2013 (8) TMI 609 - AT - Central Excise

Transport Record Discrepancies Not Grounds to Deny Cenvat Credit

M/s Sharad Electronics and others Versus CCE, Delhi-IV

The Judge found discrepancies in transport records and alleged overloading of vehicles insufficient to deny cenvat credit, noting lack of inquiries with ... CENVAT credit - cenvat credit was denied on the basis of enquiry conducted with the transporters - Held that:- Prima-facie the ground for denying the cenvat credit was doubtful - the denial of cenvat credit was on the basis that on the date of supply as mentioned in the invoices - the transport of the goods covered by the invoices was not mentioned in the diaries maintained by the drivers - The ground for denial of cenvat credit also appeared to be without any basis when on this point, no inquiry had been made with the driver and the vehicle owners confirm having transported the goods covered under the invoices - The major demand is on the basis that the weight of the goods mentioned in the impugned invoices is much more than the weight which the vehicles can legally carrying and hence the goods covered under these invoices have not been transported. Stay Application - The amount already deposited by the appellant was sufficient for hearing the appeal - the requirement of pre-deposit of balance amount of cenvat credit demand, interest thereon and penalty was waived for hearing of his appeal and recovery and was stayed - Stay granted. Issues: Allegations of cenvat credit fraud based on discrepancies in transport records and invoices.Analysis:The case involved allegations of cenvat credit fraud against a company engaged in manufacturing plastic parts, based on discrepancies in transport records and invoices from registered dealers. The main appellant was accused of availing cenvat credit amounting to Rs. 34,12,606/- using invoices from two dealers. The department conducted an inquiry, recording statements of involved parties, including the main appellant, CEOs of dealers, and transporters. Discrepancies arose as some vehicle owners denied transporting goods, while others confirmed. The department alleged that the weight of goods exceeded vehicle capacities and issued a show cause notice. The Additional Commissioner confirmed the cenvat credit demand and imposed penalties on the main appellant and other noticees. Appeals were filed challenging this decision, and stay applications were submitted.The Commissioner (Appeals) upheld the Additional Commissioner's decision, reducing penalties for some noticees. The main appellant's counsel argued that the allegations lacked substance, emphasizing discrepancies in the department's inquiry and lack of driver statements. The counsel contended that most cenvat credit demands were unjustified, except for a minimal amount. The counsel also argued against penalties, citing a deposit made during the investigation. The department opposed the stay applications, citing findings regarding bogus invoices and shortages found during a visit to the main appellant's premises.After considering submissions and records, the Judge found the grounds for denying cenvat credit doubtful. The denial was primarily based on discrepancies in transport records and alleged overloading of vehicles. The Judge noted that the denial lacked a solid basis, especially when no inquiries were made with drivers who confirmed transporting goods. The Judge also highlighted that findings regarding bogus transport documents did not implicate the transporter in question. Consequently, the Judge waived the pre-deposit requirement for the main appellant and other noticees, staying the recovery of penalties. The stay applications were disposed of accordingly.