2012 (5) TMI 429 - AT - Central Excise

CENVAT credit - bogus invoices and passing CENVAT credit wrongly without physical movement of Cenvatable inputs to their customers Held that - goods have been received. The department could not produce any evidence that the goods have not been received. in the case of CCE v. HMM Ltd. (1995 (1) TMI 70 (SC)) held that penalty is not imposable unless the department is able to sustain its demand show-cause notice which was under challenge on the ground of limitation. Revenue s appeal is dismissed

Summary

Issues:
- Appeal against order-in-appeal upholding dropping of proceedings against respondent for alleged fraudulent CENVAT credit.
- Allegations of passing CENVAT credit fraudulently through bogus invoices without physical movement of goods.
- Lower adjudicating authority dropping proceedings, challenged by Revenue.
- Commissioner (Appeals) upholding lower authority's decision.
- Dispute over physical movement of goods and admissibility of CENVAT credit.
- Statements admitting fraudulent invoices and reversal of credit under protest.
- Tribunal's decisions cited by JDR.
- Analysis of lower authorities' findings and lack of evidence against respondent.
- Supreme Court's decision on imposition of penalty.

Analysis:
The case involves an appeal against an order-in-appeal that upheld the dropping of proceedings against the respondent concerning alleged fraudulent CENVAT credit. The respondent, engaged in manufacturing M.S. ingots/Billets, faced accusations of passing CENVAT credit fraudulently by using bogus invoices without actual physical movement of goods. The lower adjudicating authority dropped the proceedings, prompting the Revenue to challenge this decision. The Commissioner (Appeals) subsequently upheld the lower authority's ruling, leading to the Revenue's appeal.

The dispute primarily revolves around the physical movement of goods and the admissibility of CENVAT credit based on the invoices. The Revenue contended that the goods were not physically moved, emphasizing statements admitting fraudulent invoices and the reversal of credit under protest. The JDR relied on Tribunal decisions to support their argument.

Upon careful consideration, the Tribunal noted that the respondent had received both the invoices and the goods in their factory, as evidenced by records. The lower authorities found no evidence of fraud or intentional evasion of duty by the respondent. The Tribunal highlighted the lack of evidence presented by the department to refute these findings. Additionally, the statement admitting fraudulent invoices did not align with the show-cause notice, and the Tribunal differentiated the cited Tribunal decisions from the current case based on the receipt of goods.

Referring to a Supreme Court decision, the Tribunal emphasized that penalties cannot be imposed unless the department can substantiate its demand. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the concurrent findings of the lower authorities and ruling in favor of the respondent.