2019 (8) TMI 1546 - AT - Central Excise

Tribunal sets aside order, citing lack of intent, procedural lapses, and illegal recovery.

M/s. Byrnihat Ispat Private Limited (Unit-I), (Unit-II), Shri Bhagwati Prasad Agarwala, Director Versus Commissioner of Central Excise & Service Tax, Shillong

M/s. Byrnihat Ispat Private Limited (Unit-I), (Unit-II), Shri Bhagwati Prasad Agarwala, Director Versus Commissioner of Central Excise & Service Tax, ... Issues Involved:1. Alleged paper clearances for availing erroneous refund under Notification No. 32/1999-CE.2. Non-existence of buyers and non-movement of goods.3. Irregular availment of Cenvat credit.4. Legality of recovery proceedings without reviewing refund orders.5. Imposition of penalty on the Director.Issue-Wise Detailed Analysis:1. Alleged Paper Clearances for Availing Erroneous Refund:The central issue was whether Units I and II resorted to paper clearances to fraudulently avail refunds under Notification No. 32/1999-CE. The notification aimed at promoting industrialization by granting refunds equivalent to the amount of duty paid in cash. The adjudicating authority accepted that the buyers were non-existent and ruled out double benefits, thereby making the exercise revenue-neutral. Consequently, the demand confirmed by invoking the extended period was set aside, following the Supreme Court's decision in Nirlon Ltd. The Tribunal held that no intent to evade duty could be attributed to Unit II, as the entire exercise was tax neutral.2. Non-Existence of Buyers and Non-Movement of Goods:The investigation alleged that there was no actual movement of goods and that the buyers were non-existent. The Tribunal found that the allegations of non-movement of goods were incorrect, as the goods cleared from Unit II had passed through the Byrnihat Check Gate, certified by the Superintendent of Taxes. The Tribunal also noted discrepancies in the vehicle numbers mentioned in the invoices and those referred to in the notice, undermining the investigation's credibility. The Tribunal concluded that the investigation was half-hearted and full of infirmities.3. Irregular Availment of Cenvat Credit:The adjudicating authority alleged irregular availment of Cenvat credit for 25 consignments involving 447 MT of ingots procured from Unit I. The Tribunal found that the charge was generalized without verifiable evidence. The Tribunal noted that the movement of goods between Unit I and Unit II, located within the same compound, did not require interception at any sales tax check post. The Tribunal set aside the denial of Cenvat credit, finding the allegations baseless.4. Legality of Recovery Proceedings Without Reviewing Refund Orders:The Tribunal addressed the legal contention that recovery proceedings initiated without reviewing the refund orders were illegal. The Tribunal referred to the decisions of the Guwahati High Court in Amalgamated Plantations Private Limited and the Madras High Court in Eveready Industries India, which held that parallel proceedings for recovery under Section 11A were not maintainable if the refund orders were not reviewed or appealed against under Section 35E(2). The Tribunal found that the adjudicating authority had passed a non-speaking order by not specifically addressing this contention.5. Imposition of Penalty on the Director:The Tribunal held that since the grant of refund was not erroneous, the imposition of penalty on the Director under Rule 26 of the Central Excise Rules was unsustainable and unjustified. The Tribunal set aside the penalty imposed on the Director.Conclusion:The Tribunal set aside the impugned order on multiple grounds, including the lack of intent to evade duty, the revenue-neutral nature of the transactions, procedural lapses in the investigation, and the illegality of recovery proceedings without reviewing refund orders. The appeals were allowed with consequential reliefs.