2018 (11) TMI 298 - AT - Central Excise

CENVAT Credit - duty paying documents not provided - what was the actual position of availability of Cenvat credit as on 30.12.2008, that is to say as to whether ₹ 72,75,421/- which was available as on 31.12.2008 in their RG 23A Part-II as alleged in the show cause notice dated 20.1.2010 or ₹ 2,77,49,625/- as per ER-I return for the relevant period filed on 17.2.2009 which was filed with the department? Held that - The requirement of duty paying documents for availment of Cenvat credit is substantive law - the appellant having not followed the procedure as prescribed for availment of Cenvat Credit Rules are not entitled for the Cenvat credit to the extent of ₹ 2,04,74,204/-. To that effect, it is found that Adjudicating authority has not violated the provisions of Cenvat credit in any way while denying the credit. In the present case, it is not disputed that the appellant has not provided any documents for huge amount of credit taken in their books of account and also utilised for the purpose of payment of duty. It was therefore, correct on part of the departmental officer to get them reversed and accordingly the same has been done by the appellant. Although, the appellant has contested that the reversal was done under the duress, threat and coercion. However, we find that the authorised signatory of the appellant has suo moto reversed the credit. Thereafter, the appellant has taken the credit of same with intimation to the department. This cannot be done without following the appropriate procedure under Cenvat Credit Rules, 2004. Having not produced the documents at the strength of which credit was taken by the appellant before the adjudicating authority, we do not find that any ground for allowing such credit to the appellant - as the appellant has not only wrongly taken the credit of Cenvat credit and but also utilised the same which was not available to them under the Cenvat Credit Rules, the department has rightly issued the show cause notice under the provisions of imposition of interest and confirmed the same after following the adjudication process. Appeal dismissed - decided against appellant.

Issues Involved:
1. Legality of the Cenvat credit demand and interest imposed.
2. Allegations of coercion and improper conduct by Central Excise officers.
3. Accuracy and method of stock-taking by Central Excise officers.
4. Legitimacy of re-credit taken by the appellant.
5. Adherence to procedural requirements for availing Cenvat credit.

Detailed Analysis:

1. Legality of the Cenvat Credit Demand and Interest Imposed:
The adjudicating authority confirmed the demand of Cenvat credit along with interest, as per the Order-in-Original No. 19/2011 dated 22.2.2011. The appellant was found to have utilized excess Cenvat credit amounting to ?2,04,74,421/- without proper documentation or receipt of goods, violating Rule 3(1), 3(4), and 9 of the Cenvat Credit Rules, 2004. The tribunal upheld this decision, stating that the appellant failed to provide duty-paying documents substantiating the claimed credit.

2. Allegations of Coercion and Improper Conduct by Central Excise Officers:
The appellant alleged that Central Excise officers coerced them into debiting the Cenvat credit amount of ?2,03,42,121/- during a factory visit on 11.12.2008. It was claimed that the factory officials were manhandled and confined illegally. However, the tribunal noted that the authorized signatory of the appellant had reversed the credit voluntarily and later re-credited the same amount, which was not permissible without following proper procedures.

3. Accuracy and Method of Stock-Taking by Central Excise Officers:
The appellant contested the accuracy of the stock-taking process, alleging that it was conducted improperly by counting billets and extrapolating the numbers, rather than physical weighment. The tribunal found that the shortage detected was not based on scientific methods, but upheld the adjudicating authority's decision as the appellant failed to provide evidence to counter the findings.

4. Legitimacy of Re-Credit Taken by the Appellant:
The appellant argued that the re-credit of ?2,03,42,121/- was legitimate as it was initially debited under coercion. The tribunal, however, found that the appellant did not follow the prescribed procedure for re-credit under the Cenvat Credit Rules, 2004. The re-credit was taken without proper documentation and receipt of goods, making it unlawful.

5. Adherence to Procedural Requirements for Availing Cenvat Credit:
The tribunal emphasized the importance of adhering to procedural requirements for availing Cenvat credit. The appellant failed to provide necessary documents and evidence to support the claimed credit. The tribunal cited relevant rules and legal precedents, concluding that the appellant's actions were in gross violation of Rule 3 and Rule 9 of the Cenvat Credit Rules, 2004.

Conclusion:
The tribunal dismissed the appeal, upholding the adjudicating authority's order. The appellant was found to have availed and utilized Cenvat credit without proper documentation and receipt of goods, violating the Cenvat Credit Rules. The allegations of coercion and improper stock-taking were not substantiated with evidence. The tribunal stressed the necessity of following procedural requirements for availing Cenvat credit and confirmed the imposition of interest and penalties as per the adjudication process.

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