plant and duty was paid, there was no evidence of the goods reaching the appellant's factory. The authority concluded that there was no intent to evade duty and that the demand was time-barred, leading to the grant of relief to the respondent.

4. The Revenue supported the Adjudication order, emphasizing that the inadmissibility of cenvat credit was justified due to the non-receipt of goods at the factory. The respondent's counsel argued that the suffering of duty on the goods was established, leading to the relief granted by the Appellate Authority.

5. The assessment of evidence regarding the transportation of goods revealed discrepancies, with statements and records contradicting the claimed movement of goods. The burden of proof was on the respondent to establish the legitimacy of the transactions, which was not satisfactorily done, leading to the decision against the respondent.

6. Discrepancies between the findings of the Adjudicating Authority and the Appellate Authority highlighted the lack of evidence supporting the transportation of goods to the appellant's factory. The Adjudicating Authority's evidence of no use of claimed vehicles for transportation undermined the Appellate Authority's assumptions, leading to the decision in favor of the Revenue.

7. The judgment pointed out legal infirmities in the Appellate Authority's order, emphasizing the lack of proof of goods reaching the factory and the burden of proof on the respondent. Citing a relevant High Court decision, the impugned order was set aside, restoring the Order-in-Original and allowing the appeal of the Revenue.

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