2013 (11) TMI 621 - AT - Central Excise

Eligibility of Cenvat credit Manipulation in Documents Waiver of Pre-deposit of balance Penalty - Revenue was of the view that there was manipulation of documents for taking ineligible credit in Unit I Held that - The transfer of the equipment was on account of the fact that there was no adequate electricity available at Unit-II - But before they could shift the machinery, electricity problem was faced by Unit-I also and therefore physical removal of the machinery was delayed and that was the reason for irregularity and they had no intention to evade any payment of duty as can be seen from the fact that they reversed credit both at Unit I as well as Unit II - Prima facie, it appears that applicant has already reversed credits at both ends though machine is available in Unit-II - Further, a penalty of Rs.20,394/- is paid - thus there is no need to make further deposit in this case for admission of appeals stay granted.

Summary

Issues:
1. Manipulation of documents for availing ineligible credit in Unit I.
2. Recovery of credit taken, confiscation of goods, and imposition of penalties at both units.
3. Waiver of pre-deposit of balance penalties for appeal admission.

Analysis:
1. The case involved the applicant, a manufacturer of excisable goods with two units, who obtained machinery in Unit II and availed Cenvat credit. Subsequently, an invoice was issued from Unit II to Unit I showing duty payment, leading Unit I to take credit of duty paid amounting to Rs.4,07,880. However, the machinery was not physically transferred from Unit II to Unit I, prompting the Revenue to allege manipulation of documents for claiming ineligible credit in Unit I. The applicant reversed the credit taken in Unit I, paid interest, and a penalty of Rs.20,394. The Revenue accused the applicants of various irregularities at both units, resulting in penalties imposed on both units, with Unit I and Unit II each facing a penalty of Rs.50,000, out of which Rs.20,394 was already paid by Unit I.

2. The counsel for the applicants sought a waiver of pre-deposit of the remaining penalty amount for appeal admission. The counsel argued that the delay in transferring the equipment between units was due to electricity issues at both units, leading to the irregularity. Emphasizing that there was no intention to evade duty payment, as evidenced by the reversal of credits and payment of penalties, the counsel requested the admission of the appeal without further pre-deposit.

3. In opposition, the Ld. AR for Revenue contended that there was a clear intention to evade duty payment by transferring credit from Unit II to Unit I without physically moving the machinery. The Revenue insisted on imposing penalties at both ends, supporting the Commissioner (Appeals) order as fair and just, and advocated for pre-deposit as a condition for appeal admission.

4. After considering the arguments from both sides, the Tribunal found that the applicant had already reversed credits at both units, despite the machinery remaining in Unit II. Noting the payment of a penalty of Rs.20,394, the Tribunal evaluated the overall facts and circumstances of the case and decided that no further deposit was necessary for appeal admission. Consequently, the Tribunal ordered the admission of the appeal without additional pre-deposit and granted a stay on the collection of dues during the appeal's pendency.