Appeal partially allowed, redemption fine set aside, penalty upheld for involvement in fraudulent activities.

The tribunal partially allowed the appeal by setting aside the redemption fine but upheld the penalty imposition, emphasizing the appellant's involvement in fraudulent activities related to illegal cenvat credit. The judgment was pronounced on 19.1.2018 by Mr. Raju, Member (Technical) at the Appellate Tribunal CESTAT MUMBAI.

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Issues involved:
Confirmation of demand of reversal of cenvat credit, demand of interest, imposition of penalty, and imposition of redemption fine.

Analysis:
1. Confirmation of demand of reversal of cenvat credit, interest, and penalty:
The appellant argued that they availed credit on goods supplied by first stage dealers, claiming to be bona fide recipients without evidence of non-receipt. However, statements from transporter, dealers, and bidders revealed fictitious transactions and diversion of goods to Gujarat. The appellant failed to provide evidence of receipt or utilization of goods. The tribunal noted discrepancies in the invoices and RTO reports, indicating goods purchased directly from manufacturers also diverted. The appellant's involvement in the conspiracy to avail illegal cenvat credit was established, leading to confirmation of demand and penalty imposition.

2. Imposition of redemption fine:
The appellant contested the imposition of redemption fine, citing no seizure of goods. The tribunal differentiated the case from precedent and set aside the redemption fine, as no goods were seized and released against bond, aligning with the Supreme Court's decision in a similar context.

3. Penalty imposition on the appellant:
The appellant claimed innocence as a victim of conspiracy, seeking exemption from penalty. However, the tribunal found the appellant complicit in the intricate web of transactions aimed at falsely claiming credit without receiving goods. Consequently, the penalty imposition was upheld due to the appellant's active participation in the fraudulent scheme.

In conclusion, the tribunal partially allowed the appeal by setting aside the redemption fine but upheld the penalty imposition, emphasizing the appellant's involvement in the fraudulent activities. The judgment was pronounced on 19.1.2018 by Mr. Raju, Member (Technical) at the Appellate Tribunal CESTAT MUMBAI.

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