2014 (3) TMI 204 - AT - Central Excise

Availment of CENVAT Credit - Waiver of pre deposit - Duty demand - Held that - Appellant No.1 availed Cenvat credit on the basis of dealers invoices under the description of HR Sheets and Coils CR Sheets and Coils MS Wire/Coils Plates etc. issued by the Appellant No.4 & 5. Appellant No.1 had not received the said goods. On investigation it was found that the dealers supplied the MS Scraps instead of the goods as described in the dealers invoices. Thus the Appellant No.1 is not eligible to avail credit on the basis of the said invoices - dealers in their statement accepted that they have supplied MS Scrap and raised invoices on MS Coils Rounds etc. to Appellant No.1 the manufacturer for claiming the benefit of Cenvat credit in violation of the Cenvat Credit Rules. It is also noted that the manufacture knowing fully well that they have not received the goods as per description of the invoices they have availed the credit which is totally irregular. Hence the demand of duty along with penalties on the manufacture and the dealers are justified - demand of duty penalty along with interest on Appellant No.1 is upheld - Decided against assessee.

Issues:
- Availment of Cenvat credit based on incorrect invoices.
- Imposition of duty, interest, and penalties on the manufacturer and dealers.
- Justification of penalties imposed on the managing partner and authorized signatory.
- Comparison with previous tribunal decisions on similar issues.

Issue 1: Availment of Cenvat credit based on incorrect invoices

The case involved M/s. K.S.G. Castings and Products, Appellant No.1, who availed Cenvat credit based on invoices for goods like HR Sheets and Coils, CR Sheets and Coils, MS Wire/Coils, Plates issued by dealers, but actually received MS Scraps. The adjudicating authority confirmed the demand of duty, interest, and penalties on the manufacturer for irregularly availing credit. The Commissioner (Appeals) rejected the appeals filed by the appellants. The Tribunal found that Appellant No.1 was not eligible to avail credit based on the incorrect invoices as they did not receive the specified goods.

Issue 2: Imposition of duty, interest, and penalties on the manufacturer and dealers

The Tribunal noted that the dealers supplied MS Scraps instead of the goods described in the invoices to Appellant No.1. The manufacturer availed credit despite not receiving the actual goods, leading to the demand of duty, penalties, and interest. The Tribunal upheld the demand of duty, penalties, and interest on Appellant No.1, stating that the irregular availing of credit was unjustified. The penalties on the managing partner and authorized signatory were also addressed based on their involvement in the irregular credit availment.

Issue 3: Justification of penalties imposed on the managing partner and authorized signatory

The Tribunal found that the penalties imposed on the managing partner and authorized signatory were justified due to their involvement in availing irregular Cenvat credit. While the penalty on the managing partner was reduced to Rs.50,000 considering the circumstances, the penalty on the authorized signatory was reduced to Rs.20,000. The Tribunal emphasized the importance of complying with Cenvat Credit Rules and penalized those involved in the irregular credit transactions.

Issue 4: Comparison with previous tribunal decisions on similar issues

The Tribunal referred to previous decisions, such as the case of Amex Alloys Pvt. Ltd. & Ors. Vs Commissioner of Central Excise & Service Tax, to support its decision in upholding the demand of duty and penalties. It also mentioned the discretion of authorities in determining penalties based on circumstances, as seen in the case of V.K. Enterprises Vs Commissioner of Central Excise. The Tribunal highlighted the consistency in upholding penalties on dealers equal to the duty amount in such cases.

In conclusion, the judgment upheld the demand of duty, interest, and penalties on the manufacturer and dealers for irregularly availing Cenvat credit based on incorrect invoices. The penalties on the managing partner and authorized signatory were deemed justified, with some reductions based on the circumstances. The decision was supported by references to previous tribunal rulings on similar issues, emphasizing the importance of compliance with Cenvat Credit Rules and the consequences of irregular credit transactions.

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