2018 (8) TMI 547 - AT - Central Excise

CENVAT Credit - the allegation is that UAL failed to take reasonable steps to ensure that inputs in respect of which they had taken CENVAT credit were the goods on which appropriate duty of excise as indicated in the documents accompanying the goods have been paid - Held that - There is no allegation that the supplier / dealers are not registered. It is also indicated that these dealers have received various types of scrap from manufacturers and at the same time, they have also purchase local scrap in cash - There is nothing in the statement of P. Kumaresan to support any allegation that the samples tested by him were found to be different from that invoiced. It is also not the case that the department had intercepted some of the raw materials supplied, taken samples thereof, got them tested and proved that what was received was not what was invoiced. The department has not sufficiently proved its case. The allegations in the show cause notice are not supported by any solid evidence but only statements. Hence, even a preponderance of probability has not been proved by the department. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Alleged irregular CENVAT credit availed on non-duty paid inputs
- Discrepancies between description of goods received and dealer invoices
- Statements recorded from suppliers and dealers
- Show cause notice proposing recovery and penalties
- Confirmation of proposals and penalties by original authority and Commissioner (Appeals)
- Appeals filed by UAL and Alagappa before the Tribunal

Analysis:
1. Alleged irregular CENVAT credit: The case involved allegations that M/s. Ultimate Alloys Pvt. Ltd. (UAL) availed irregular CENVAT credit on non-duty paid inputs fraudulently received in the guise of secondary MS angles, MS ingots, and other items. The department claimed discrepancies between the description of goods received and the invoices from dealers, leading to the issuance of a show cause notice proposing recovery of allegedly ineligible CENVAT credit, interest, and penalties under relevant rules and acts.

2. Statements and investigations: Statements were recorded from suppliers and dealers, including Alagappa, M/s. Sri Amman Steel, M/s. Vijay Kamal Traders, M/s. Guru Raghavendra & Co., and UAL's Lab In-charge. The original authority confirmed the proposals and imposed penalties on UAL and the suppliers. The Commissioner (Appeals) upheld the decision, prompting UAL and Alagappa to appeal before the Tribunal.

3. Arguments and submissions: During the hearing, UAL's representative argued that the case heavily relied on statements from dealers, highlighting inconsistencies and retractions in the statements. The representative emphasized that there was no dispute regarding the receipt and utilization of raw materials in manufacturing processes.

4. Department's contentions: The department, represented by the ld. AR, pointed out findings by the original authority regarding UAL's receipt of non-duty paid MS scrap under the guise of various items, leading to wrongful CENVAT credit availing. The department argued that these aspects were admitted in supplier/dealer statements and commercial invoices accompanying the goods differed from the original manufacturers' invoices.

5. Tribunal's decision: After considering both sides, the Tribunal analyzed the show cause notice's allegations and supporting documents. It noted discrepancies in the descriptions of goods received and the lack of concrete evidence beyond statements. Citing relevant case laws, the Tribunal found that the department failed to sufficiently prove its case with solid evidence, relying only on statements. Consequently, the Tribunal ruled in favor of the appellants, setting aside the impugned order and allowing the appeals with any consequential relief as per the law.