2014 (12) TMI 409 - AT - Central Excise

Tribunal Upholds Fraudulent Cenvat Credit Allegations, Requires 50% Pre-Deposit

ARJANDAS METALS INDUSTRIES PVT LTD, ARJANDAS KASHYAP Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI

The tribunal found substantial evidence supporting allegations of fraudulent availment of Cenvat Credit against the appellant, based on document ... Fraudulent availment of Cenvat Credit - No Opportunity for cross examination given - Held that:- the non-receipt of the goods by the appellants is duly supported by the statement of transporter, the type of the vehicles used and the communication received from the Octroi authorities and this is sufficient to prove the case against the appellant that they did not receive the goods. Therefore, the denial of cross examination of the broker or of the suppliers has not prejudicially affected the appellants as the case against the appellant can be established even without these statements. It is clear that the entire availment of credit is only on the strength of documents without actual receipt of the goods. Therefore, we are of the prima facie view that the appellant has not made out any case for grant of waiver of pre-deposit of dues adjudged against the appellant. However, in the absence of a prima facie case, the interest of revenue needs to be protected. Accordingly, we direct the appellant to make a pre-deposit of 50% of the duty demand confirmed against the appellant within a period of eight weeks - Partial stay granted. Issues:- Denial of opportunity for cross-examination- Allegations of fraudulent availment of Cenvat Credit- Financial hardship pleaDenial of opportunity for cross-examination:The appellant argued that the case relied heavily on statements from suppliers and a broker without granting an opportunity for cross-examination, violating principles of natural justice. However, the tribunal found substantial evidence on record establishing the case against the appellant. The tribunal highlighted that the appellant must prove receipt of goods based on transport documents. It was revealed that some transporters denied transporting goods, vehicles used were inappropriate for scrap transportation, and Octroi authorities confirmed discrepancies in transportation details. Consequently, the tribunal concluded that the denial of cross-examination did not prejudice the appellant as the case against them was established without those statements. The tribunal held that the appellant failed to demonstrate a legitimate case for a waiver of pre-deposit of dues.Allegations of fraudulent availment of Cenvat Credit:The tribunal noted that the appellant allegedly availed ineligible Cenvat Credit without actually receiving goods, solely based on documents. It was found that evidence, including transporter statements and Octroi authorities' confirmation, supported the claim that goods were not received by the appellant. The tribunal emphasized that the entire credit availed was document-based, lacking actual receipt of goods. Consequently, the tribunal held that the appellant did not establish grounds for a waiver of pre-deposit of confirmed dues. The tribunal directed the appellant to make a 50% pre-deposit of the confirmed duty demand within a specified period, failing which the appeals would be dismissed.Financial hardship plea:Although the appellant cited financial hardship due to factory closure, no substantial evidence was presented to support this claim. Despite considering the plea, the tribunal emphasized the need to protect the revenue's interest. Consequently, the tribunal directed the appellant to make the specified pre-deposit, failing which the appeals would be dismissed without further notice. The tribunal's decision aimed to balance the appellant's financial concerns with the revenue's interests, ensuring compliance with the pre-deposit requirements.