2001 (2) TMI 380 - AT - Central Excise

Summary

Issues:
- Recovery of MODVAT credit and penalty imposition based on alleged forged invoices.
- Invocation of extended period of limitation under Rule 57-I of Central Excise Rules.
- Allegation of suppression or misstatement against the appellants.
- Request for cross-examination of a key individual involved in the case.
- Appellants' argument of bona fide belief in availing credit and returning defective goods.
- Denial of invoices issuance and goods receipt by M/s. Steel Tubes of India Ltd.
- Duty demand and penalty imposition based on forged invoices.

Analysis:
The Appellate Tribunal CEGAT, New Delhi, heard appeals filed against an order-in-appeal passed by the Commissioner (Appeals) regarding the recovery of MODVAT credit and penalty imposition on the grounds of availing credit based on allegedly forged invoices. The case involved the appellants, engaged in manufacturing Motor Vehicle parts, who were accused of availing credit using invoices from M/s. Steel Tubes of India Ltd., Ludhiana. The adjudicating authority confirmed the demand and imposed penalties, which were upheld by the Commissioner (Appeals).

The learned Counsel for the appellants argued that the benefit of MODVAT credit was legitimately availed based on invoices from M/s. Steel Tubes of India Ltd. on specific dates. The appellants had informed the Revenue about the goods received and returned, including defective goods, well within the required timelines. The Counsel contended that as the appellants had promptly informed the Revenue about the transactions, no suppression or misstatement could be alleged, making the demand time-barred. The Counsel also requested cross-examination of a key individual, Mohan Singh, from M/s. Steel Tubes of India Ltd., which was not conducted by the adjudicating authority.

Moreover, the appellants argued that they acted in good faith while availing the credit and returning the defective goods, emphasizing that the actions were taken under due intimation to the Revenue. They highlighted the timely filing of returns and communication with the authorities regarding the transactions. On the contrary, the Respondent reiterated the findings of the lower authorities, emphasizing the denial by M/s. Steel Tubes of India Ltd. regarding the issuance of invoices and receipt of goods, which formed the basis for the credit availed by the appellants.

After considering the submissions from both sides, the Tribunal concluded that the demand and penalty imposition, based on the alleged forged invoices, were time-barred due to the appellants' timely communication with the Revenue and return of defective goods with proper duty payment. The impugned order was set aside, and the appeals were allowed in favor of the appellants.