2018 (9) TMI 1712 - AT - Central Excise

CENVAT Credit - fake invoices - Department was of the view that MS Wires have not been the material supplied to the appellants and that only cenvatable invoices giving the description as MS Wires were issued - invoices are dated Mar. 05, whereas, the investigation was conducted in 2006 and SCN issued only in Mar. 2010 - suppression of facts or not - invocation of extended period of limitation. Held that - After such a long gap of five years, apart from the statements and these three invoices, the department has not been able to put forward any evidence to establish the allegations raised in the show-cause notice. There is no allegation that suppliers/dealers are not registered with the department. The allegation is that these dealers procure non-duty paid scrap locally and also from manufacturers by paying duty - There is no evidence put forward by the department to show that the appellants have procured such large quantities of inputs locally. Neither buyers nor transporters have been examined. There is nothing brought out from evidences as to how the appellants have been able to manufacture the finished products if they were not receiving the goods as per the cenvated invoices. It is settled law that statements cannot be relied upon without examining the witnesses under section 9D of the Central Excise Act. Mere statements cannot be a ground for confirming the demand in a serious charge of clandestine availment of credit. The Department has failed to establish case alleged in the SCN - appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged wrongful availing of Cenvat credit without receiving goods as per invoices; Confirmation of duty demand, interest, and penalties; Imposition of equal penalty under section 11AC; Appeal before Commissioner (Appeals) by both appellants and department; Dispute regarding invoices supplied by M/s. Santosh Kumar Steels.

Analysis:
The case involved allegations of the appellants availing Cenvat credit wrongly on invoices without receiving the goods described. The department suspected that non-duty paid MS Scrap was received instead of MS Wires, leading to a demand for recovery of wrongly availed credit, interest, and penalties. The original authority confirmed the duty demand and imposed penalties under Cenvat Credit Rules, 2004. Separate penalties were also imposed on other parties involved. Appeals were filed by both the appellants and the department before the Commissioner (Appeals).

The appellants argued that they had purchased inputs from registered dealers for manufacturing automobile spares, and the credit availed was correct as they had received and paid duty on the goods. They disputed the allegations based on statements without corroborative evidence, highlighting discrepancies in the description of goods in the invoices. The department's case relied on statements indicating the appellants received cenvated invoices without actual goods, suggesting a modus operandi involving registered dealers passing on credit without supplying goods.

After hearing both sides and examining the records, the Tribunal found that the department failed to establish the case alleged in the show-cause notice. Noting the lack of evidence beyond statements and three disputed invoices, the Tribunal set aside the impugned order confirming the demand. The decision emphasized the necessity of concrete evidence in cases of clandestine availment of credit, highlighting the insufficiency of mere statements without witness examination under the Central Excise Act.

In conclusion, the Tribunal allowed the appeals, overturning the confirmation of the demand and providing consequential benefits to the appellants. The judgment was pronounced on 17-08-2018, emphasizing the importance of substantiated evidence in cases involving allegations of wrongful availing of credit based on invoices.