Tribunal grants unconditional stay on Cenvat credit and duty demand, penalties

The Tribunal granted an unconditional stay on both the Cenvat credit demand and duty demand, along with associated penalties, in favor of the appellant company and its director. This decision was based on the lack of sustainable evidence and arbitrary adoption of norms by the Commissioner.

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Issues:
1. Allegation of taking Cenvat credit based on bogus invoices.
2. Allegation of underreporting production by inflating power consumption.

Analysis:
1. The appellant company was accused of taking Cenvat credit amounting to Rs. 5,50,50,489 based on alleged bogus invoices of copper ingots from M/s V.K. Metal Works, Jammu. The Commissioner confirmed this demand along with penalties. The appellant argued that the same allegation against M/s V.K. Metal Works was not sustainable as per a Tribunal stay order, which also considered the existence of M/s Kanpur Kashmir Roadways. The Tribunal found a prima facie case in favor of the appellant and granted an unconditional stay on the Cenvat credit demand.

2. The second allegation against the appellant was underreporting production by inflating power consumption, leading to a duty demand of Rs. 32,06,93,486. The Commissioner adopted a power consumption norm of 346 units per MT, disregarding fluctuations due to power breakdowns and voltage fluctuations. The appellant contended that this norm was arbitrary and did not consider valid reasons for power consumption variations. They cited legal precedents where allegations based solely on power consumption norms were deemed unsustainable. The Tribunal agreed with the appellant, finding that the duty demand was not sustainable due to lack of evidence of unaccounted raw material purchase and arbitrary adoption of power consumption figures. Therefore, the Tribunal waived the pre-deposit requirement for the duty demand, interest, and penalties, allowing a stay on recovery.

In conclusion, the Tribunal granted an unconditional stay on both the Cenvat credit demand and duty demand, along with associated penalties, in favor of the appellant company and its director, based on the lack of sustainable evidence and arbitrary adoption of norms by the Commissioner.

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