2018 (6) TMI 728 - AT - Central Excise

Appeal dismissed for denied cenvat credit; fabricated evidence leads to penalties.

United Rubber Industries (India) P. Ltd., Biravu Navin Rai, Sailen Kumar Jana Versus CCE, Thane- III

The tribunal dismissed the appeal, upholding the denial of cenvat credit under Rule 16 of the Cenvat Credit Rules for rejected material not disposed of in ... Rejected goods - CENVAT credit - Rule 16 of Cenvat Credit Rules - material rejected by their buyers which was brought back into the factory - Whether the said goods were disposed of in terms of Rule 16 or not? - Held that:- The appellants were receiving goods rejected by their buyer and they were availing credit. The appellants have not maintained any record to show that the goods were processed and cleared on payment of duty after repairs. After the case was booked, the appellants have created a table on the basis of the memory as dictated by the CEO. The same cannot be admitted as any evidence - it would appear that the appellants have not been able to establish that the goods on which credit was taken were processed and cleared on payment of duty. In these circumstances, the appeal cannot succeed and is dismissed. Penalty on Biravu Navin Rai - Held that:- It is noticed that he had tried to fabricate and introduce a chart as evidence in the proceedings. It is obvious that he was fully aware of the issue and therefore, his liability to penalty cannot be set aside. Appeal dismissed - decided against appellant. Issues:- Demand of duty and imposition of penalties for availing cenvat credit under rule 16 of Cenvat Credit Rules in respect of material rejected by buyers.Analysis:1. The appellants, manufacturers of rubber products, claimed cenvat credit under Rule 16 for rejected material brought back into the factory. The main issue was whether the goods were disposed of in compliance with Rule 16.2. The revenue contended that the goods were not reprocessed but cut and scrapped based on statements from various employees and the CEO. The appellants failed to maintain records as required under Rule 16.3. The appellant's counsel argued that lack of separate records does not justify denying credit, emphasizing that repair work included reprinting, clamp refitting, and cleaning.4. The Authorized Representative supported the revenue's position, citing statements confirming no repair work was done on the rejected goods, leading to denial of credit.5. The tribunal observed the lack of evidence showing the goods were processed and cleared after repairs. The CEO and employees confirmed no repair work in daily reports, leading to dismissal of the appeal.6. Regarding the CEO's attempt to introduce a fabricated chart as evidence, the tribunal found awareness of the issue, upholding his liability for penalties and dismissing his appeal.