2017 (11) TMI 763 - AT - Central Excise

Irregular availment of CENVAT credit - capital goods - whether Modvat Credit of ₹ 38,53,942/- on capital goods with interest and penalty is recoverable from the appellant M/s SKPYL and consequent confiscation of seized capital goods, plant and machineryas directed be confirmed and penalty on other appellants be upheld? Held that - Even though, in the subsequent statement of the Director Shri. Tayal, it has been stated that those capital goods were removed from the factory to be installed for repairing purpose at M/s SKPL, however, no corroborative evidence was placed to substantiate the claim furnishing the details of repairing to be carried out and the difficulty of its repairing in the premises of the appellant M/s SKPYL. Therefore, the plea of the appellant that it were cleared for repairing cannot be acceptable - No contrary evidence has been placed by the appellant to rebut the said finding in their present Appeals before this forum. Time limitation - Held that - the evidence brought on record revealed that the capital goods were installed in the premises of M/s SKPL through solid foundations. Accordingly, the demand with interest has been rightly issued and confirmed invoking larger period of limitation against M/s SKPYL. Confiscation of capital goods, on which credit availed at M/s SKYPLbut found in the premises of M/s SKPL - Held that - confiscation do not sustain as removal of the duty paid capital goods without intimation to the department, cannot make the capital goods non-duty paid and offending one, inviting confiscation of the same. Penalty - Held that - the penalty equal to the credit wrongly availed imposed on them is justified - the penalty imposed on M/s SKPL and Sh. Tayal, Director appears to be too harsh, and in the interest of Justice, it is reduced to ₹ 2.00 Lakhs and ₹ 1.00 lakh, respectively. Appeal allowed in part.

Summary

Issues:
Recovery of irregular Modvat Credit on capital goods, confiscation of seized capital goods, plant, and machinery, and penalty imposition.

Analysis:

1. The appellant, M/s SKPYL, availed Modvat credit on capital goods that were not found in their premises during a visit by Central Excise officers. The General Manager admitted that the goods were transferred to another unit, M/s SKPL, without departmental intimation. The appellant claimed the goods were removed for repair, but failed to provide evidence supporting this claim. Additionally, they wrongly availed credit on goods used for exempted products. The Ld. Commissioner(Appeals) upheld the demand, stating the appellant did not provide evidence of goods being used in their unit before transfer. The extended limitation period was invoked due to lack of evidence supporting the appellant's claims.

2. The appellant argued that the demand was time-barred as they correctly availed credit on goods after installation in their premises and regular filing of returns. However, statements from the Chief General Manager and lack of evidence supporting the repair claim led to the confirmation of the demand with interest. Confiscation of capital goods found in M/s SKPL was deemed unsustainable as the goods were duty-paid, even if transferred without intimation. The penalty imposed on the appellants was considered justified, but reduced for M/s SKPL and the Director in the interest of justice.

3. The judgment highlighted the lack of evidence supporting the appellant's claims regarding the transfer of capital goods and the utilization of Modvat credit. The decision emphasized the importance of substantiating claims with proper documentation and the consequences of availing incorrect credits. The reduction in penalties indicated a balance between ensuring compliance and fairness in penalty imposition. The judgment concluded by modifying the impugned order and disposing of the appeals accordingly.

This detailed analysis provides a comprehensive overview of the issues involved in the legal judgment, the arguments presented by both parties, and the reasoning behind the final decision delivered by the Appellate Tribunal CESTAT AHMEDABAD.