2017 (1) TMI 647 - AT - Central Excise

CENVAT credit - alleged short found inputs - goods not received into the factory - invoice no. 23 dated 23.04.2009 without receipt of the goods - invoices where goods were returned back - invoice no. 201 dated 31.03.2008 with no record of the consignment passing Churu toll post - Held that - as regards denial of Cenvat Credit of ₹ 61,14,698/- on alleged short found inputs, the only charge is that the goods were kept in the plot adjacent to the factory premises. The said adjacent plot has been found to be regularized in the name of the appellant company. The appellant company has also intimated to the Revenue about the regularization of the adjacent plot in the name of the appellant - confirmation of the duty and penalty set aside. Cenvat Credit of ₹ 35,47,178/- availed on goods not received into the factory - Held that - The appellant pleads that they should be called upon to deposit only the interest and 25% of penalty by giving them the benefit of Proviso to Section 11 AC of Central Excise Act, as no option was given to the assessee to pay 25% penalty - When the appellant can legally claim this benefit of payment of 25% penalty only as per provisions of Proviso to Section 11AC of Central Excise Act, the same is hereby allowed to them. Cenvat Credit of ₹ 66,442/- against the invoice no. 23 dated 23.04.2009 without receipt of the goods - Held that - The assessee company has not been able to disprove the allegation that they took the Cenvat Credit of ₹ 66,442/- without actual receipt of corresponding inputs. The appellant has not placed on record any proof of receipt of subject inputs in their factory premises - recovery of credit with interest and penalty confirmed. Cenvat Credit of ₹ 11,08,524/- taken on invoices where goods were returned back - Held that - The appellant company gives the proof of the return of goods in the form of letters from the customers or the marking on the invoice itself etc - We do not find any reason and the evidence for non-acceptance of the proof of return of the goods submitted by the appellant company in the form of letter, marking on the invoices GRs etc - credit allowed. Cenvat Credit of ₹ 2,33,694/- taken on invoice no. 201 dated 31.03.2008 with no record of the consignment passing Churu toll post - Held that - it appears that mere non entry of the consignment at one of the toll posts cannot prove that the goods covered under the subject invoice were not received by the appellant company, unless there are other substantial corroboratory evidences to prove the charge of non-receipt of such goods - there is no material brought on record by the Department in support of allegation - demand dropped. Appeal partly allowed - decided partly in favor of appellant.

Summary

Issues:
1. Denial of Cenvat Credit on alleged short found inputs.
2. Cenvat Credit availed on goods not received into the factory.
3. Cenvat Credit taken without receipt of goods.
4. Cenvat Credit taken on invoices where goods were returned back.
5. Cenvat Credit taken with no record of consignment passing Churu toll post.

Issue 1: Denial of Cenvat Credit on alleged short found inputs:
The appellant company faced allegations of not having Zinc and Lead Concentrate inputs in the registered premises. The company argued that the materials were stocked in an adjacent plot, which was regularized and part of their premises. The Tribunal found in favor of the appellant, citing lack of evidence of goods being cleared to third parties and following precedent from a previous case. The duty and penalty were set aside.

Issue 2: Cenvat Credit availed on goods not received into the factory:
The appellant reversed the entire Cenvat Credit amount and settled with suppliers for non-received goods. The Tribunal allowed the appellant to pay only interest and 25% of the penalty under the Proviso to Section 11AC of the Central Excise Act.

Issue 3: Cenvat Credit taken without receipt of goods:
The appellant failed to prove receipt of goods against a specific invoice, leading to confirmation of the recovery of Cenvat Credit along with interest and penalty.

Issue 4: Cenvat Credit taken on invoices where goods were returned back:
The appellant provided evidence of goods being returned through letters from customers and markings on invoices. The Tribunal found the credit admissible, noting transportation loss as a reason for value differences.

Issue 5: Cenvat Credit taken with no record of consignment passing Churu toll post:
Allegations of goods not passing through a toll post were refuted by the appellant, citing the availability of a toll receipt at another border. The Tribunal dismissed the demand for Cenvat Credit, emphasizing the lack of substantial evidence.

Penalties:
Penalties imposed on the directors were reduced due to the decreased total liability of the company. The penalties on the directors were significantly reduced or set aside based on the Tribunal's findings and considerations of the case.

In conclusion, the appeals were allowed in favor of the appellant company with modifications to the penalties imposed on the directors. The impugned order was modified accordingly, and the appeals were disposed of.