2013 (12) TMI 871 - AT - Central Excise

Tribunal Upholds Decision on Cenvat Credit Dispute

The Tribunal upheld the lower authority's decision, rejecting the appellant's appeal regarding disputed Cenvat credit on scrap of Mild Steel purchased ... Credits taken did not relate to the goods that were received – Cenvat credit taken on scrap of Mild Steel – Held that:- The duty payment against which appellant had taken credit was not relating to material used in manufacture by the appellant is fairly clear - the contention of the appellant that they were not aware of the fraudulent nature of the document cannot be accepted - There were inherent contradictions that can be seen in the document with regard to price and also the mismatch of the description of goods vis-à-vis., goods received by the appellant -they had accounted the raw material and paid duty on the final product manufactured out of it does not in any way prove that duty was paid on the raw material – decided against Assessee. Issues: Dispute over Cenvat credit on scrap of Mild Steel purchased from second stage dealers leading to alleged fraudulent credit and subsequent recovery action.In this case, the dispute revolves around the Cenvat credit amounting to Rs.1,07,900/- taken by the appellant during a specific period on scrap of Mild Steel bought from second stage dealers. The Revenue's investigation revealed discrepancies in the documents provided by these dealers, indicating that the credits were based on fraudulent transactions. The second stage dealers obtained invoices for MS Wire Coils from another entity, which were then sold as scrap to the appellant with duty payment shown. The appellant, in their defense, claimed they were not aware of the fraudulent nature of the documents and had manufactured goods out of the received scrap, paying duty on the final product. However, the Revenue argued that the discrepancies in pricing and description of goods clearly pointed towards fraudulent activities. The lower authorities confirmed the demand against the appellant, including interest and penalty. The appellant's appeal to the Commissioner (Appeals) did not result in any relief, leading to the current appeal before the Tribunal.The Tribunal noted the repeated adjournments sought by the appellant, indicating a potential attempt to prolong the proceedings without valid reasons. Upon hearing the arguments from the Revenue's side and examining the case records, the Tribunal observed that the duty payment associated with the credit taken by the appellant did not correspond to the actual material used in manufacturing. The appellant's defense of being unaware of the fraudulent nature of the documents was rejected due to evident contradictions in pricing and goods description. Despite the appellant accounting for the raw material and paying duty on the final product, it did not establish the duty payment on the disputed raw material. Consequently, the Tribunal upheld the lower authority's decision, rejecting the appeal and affirming the demand, interest, and penalty imposed on the appellant.