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TMI Blog2010 (10) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... under such fictitious invoices to respondent would also be fictitious - Held that the impugned order setting aside the Cenvat credit demand alongwith interest against respondent and also setting aside the imposition of penalty on respondent is not correct. - E/1038-1040/2006 - 746-748/2010-EX(PB) - Dated:- 25-10-2010 - Justice R.M.S. Khandeparkar, Shri Rakesh Kumar, JJ. REPRESENTED BY : Shri Mahesh Rastogi, DR, for the Appellant. None, for the Respondent. [Order per : Rakesh Kumar, Member (T)]. The facts leading to these three appeals filed by the Department are in brief, as under. 1.1 M/s. Chemiplast Industries, Parwanoo (Respondent No. 1) are engaged in the manufacture of PVC and HDPE pipes and fittings, chargeable to Central Excise Duty under Chapter 39 of the Central Excise Tariff. They avail Cenvat credit of duty on inputs and capital goods as per the provisions of the Central Excise Rules, 1944. Shri M.L Gupta (Respondent No. 2) is the partner of M/s. Chemiplast Industries who manages its affairs. M/s. Karan Co., Parwanoo (Respondent No. 3) are a registered dealer receiving plastic granules from IPCL, Reliance Industries Ltd. and GAIL and during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise Department as a registered dealer for issue of cenvatable invoices, that in respect of the goods purchased from M/s. Karan Co., they were taking Cenvat credit on the basis of the invoices issued by them, that for transportation of the goods from the premises of M/s. Karan Co., the trucks had been engaged for which the freights was paid to drivers in cash, as the freight involved was very small because of the short distant between their factory and the godown of the respondent No. 3, that for entry of the goods into Parwanoo from outside the State form ST-XXVI-A was required to be filed in triplicate at sales tax barrier, of which two copies are retained by sales tax authorities at the check post and one copy duly signed is returned to the carrier of the goods/owner of the goods, that filing of ST-XXVI-A form at the sales tax barrier in respect of the goods received from outside the State is mandatory and that the person receiving the goods from outside the state is required to maintain the record of the receipt of the consignments from outside the State in Form ST-XXVI-B register. The Investigating Officers examined the ST-XXVI-B register maintained by the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise Rules, 1944. 1.4 The show cause notice was adjudicated by the Additional Commissioner vide order-in-original dated 14-10-05 by which :- (i) out of total Cenvat credit of Rs. 45,28,023/-, the demand of Rs. 21,26,832/- was confirmed alongwith interest and the remaining demand of Rs. 24,01,191/- was dropped ; (ii) penalty of Rs. 21,26,832/- was imposed on respondent No. 1 under Rule 57-I/57AH of the Central Excise Rules, 1944 readwith Section 11AC of the Central Excise Act and penalty of same amount was imposed on respondent No. 3 under Rule 173Q(1) of the Central Excise Rules, 1944; and (iii) penalty of Rs. 5,00,000/- was imposed on respondent No. 2 under Rule 173Q of Central Excise Rules, 1944. 1.5 All the three respondents filed appeals to the Commissioner (Appeals) against the above-mentioned orders of the Additional Commissioner and the Commissioner (Appeals) vide impugned order-in-appeal No. 172-174/CE/CHD/05 dated 29-12-05 set aside the Additional Commissioner s order. It is against this order of the Commissioner (Appeals), these appeals have been filed by the Revenue. 2. None appeared for the respondent, though a notice regarding the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... register maintained by them and they were not in a position to produce the corresponding ST-XXVI-A forms showing the entry of those consignments into Himachal Pradesh, Parwanoo through the check post, which shows that no goods had been received and bogus entries had been made in RG 23D register. However, subsequently when respondent No. 3 produced ST-XXVI-A forms in respect of the consignments listed in the Annexure A, B C to the show cause notice and claimed that all those consignments had actually been received by them, the Adjudicating Authority after examining their claim, dropped the demand for an amount of Rs. 24,01,191/- and confirmed the Cenvat credit demand of Rs. 21,26,832/-. The Cenvat credit demand of Rs. 21,26,832/- was confirmed only in respect of those consignments where the date of entry into Parwanoo as per the records of the sales tax check post was on date prior to the date of depot invoice, while the goods could have been despatched from the depot only on or after the date of issue of the invoice and there was no way the consignments could have reached the Parwanoo check post prior to that date. The details of such discrepancies are given in the - discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the burden would be on the assessee to prove that the goods had actually been received. In this case, it is not in dispute that except for a few consignments, all the consignments reaching Parwanoo, had come through the check post. When the goods are claimed to have been received from IPCL s depot at Ludhiana, Baroda or Nagothane and the record show that the date of entry as per ST-XXVI-A form is prior to the date of despatch of the goods from the depot, the consignee have to explain this discrepancy. Since the respondent No. 3 have not been able to give any explanation for this, the central excise authorities are justified in drawing adverse conclusion from this that these are only paper transactions and no goods has been received and, therefore, the invoices showing the sales of the goods received under such fictitious invoices to respondent No. 1 would also be fictitious. In view of the above discussion, we hold that the impugned order setting aside the Cenvat credit demand alongwith interest against respondent No. 1 and also setting aside the imposition of penalty on respondent No. 1, 2 and 3 is not correct. The same is set aside and the order-in-original passed by the Adjudic ..... 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