2013 (1) TMI 123 - AT - Central Excise

Tribunal grants relief to appellants, finding duty demands unsustainable. Correct CENVAT credit usage upheld.

BHAGWATI STEELCAST LTD & Others Versus COMMISSIONER OF CENTRAL EXCISE, NASHIK

BHAGWATI STEELCAST LTD & Others Versus COMMISSIONER OF CENTRAL EXCISE, NASHIK - 2013 (293) E.L.T. 417 (Tri. - Mumbai) Issues Involved:1. Demand of duty on account of duplicate/parallel invoices.2. Demand of duty on account of dealers' invoices where vehicles were found to be non-transport vehicles as per RTO's report.3. Demand of duty in respect of invoices issued by dealers based on ship breakers' invoices.4. Whether the demands are barred by limitation.5. Imposition of penalties and interest.Issue-Wise Detailed Analysis:1. Demand of Duty on Account of Duplicate/Parallel Invoices:The department argued that the appellants availed CENVAT credit based on duplicate/parallel invoices issued by dealers, which did not find any entry in the RG-23D register maintained by the dealers. The appellants contended that the invoices issued to them bore the entry number of the RG-23D register and that any error in the serial numbers was due to human error or programming issues. The Tribunal found that the appellants received the goods under proper invoices, which were not disputed by the Revenue. The Tribunal held that the appellants could not be denied credit for the fault of the dealer, and the department should take action against the dealer instead.2. Demand of Duty on Account of Dealers' Invoices Where Vehicles Were Found to Be Non-Transport Vehicles as Per RTO's Report:The department argued that the vehicles mentioned in the invoices were incapable of transporting iron and steel scrap, indicating that the goods were not actually received. The appellants contended that human error in mentioning vehicle numbers could not be ruled out and that they had received the scrap physically. The Tribunal found that the appellants did not provide any documentary proof such as transport bills or lorry receipts to support their claim. However, the Tribunal held that the burden of proof lay on the department to prove that the appellants did not receive the goods, and the department failed to provide concrete evidence.3. Demand of Duty in Respect of Invoices Issued by Dealers Based on Ship Breakers' Invoices:The department argued that the ship breakers' invoices were not genuine as some suppliers had closed their manufacturing activities, and the goods did not cross the Gujarat border. The appellants contended that re-rollable scrap could be used as melting scrap and that they had taken reasonable steps to verify the authenticity of the invoices. The Tribunal found that the appellants had received the goods and that the department's reliance on the letters from the Sales Tax authorities was not sufficient to deny credit. The Tribunal held that the appellants had taken all reasonable steps as required under the law.4. Whether the Demands Are Barred by Limitation:The appellants argued that the extended period of limitation could not be invoked as they were not aware of any fraud committed by the dealers. The department contended that the appellants were working under the Self-Assessment Scheme and were responsible for the correctness of the information furnished. The Tribunal found that the department had initiated investigations against the dealers as early as 2001, and the appellants could not be held responsible for any delay in action by the department. The Tribunal held that the extended period of limitation was not justified.5. Imposition of Penalties and Interest:The appellants argued that they had acted in good faith and had not willingly sought to avail credit that was not available to them. The department contended that the appellants had intentionally availed inadmissible CENVAT credit. The Tribunal found that there was no evidence of collusion or fraud on the part of the appellants and that they had taken all reasonable steps to verify the authenticity of the invoices. The Tribunal held that no penalties or interest were imposable on the appellants.Conclusion:The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, holding that the appellants had correctly availed CENVAT credit and that the demands were not sustainable on the grounds of discrimination, lack of concrete evidence, and non-fulfillment of the burden of proof by the department. The Tribunal also held that the extended period of limitation was not justified and that no penalties or interest were imposable on the appellants.