2016 (9) TMI 33 - AT - Central Excise

Denial of credit based on import discrepancies upheld, penalties confirmed, extended limitation period demand set aside.

The case involved the denial of credit to M/s. Copper Semis Pvt. Ltd. based on discrepancies revealed in a show-cause notice from M/s. Nakoda Trading ... Imposition of penalty - credit taken on the strength of invoice received from M/s. Nakoda Trading Corporation has been denied - M/s. Nakoda Trading Corporation had not received the imported goods at all - sale of imported goods to the appellants and the countervailing duty paid on the imported goods was transferred to the appellant by issue of invoices, on which the appellant had taken the credit - Held that:- it is found that earlier in the case of another noticee in the same proceedings, namely, Shri Satish Agarwal, Partner of M/s.Time & Space Haulers, against whom penalty was dropped by the impugned order, the Revenue had withdrawn the appeal by filing a miscellaneous application. The said appeal was allowed to be withdrawn, as the amount of penalty was below the threshold limit prescribed in the litigation policy. In the case of Shri Pradeep Gaur, the facts are identical and the penalty imposed is ₹ 2.00 lakhs which is below the threshold limit prescribed in the litigation policy. In view of the above, the appeal filed by the Revenue in the case of Shri Pradeep Gaur is dismissed. Invokation of extended period of limitation - Demand - credit taken during 2005 has been raised in 2010 - Held that:- the order-in-original does not record any ground for upholding the extended period of limitation and also does not examine the documents submitted by the appellants to establish that they have indeed received the goods. In the impugned order also no suppression mis-declaration or fraud on the part of the appellant has been pointed out. No statements or other evidence has been shown to indicate any role of the appellant in the alleged fraud. The impugned order does not dispute that goods have been received by the appellants along with the said invoice. Therefore, in the absence of any specific allegation of mis-declaration, suppression, fraud or collision on the part of the appellant extended period of limitation cannot be invoked against the appellants. The demand is therefore set aside as barred by limitation. - Decided in favour of appellant Issues:1. Denial of credit based on show-cause notice from M/s.Nakoda Trading Corporation.2. Confirmation of demand and penalty on M/s.Copper Semis Pvt. Ltd.3. Challenge on non-imposition of penalty on Shri Pradeep Gaur by Revenue.4. Invocation of extended period of limitation for credit taken during 2005.5. Examination of evidence submitted by appellants.6. Cross-examination denial and burden of proof on appellant.7. Application of case laws related to suppression, fraud, and extended period.8. Argument on fraud committed by importer justifying extended period.9. Lack of fraud allegations against appellants.10. Setting aside demand due to absence of fraud allegations.Analysis:1. The judgment revolves around the denial of credit to M/s.Copper Semis Pvt. Ltd. based on a show-cause notice from M/s.Nakoda Trading Corporation, alleging non-receipt of imported goods. Investigations revealed discrepancies, leading to confirmation of demand and penalty on the company.2. The Commissioner (Appeals) upheld the demand and penalty on M/s.Copper Semis Pvt. Ltd. but excluded Shri Pradeep Gaur from the penalty. The Revenue challenged this exclusion, citing similar cases where penalties were withdrawn due to threshold limits, leading to the dismissal of the appeal against Shri Pradeep Gaur.3. The appellant argued the invocation of an extended period of limitation for credit taken in 2005, emphasizing the submission of evidence like weighbridge receipts and invoices to prove receipt of goods. However, the original adjudicating authority failed to examine these crucial documents, leading to a lack of evidence supporting the demand.4. The appellant raised concerns about the denial of cross-examination and the burden of proof placed on them to establish the goods' authenticity. They argued against the reliance on statements without allowing cross-examination, highlighting the lack of direct evidence linking them to any fraudulent activities.5. The judgment discussed various case laws related to suppression, fraud, and the invocation of extended periods. The appellant's counsel emphasized the absence of fraud allegations against the appellants and the necessity of specific allegations to justify the extended period of limitation.6. The AR relied on case laws to argue that fraud by the importer justified invoking the extended period, even if the appellants were not directly involved. However, the judgment emphasized the lack of fraud allegations against the appellants, leading to the setting aside of the demand due to the absence of specific allegations justifying the extended period.