Appellant's Improper Cenvat Credit Leads to Tribunal's Ruling on Deposit and Waiver

The Tribunal found that the appellant unit availed wrongful Cenvat Credit based on invoices with incorrect consignee addresses, leading to a demand, interest, and penalty. Despite the appellant's argument of machinery return, evidence showed five out of seven machines at a different unit with no proof of return. The Tribunal directed a deposit of Rs. 1,00,000/- within four weeks, waiving the pre-deposit for the remaining demand, interest, and penalty pending compliance, and stayed recovery for the appeal.

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Issues: Allegation of wrongful Cenvat Credit availed by the appellant unit based on invoices with incorrect consignee address.

Analysis:
The appellant company, with two manufacturing units in Gurgaon, faced allegations of availing Cenvat Credit amounting to Rs. 6,74,582/- based on invoices with the consignee address of the second unit instead of the actual unit where the machinery was installed. The Joint Commissioner confirmed the demand, interest, and penalty after verification revealed that only two out of seven machines covered by the invoices were installed in the intended factory. The Commissioner (Appeals) upheld this decision. The appellant argued that the machinery transferred to the other unit was on a return basis, and the goods covered by the invoices were eventually received back at the Manesar unit. The appellant requested a waiver of the pre-deposit for the appeal.

The appellant's counsel contended that despite the consignee address discrepancy, the machinery was installed at the correct unit, and the transferred machinery was returned. However, the Joint Commissioner's findings indicated that five out of seven machines were at the Naharpur unit, with no evidence of their return to the Manesar unit. The stay application was opposed, emphasizing the lack of evidence regarding the use of dies and inputs in the Manesar unit and the absence of verification showing the return of machinery to the correct unit. The Tribunal considered both arguments and examined the records.

The Tribunal found that five machines covered by the invoices were indeed at the Naharpur unit, with no proof of their return to the Manesar unit. Additionally, there was no verification to confirm that the Naharpur unit did not claim Cenvat Credit based on the same invoices. Consequently, the Tribunal directed the appellant to deposit Rs. 1,00,000/- within four weeks, with further compliance due by a specified date. Upon this deposit, the pre-deposit requirement for the remaining Cenvat Credit demand, interest, and penalty would be waived for the appeal's hearing, and recovery would be stayed.

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