2017 (11) TMI 248 - AT - Central Excise

CENVAT credit - PVC resins - fake invoices - non-receipt of inputs in the factory - case of the appellant is that the appellant has availed CENVAT credit on the actual inputs received in the factory and that has been entirely accounted by them and also the department has not been able to establish that the appellant has availed credit on inputs which are not been used in the factory basing upon the input-output ratio. Held that - The Director Shri S. Nainar has deposed and admitted that the appellants have issued two sets of invoices for clandestine clearance of finished goods. Further, he has also admitted that though 54 MTs of PVC resins was shown in the invoices by Sree Mahavir Impex, only 10 MTs was received in the factory and appellant has availed credit on entire 54 MTs of inputs. These facts stand undisputed by the appellant. On such score, the claim of the appellant basing upon certain calculations with regard to input output ratio, adopting ISI norms cannot be considered as cogent evidence so as to hold that the appellants have not availed wrongful credit. Extended period of limitation - Held that - on the background of admission of issuance of double set of invoices, the suppression of facts, willful mis-statement with intent to evade duty is also established, for which reason I find that the invocation of extended period is also justified. It may be true that the allegation of clandestine clearance cannot be proved with mathematical precision, however, on totality of facts and evidences placed before me, I am of the view that the department has been able to prove the case of wrongful availment of credit as well as clandestine clearance of goods on the basis of balance of probabilities. Appeal dismissed - decided against appellant.

Summary

Issues:
Alleged wrongful availment of CENVAT credit on inputs not received, duty demand on finished goods removed clandestinely, quantification of duty demand based on input-output ratio, invocation of extended period of limitation.

Analysis:
1. Alleged wrongful availment of CENVAT credit on inputs not received:
The appellant, engaged in PVC pipe manufacturing, faced allegations of availing CENVAT credit on PVC resins not actually received in the factory. The department discovered discrepancies in the receipt of inputs, with evidence suggesting diversion of goods into the local market. The appellant's director admitted to issuing double sets of invoices and not accounting for all transactions properly. The Tribunal found the appellant liable for irregularly availing credit and upheld the recovery of the credit amount along with penalties.

2. Duty demand on finished goods removed clandestinely:
The appellant was also charged with removing finished goods without paying duty. The department issued a show cause notice and imposed duty on the clandestinely removed goods. The appellant did not contest this duty demand, further strengthening the department's case. The Tribunal affirmed the duty demand and penalties imposed on the appellant for this violation.

3. Quantification of duty demand based on input-output ratio:
The appellant contested the department's quantification of duty demand based on the input-output ratio. The appellant argued that they had accounted for all inputs correctly and relied on ISI norms to calculate the required quantity of inputs for the finished products. However, the Tribunal found discrepancies in the actual receipt of inputs compared to the invoices and upheld the department's quantification of duty demand based on the evidence presented.

4. Invocation of extended period of limitation:
The department invoked the extended period of limitation due to willful suppression of facts and misrepresentation by the appellant. The appellant's issuance of double sets of invoices and failure to properly account for transactions supported the department's decision to extend the period for investigation. The Tribunal deemed the invocation of the extended period justified based on the evidence and upheld the penalties imposed on the appellant.

In conclusion, the Tribunal found no grounds to interfere with the impugned order and dismissed the appeal, holding the appellant responsible for wrongful availment of credit and clandestine removal of goods based on the evidence and admissions presented during the proceedings.