2018 (11) TMI 353 - AT - Central Excise

CENVAT Credit - duty paying documents - credit availed on the basis of such endorsed invoices received from the principal manufacturers for whom they were doing job work - documents were issued by fake/ non-existent firms - it was also alleged that provisions of sub-rule (2) of Rule 7 of the CCR-2002 not complied with - CBEC Circular No. 713/29/2003-CE dated 07.05.2003 - invocation of Extended period of limitation. Held that - The appellants are job workers who received goods from various principal manufacturers. The appellants are not buyers of the goods as the said goods are purchased by the principal manufacturers and supplied to the appellants for the purpose of processing by endorsing the invoices. The appellant do not come in contact with the suppliers - in the SCN no specific charge or evidence of any suppression mis-declaration etc. on the part of the appellant has been pointed out - the demand of Cenvat Credit is set aside on the ground of limitation. Rebate claim to M/s Dolar Tek - penalty on M/s RTML - appellant has argued that Section 11AC of Central Excise Act, 1944 cannot be invoked to impose penalty as there is no demand raised in the said proceedings against the appellant - Held that - It is seen that the SCN issued to the appellant in the said case only makes allegation regarding wrong availment of credit without citing any evidence infact the SCN presumes that there are bogus/ fake suppliers and does not substantiated the said allegation by any evidence whatsoever. In these circumstances imposition of penalty under Section 11AC read with Rule 15(2) of the Cenvat Credit Rule is not sustainable - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Recovery of Cenvat Credit availed on the strength of endorsed documents from alleged fake/non-existent firms.
2. Invocation of extended period of limitation for recovery of Cenvat Credit.
3. Compliance with Rule 7(2) under deeming provisions.
4. Allegations of availing credit on invoices from bogus/non-existent firms.
5. Imposition of penalty on rebate claim without invoking extended period of limitation.

Analysis:

1. The appeals were filed regarding the recovery of Cenvat Credit availed based on endorsed documents from alleged fake/non-existent firms. The appellant argued that they processed goods received from principal manufacturers under Notification 28/2003-CE(NT) and took credit on endorsed invoices. The appellant received a Show Cause Notice (SCN) invoking extended limitation for recovery. The appellant contended that they were not aware of alert Circulars issued by the Commissioner of Central Excise and Customs, Surat-I. Part of the demand was reversed, and credit from legitimate firms was wrongly included in the alert circulars.

2. The invocation of extended period of limitation for recovery of Cenvat Credit was challenged by the appellant. The appellant argued that no specific charges or evidence of suppression or mis-declaration were provided in the SCN. The Tribunal considered previous decisions and observed that the demand was confirmed under extended limitation, but the issue was covered in favor of the appellant based on the decision of the Hon'ble High Court of Gujarat in a similar case. The demand was set aside, and the appeal was allowed.

3. Compliance with Rule 7(2) under deeming provisions was a crucial point raised by the appellant. The appellant argued that the provisions were complied with under deeming provisions when the traders' identity was not under dispute. The appellant relied on Notification 28/2003-CE(NT) and CBEC Circular No. 713/29/2003-CE to support their compliance.

4. Allegations of availing credit on invoices from bogus/non-existent firms were addressed in the case. The appellant argued that no evidence of non-existent firms listed in the alert circular was provided to them, and relying solely on the alert circular was deemed improper. The Tribunal considered the lack of evidence against the appellant and set aside the demand of Cenvat Credit based on the ground of limitation.

5. The issue of imposition of penalty on rebate claim without invoking extended period of limitation was also raised. The appellant contended that penalty under Section 11AC of the Central Excise Act could not be imposed as no demand was raised against them in the proceedings. The Tribunal found that the penalty imposed was not sustainable as the SCN did not provide any evidence to substantiate the allegations against the appellant. Consequently, the penalty was set aside, and the appeals were allowed.