2011 (10) TMI 69 - AT - Central Excise

Tribunal overturns Commissioner's order due to failure to consider evidence under Cenvat Credit Rules

The Tribunal set aside the Commissioner's order in appeals challenging the recovery of wrong credit under Cenvat Credit Rules, 2004, due to the lower ... Wrong availment of cenvat credit - fraudulent activity - Held that:- it appears that all the evidentiary materials on record were duly considered by the adjudicating authority. The affidavit in question was not before that authority. Even the assessee (GS Alloy Castings Pvt. Ltd.) did not rely on any such affidavit in their reply to the show-cause notice. It is surprising to note that the appellate authority chose to permit the assessee to bring on record the said affidavit. - A crucial fact was either overlooked or ignored by the appellate authority and the same is that an amount equal to the credit in question was paid by the assessee prior to issue of show-cause notice and the same was appropriated by the adjudicating authority. - Coupled with this is the fact that the said payment was not under protest and that this payment was made close on the heels of admission of lapse under Section 14 of Central Excise Act. - Matter remanded to commissioner (appeals) for fresh decision. Issues:1. Appeal against Order-in-Original No. 05/2009-C.E. dated 29.5.2009 passed by the Assistant Commissioner.2. Allegations of wrong credit availed fraudulently under Cenvat Credit Rules, 2004.3. Discrepancy in description of goods in invoices and physical receipt of material.4. Applicability of penalties under various rules.5. Admissibility of fresh evidence at the appellate stage.Analysis:1. The appeals filed by the department challenged the Commissioner (Appeals) order setting aside Order-in-Original No. 05/2009-C.E. The original authority had ordered recovery from a company towards wrong credit availed fraudulently under Cenvat Credit Rules, 2004. The appellate authority set aside the order citing the lower authority's ignorance of documentary evidence submitted by the company. The appellate authority allowed the company to adduce fresh evidence, including an affidavit not presented before the adjudicating authority, leading to the setting aside of the original order.2. In one appeal, the respondent had taken CENVAT credit on invoices describing goods differently from what was received. The department alleged fraudulent availment of credit without physical receipt of material, which was contested by the respondent. The adjudicating authority imposed penalties after finding the credit availed fraudulently. The Commissioner (Appeals) set aside this decision, leading to the Revenue's appeal challenging the lack of corroborative evidence supporting the demand.3. The Revenue contended that the Commissioner (Appeals) erred in finding no corroborative evidence for the demand, citing discrepancies in the description of goods in the invoices and the actual material received. The department highlighted the mismatch between the goods described in the invoices and the material physically received, emphasizing the need for setting aside the Commissioner's order.4. The Counsel for one party supported the Commissioner's decision, while another party sought an adjournment due to the inability to appoint a counsel. The request for adjournment was denied due to sufficient time available for representation.5. The Tribunal found merit in the department's submissions, emphasizing that all evidentiary materials were considered by the adjudicating authority, and the appellate authority's allowance of new evidence lacked a valid reason. The Tribunal noted the payment made by the assessee prior to the show-cause notice, which was not under protest, indicating an admission of lapse under the Central Excise Act. The Tribunal set aside the Commissioner's order and remanded the appeals for a fresh decision without considering the additional affidavit, emphasizing the need to base decisions on original record materials.