2017 (3) TMI 461 - HC - Central Excise

MODVAT credit - indifference in the description of goods in the subject invoices - denial on the ground that no correlation could be established between the input scrap actually received and used in the manufacture of excisable goods and the scrap described in the invoices under which input scrap was received. Held that - There was no need to give any specific instructions for supplying a particular variety of scrap. How that scrap can be used in induction furnace was duly explained. This is not, therefore, a case of irregular availment of the Modvat Credit - Eventually when the documents placed on record themselves point out that all types of scrap were utilised by the assessee, then, one cannot just pick and choose any statement or single out a document to deny the Modvat Credit - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Modvat/Cenvat Credit availed by the assessee.
2. Setting aside of demand for confirmed amount by the Commissioner of Central Excise.
3. Justification of setting aside penalties imposed by the Commissioner.
4. Setting aside of interest on the duty amount.
5. Imposition of penalties on various corporations under Central Excise Rules.

Analysis:

1. The judgment primarily revolves around the interpretation of Modvat/Cenvat Credit availed by the assessee. The Tribunal examined whether there was a correlation between the input scrap received and used in manufacturing excisable goods and the scrap described in the invoices. The Tribunal found that the Commissioner had not considered all statements in their entirety, leading to a factual finding that the duty paid on a lesser value should not result in denying credit but rather enhancing scrap values. The Tribunal concluded that there was no evidence to indicate that the received scrap was different from that described in the duty documents.

2. The judgment also addressed the demand confirmed by the Commissioner of Central Excise. The Tribunal held that the denial of credit on dealers' invoices could not be upheld without bringing the dealers' activities under excisable manufacture. It was noted that there was no allegation or finding of short receipt of scrap compared to the quantity mentioned in the Modvat Credit availing documents. The Tribunal found that the duty, interest, and penalty orders deserved to be set aside based on the factual data presented.

3. Regarding penalties, the Tribunal justified setting aside the penalties imposed by the Commissioner under the CENVAT Credit Rules, noting that there was no evidence of irregular availment of Modvat Credit. The Tribunal found that the order was not perverse or vitiated by any legal errors on record. The argument for establishing a correlation between received scrap and that described in invoices was deemed unacceptable when all types of scrap were utilized by the assessee.

4. The judgment also discussed the imposition of penalties on various corporations under the Central Excise Rules. The Tribunal found no merit in the appeals and dismissed them without costs. Overall, the judgment focused on the proper interpretation of Modvat/Cenvat Credit, the justification for setting aside demands and penalties, and the lack of evidence supporting the alleged fraud in availing credits.

This detailed analysis provides a comprehensive overview of the key issues addressed in the judgment, emphasizing the Tribunal's findings and conclusions regarding Modvat/Cenvat Credit, demand confirmation, penalties, and compliance with Central Excise Rules.