2018 (8) TMI 792 - AT - Central Excise

Clandestine removal - shortage of raw materials - Revenue was of the belief that the excess Duplex Paper entered in their Cenvat records involving duty of ₹ 12,31,553/- was availed only on the basis of the invoices issued by the raw material supplier, without the actual receipt of the said Duplex Paper - Held that - The issuance of raw material from the Cenvat account is not on one to one co-relation basis. Revenue has picked up a particular period and has relied upon the receipt during that period and the consumption shown in that period. Raw material received in one particular period can always be used in the subsequent periods. The credit is available to the assessee at the time of receipt of the said raw material and there is no requirement of its use, for earning the credit. The appellants have taken a categorical stand before the authorities below, which does not stand disputed by the revenue that the payments were by the appellants through the bank channels i.e. ride cheques, which establishes that the Duplex Paper Board was actually purchased by the appellants. There is neither any allegation nor any evidence of flow back of money from the raw material seller to the appellants. The consideration of the raw material having been made by way of cheques and there being no evidence to support the revenue s allegations, the denial of credit to the appellants on the said sole ground is not sustainable. The appellants having availed the credit in respect of the Duplex paper, is duty bound to show the utilization of the raw material in the manufacture of their final product. It is not understood as to how in the absence of the Duplex paper, the assessee would manufacture their final product - demand set aside. Confirmation of demand of ₹ 4,06,382/- based upon the dispatch advices and parallel invoices - there is a recording by the Commissioner (Appeals) that the appellants have not contested the above demand and as such the same is being upheld. Learned Advocate appearing for appellant submits that the said demand stands contested by them - Held that - Inasmuch as, there is a dispute on the said factual fact, it is fit to set aside the said part of the order and remand the matter to the Commissioner (Appeals) for fresh decision, after affording an opportunity to the appellant. Penalty u/r 26 of CER on Shri Upendra Goenka, Director - there is no confiscation of goods - Held that - In the absence of any proposal for confiscation, penalty under Rule, 26 cannot be imposed - Otherwise also, there is no evidence on record indicating any malafide on the part of Director, showing his association with any illegal activity - penalty set aside. Appeal allowed - decided partly in favor of appellant and part matter on remand.

Summary

Issues involved:
1. Availment of Cenvat credit on Duplex Paper without actual receipt.
2. Allegations of clandestine removal of final products and duty evasion.
3. Confirmation of demands and imposition of penalties.
4. Imposition of penalty on the Director without confiscation of goods.

Analysis:
1. The appellant, engaged in manufacturing, availed Cenvat credit on Duplex Paper without actual receipt, leading to a demand of ?12,31,553. The revenue alleged excess credit based on invoices without physical receipt. However, the Tribunal found no merit in this, stating that credit is available upon receipt, not use, and statements alone are insufficient evidence. The appellant's bank payments for the paper were verified, indicating actual purchase, and lack of evidence for revenue's allegations rendered denial of credit unsustainable.

2. Allegations of clandestine removal and duty evasion were based on discrepancies in dispatch advices and invoices, with penalties imposed by the Additional Commissioner. The Tribunal upheld a demand of ?4,06,382 but remanded the matter for fresh decision due to a factual dispute. Regarding the penalty on the Director, it was imposed without confiscation of goods, contrary to legal requirements. Citing precedent cases, the Tribunal set aside the penalty, noting the absence of evidence of malafide intent or association with illegal activities.

3. The confirmation of demands and penalties imposed by the Additional Commissioner were challenged in the appeals. The Tribunal set aside the demand related to Duplex Paper but upheld a portion pending fresh decision. The penalty on the Director was deemed unjustified and set aside due to lack of evidence and the absence of a confiscation order.

4. The judgment emphasized the importance of proper evidence and legal procedures in imposing penalties and confirming demands. The Tribunal's decisions were based on legal principles and precedents, ensuring fairness and adherence to procedural requirements. The appeals were disposed of accordingly, with the demands and penalties either set aside or upheld based on the merits of each issue.