2015 (6) TMI 655 - AT - Central Excise

Denial of CENVAT Credit - Fraudulent availment of CENVAT Credit - Held that - The sole reason to denying the CENVAT Credit is that the Revenue did not find any entry at Punjab Sales Tax Barrier but on the other hand entry at the Himachal Pradesh Sales Tax Barrier entry point is there. Therefore, the receipt of scrap has been entered into the barrier of Himachal Pradesh. Moreover, the allegation against the respondent is that they have procured this scrap from Delhi. If the scrap is procured from Delhi to enter into Himachal Pradesh, the same has to pass through many State Barriers but Revenue has failed to prove that respondent has procured the scrap from Delhi with cogent evidence that same has passed through various barriers particularly from the Punjab Barrier of Sales Tax. Admittedly, no statement of transporters has been recorded to unearth the truth and the payment of all the scraps have been made by the respondent through account of payee cheques. In the absence of any cogent evidence against the respondent, the charge of availment of fraudulent CENVAT Credit on melting scrap on the invoices issued by the dealers of Mandi Govind Garh is not sustainable. Demand of differential duty - imported melting scrap - Held that - certificate issued by the Range Superintended cannot be denied by any authority in the absence of any contrary evidence. Admittedly, in this case Revenue has not produced any contrary evidence. Therefore, the end user certificate is a reliable evidence to ascertain the fact that the respondent has received the imported melting scrap, therefore, we hold that respondent are entitled for the benefit of notifications allowing the entitlement of concessional rate of duty on the condition of end user as the respondent has complied with the conditions of notifications. Therefore, on imported melting scrap, the respondent is not liable to pay differential custom duty and cannot be denied CENVAT Credit of CVD paid by them. Clandestine removal of goods - parallel invoices - Held that - Merely, the statement that they have received these photocopies of invoices from Excise and Tax Department of Himachal Pradesh, in the absence of any documentary evidence, the parallel invoices are no acceptable documents, therefore, we hold that the duty cannot be demanded on this fake invoices produced by the Revenue. Therefore, demand of duty against the respondent on this account is also not sustainable. - Decided against Revenue.

Summary

Issues:
1. Fraudulent availment of CENVAT Credit on melting scrap from dealers of Mandi Govind Garh.
2. Short payment of custom duty on imported melting scrap and alleged non-receipt by the respondent.
3. Clandestine removal of goods based on parallel invoices.

Analysis:

(a) Fraudulent availment of CENVAT Credit on melting scrap:
The Revenue alleged that the respondent procured scrap from Delhi without passing through Punjab barriers, leading to inadmissible CENVAT Credit. However, the entry at Himachal Pradesh Sales Tax Barrier was present, indicating receipt of scrap. Lack of evidence showing passage through Punjab barriers and absence of transporter statements weakened the Revenue's case. Payments made via cheques further supported the respondent's position. Consequently, the charge of fraudulent CENVAT Credit was deemed unsustainable, and penalties on co-respondents were not imposed.

(b) Short payment of custom duty on imported melting scrap:
The respondent availed concessional duty rates based on end-user conditions, supported by a certificate from the Range Superintendent confirming usage of imported scrap in manufacturing. The absence of contradictory evidence and the reliability of the end-user certificate led to the conclusion that the respondent complied with duty rate conditions. Therefore, the demand for differential duty and denial of CENVAT Credit on imported scrap were dismissed.

(c) Clandestine removal based on parallel invoices:
The Revenue failed to provide the source of the parallel invoices, only presenting photocopies without proof of origin. Without documentary evidence or verification of the source, the validity of these invoices was questioned. As a result, the demand for duty based on these questionable invoices was deemed unsustainable. Since the main respondent was not found liable, penalties on all respondents were also deemed unwarranted.

The Tribunal upheld the adjudicating authority's decision, dismissing the Revenue's appeals and finding no faults in the impugned order. The lack of evidence and failure to substantiate allegations led to the rejection of demands against the respondent. The judgment was pronounced on 6th May 2015.