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2022 (1) TMI 709 - AT - Central ExciseCENVAT Credit - inputs - ingots - allegation of fake sales and transfer of inadmissible CENVAT credit, without actual transfer or delivery of goods - penalty - HELD THAT - In the case of similarly situated co-appellant (arising from the common impugned order), the coordinate Bench of this Tribunal in the case of M/S ARYA ALLOYS PRIVATE LIMITED, ROMY BANSAL, DIRECTOR, RAJ KUMAR BANSAL, DIRECTOR (FORMER) , AMIT GUPTA VERSUS COMMISSIONER, CENTRAL GOODS SERVICE TAX, CUSTOMS CENTRAL EXCISE, ALWAR 2020 (3) TMI 148 - CESTAT NEW DELHI where it was held that In the absence of the inputs, it is not possible to manufacture final product, which the appellant have shown to have manufactured and cleared on payment of duty. Penalty also cannot be levied. Appeal allowed - decided in favor of appellant.
Issues:
Disallowance of cenvat credit on inputs and penalty under Rule 15(2) of Cenvat Credit Rules. Analysis: 1. Facts of the Case: The appellant, a manufacturer of electroplating and metal finishing chemicals, required raw materials such as Nickel Cathode and Tin Ingots for its manufacturing activities. The Commissioner confirmed the disallowance of cenvat credit on inputs and imposed a penalty under Rule 15(2) of Cenvat Credit Rules. 2. Procurement of Raw Materials: The appellant regularly ordered ingots from M/s Unnati Alloys Pvt. Ltd., received them at their registered premises, and made payments through banking channels. The transportation charges were included in the price of the goods, arranged by the supplier. 3. Utilization of Raw Materials: Upon receipt, the appellant used the raw materials to manufacture final products, which were then sold to third parties after paying duty. There was no dispute regarding the manufacturing and sale activities of the appellant. 4. Audit and Compliance: As a regular assessee, the appellant underwent audits by the Central Excise Department and maintained statutory records diligently, including the RG-23 register. 5. Allegations Against Supplier: The department alleged that M/s Unnati Alloys were involved in importing goods, showing fake sales, and transferring inadmissible CENVAT credit without actual delivery of goods. This allegation was based on investigations against other buyers of M/s Unnati Alloys. 6. Impugned Order and Appeals: The impugned order disallowed cenvat credit on inputs for the appellant and other co-noticees. The penalty imposed under Rule 25 of Central Excise Rules, 2002, was set aside partially. The appellant appealed to the Tribunal against this decision. 7. Similar Cases and Precedents: The appellant's counsel referred to a similar case involving M/s Arya Alloys Pvt. Ltd., where the Tribunal set aside the impugned order and penalties based on similar allegations and investigations. The appellant sought similar relief based on this precedent. 8. Judicial Analysis and Decision: After considering the arguments, the Tribunal found no justifiable reasons to deny cenvat credit or impose penalties on the appellant. Citing precedents and lack of additional evidence, the Tribunal set aside the impugned order and allowed the appeals with consequential relief for the appellant and its Director. 9. Final Decision: Following the precedent set in the case of M/s Arya Alloys Pvt. Ltd., the Tribunal allowed the appeals, set aside the impugned order, and granted consequential benefits to the appellant. Both appeals were allowed with consequential relief. 10. Conclusion: The Tribunal's decision, pronounced on 18.01.2022, favored the appellant by setting aside the disallowance of cenvat credit on inputs and penalties, aligning with the judgments in similar cases and based on the lack of substantial evidence against the appellant. This detailed analysis covers the issues, facts, arguments, precedents, and the final decision of the Tribunal in the legal judgment.
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