2019 (4) TMI 991 - AT - Central Excise

Violation of import condition - benefit of N/N. 32/2005-Cus - it is alleged that in terms of Notification No.32/2005-Cus, the importer shall not transfer or sale the imported goods - HELD THAT - Admittedly, in this case, the goods have been transferred by the appellant to the job worker for further processing but no demand has been raised under Customs Act, 1962 for contravention of conditions of Notification No.32/2005-Cus. Therefore, on that count, no demand is sustainable against the appellant. CENVAT credit denied for violation of condition of notification - the allegation of the department is that systematic rubber has been sent by Windsor was not received back and no machinery installed in the factory, therefore no manufacturing process can take place in the factory of M/s. Windsor - HELD THAT - As it is already held that for violation of conditions of Notification No.32/2005-Cus dt.8.4.2005, there is no demand notice has been issued for recovery of customs duty, therefore, import cannot be held irregular. Thus, the credit cannot be denied on the allegation of violation of conditions Notification No.32/2005-Cus dt.8.4.2005. Therefore, the allegation is not sustainable. Further, it has been alleged that there is no entry of passing of vehicle on the basis of report of NHAI - HELD THAT - Revenue has failed to show the evidence except the report of NHAI in the form of the statements/records of vehicle owner to ascertain the fact to came to the conclusion that these goods vehicles in question have not transported the goods from Ludhiana to Jalandhar or Jalandhar to Ludhiana. Except from the report of NHAI, no documents has been placed by the Revenue whether it is mere paper transaction, therefore the credit cannot be denied when the goods have been cleared on payment of duty. CENVAT credit - credit sought to be denied to M/s. Kohinoor Enterprises, M/s. Asian Tire Factory Limited and M/s. Vinko Auto Industries on the ground that no goods have been travelled from M/s. Windsor and only invoices have been moved - HELD THAT - There is no record of passing of toll barrier were recorded therein. In this case, except the report from the toll barrier, no efforts were made by the Revenue to ascertain whether the entries are of found at toll barrier and whether the goods fond travelled from Ludhiana to Jalandhar or Jalandhar to Ludhiana or not. In fact, investigation with regard to the transporter is essential to ascertain whether they have transported the goods from Windsor to the buyer s premises or not. Penalty - HELD THAT - As it is held that the credit cannot be denied and therefore no proceedings initiated against M/s. Windsor Exports under Customs Act, 1962 as no cogent evidence has been produced by the appellant for non movement of the goods along with invoices, the benefit of doubt goes in favour of the appellants - Penalty also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Denial of Cenvat credit to M/s Windsor.
2. Alleged bogus transactions involving M/s Windsor, M/s Kohinoor India Pvt. Ltd., M/s Kohinoor Rubber Mills, and M/s Oswal Enterprises.
3. Recovery of wrongly availed Cenvat credit from various parties.
4. Imposition of penalties on multiple entities and individuals.

Detailed Analysis:

1. Denial of Cenvat Credit to M/s Windsor:
The main issue revolves around the denial of Cenvat credit amounting to ?59,72,510/- to M/s Windsor. The allegation was that M/s Windsor had imported synthetic rubber under Notification No. 32/2005-CUS, which they subsequently sent for job work to M/s Kohinoor India Pvt. Ltd. The authorities contended that M/s Windsor did not receive back the processed goods and had no machinery installed in their factory, thus violating the conditions of the said notification. However, the Tribunal found that no demand notice was issued for recovery of customs duty under the Customs Act, 1962, for the alleged violation. Therefore, the import was not deemed irregular, and the credit could not be denied on this basis.

2. Alleged Bogus Transactions:
The department alleged that the transactions of job work and sale of synthetic rubber compound by M/s Windsor to M/s Kohinoor Rubber Mills and M/s Oswal Enterprises were bogus. It was claimed that no vehicles carrying the job work goods or finished goods were recorded on the Ludhiana-Jalandhar Toll Plaza, suggesting mere paper transactions. The Tribunal noted that the Revenue failed to provide concrete evidence beyond the NHAI report. No statements or records from vehicle owners were presented to substantiate the claim that goods were not transported. As such, the Tribunal held that the credit could not be denied based on these allegations.

3. Recovery of Wrongly Availed Cenvat Credit:
The Tribunal examined the recovery of Cenvat credit from M/s Kohinoor Rubber Mills (?16,13,060/-), M/s Asian Tire Factory Ltd. (?37,73,889/-), and M/s Vinko Auto Industries Ltd. (?6,28,926/-). The allegation was that these entities availed credit based on invoices without actual receipt of goods. The Tribunal found that the Revenue did not make sufficient efforts to verify whether the goods were indeed transported or received by these entities. Investigations with transporters and buyers were deemed essential but were not conducted. Consequently, the Tribunal ruled that the credit could not be denied to these entities.

4. Imposition of Penalties:
Various penalties were imposed on entities and individuals, including M/s Windsor, M/s Kohinoor India Pvt. Ltd., M/s Kohinoor Rubber Mills, M/s Oswal Enterprises, and individuals associated with these entities. Given the Tribunal's findings that the allegations of bogus transactions and non-receipt of goods were not substantiated with concrete evidence, it concluded that no penalties were imposable on the appellants.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeals with consequential relief. It held that the allegations of violation of Notification No. 32/2005-CUS and bogus transactions were not substantiated by adequate evidence. Consequently, the denial of Cenvat credit and imposition of penalties were not justified.