2018 (12) TMI 781 - AT - Central Excise

CENVAT Credit - inputs - there was variation in the product description in the dealers invoice and the Material Inward Notes (MIN) maintained by the appellant - Held that - There is no different central excise duty with regard to CI borings and waste and scrap (other). On such score, I cannot find any reason for the appellant to have any intention to avail fraudulent credit. The very variation in the description of the goods in the dealers invoice as well as the material inward notes cannot be a ground for alleging that the appellant has availed fraudulent credit. There is no allegation with respect to the difference in quantity of the goods received. It is only with regard to the variation in the description of the goods in the dealers invoice. Demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged fraudulent credit of inputs based on discrepancies in product description between dealer's invoices and Material Inward Notes (MIN).

Analysis:
1. The case involves the appellant, engaged in manufacturing iron and steel articles, availing CENVAT credit of inputs. The department alleged fraudulent credit based on discrepancies in product description between dealer's invoices and MIN for transactions with a registered dealer. The department issued a show cause notice for demanding a specific amount and imposing penalties under the Central Excise Act, 1944.

2. The appellant argued that the discrepancies arose due to the dealer labeling CI borings as waste and scrap in invoices, despite supplying CI borings as per the purchase order. The consultant highlighted that CI borings and waste and scrap fall under the same Tariff heading, with no separate heading for CI borings. The appellant maintained that the difference in description did not result in any benefit, as the duty rates for both were the same.

3. The department, supported by the Assistant Commissioner, contended that the discrepancies indicated fraudulent credit availed by the appellant. They relied on the statement of a partner from the dealer, who claimed to have supplied waste and scrap instead of CI borings as noted in the invoices.

4. The Tribunal considered the issue of 24 invoices showing discrepancies in product description. It noted that CI borings and waste and scrap fall under the same Tariff heading, with no duty rate distinction. The Tribunal found no evidence of fraudulent intent by the appellant, as the discrepancies did not result in any advantage. Moreover, the lack of cross-examination of the dealer's partner weakened the department's case. Consequently, the Tribunal set aside the demand and allowed the appeal, emphasizing that the discrepancies in product description did not support the allegation of fraudulent credit.

Conclusion:
The Tribunal ruled in favor of the appellant, overturning the original authority's decision. The judgment highlighted that the discrepancies in product description did not establish fraudulent intent, especially when the goods fell under the same Tariff heading with identical duty rates. The lack of cross-examination of key witnesses further weakened the department's case, leading to the appeal's success and relief for the appellant.