2022 (8) TMI 827 - AT - Central Excise

Tribunal sets aside Cenvat Credit demands, deems procedural lapse non-substantial

Amod Stamping Pvt Ltd, Tanmay S Patel, Malhotra Transport Co, Golden Logistics, Bhari Golden, Amod Steel Processors Versus C.C.E. & S.T. -Vadodara-I

Amod Stamping Pvt Ltd, Tanmay S Patel, Malhotra Transport Co, Golden Logistics, Bhari Golden, Amod Steel Processors Versus C.C.E. & S.T. -Vadodara-I - TMI Issues Involved:1. Denial of Cenvat Credit to Daman Unit.2. Central Excise Duty Demand on Vadodara Unit.3. Procedural Lapse under Rule 4(6) of the Cenvat Credit Rules, 2004.4. Validity of Transport Documents and Statements by Transporters.5. Personal Penalties on Directors and Transporters.Issue-wise Detailed Analysis:1. Denial of Cenvat Credit to Daman Unit:The primary issue was whether the Daman unit was entitled to Cenvat Credit on inputs (CRGO sheets) sent to the Vadodara unit for job work, under Rule 4(5)(a) of the Cenvat Credit Rules, 2004. The revenue department argued that since the processed goods were not physically returned to the Daman unit but were cleared directly from Vadodara to customers, the Cenvat Credit should be denied. However, the Tribunal found that the Daman unit had paid the Central Excise duty on the finished goods, irrespective of whether they were physically cleared from Daman or Vadodara. The Tribunal held that since the duty was paid by the Daman unit, Cenvat Credit could not be denied.2. Central Excise Duty Demand on Vadodara Unit:The Vadodara unit was alleged to have cleared processed goods directly to customers without returning them to the Daman unit, leading to a demand for Central Excise duty. The Tribunal noted that duty was already paid by the Daman unit on the finished goods. It was held that since the principal manufacturer (Daman unit) had discharged the duty, the demand for duty on the Vadodara unit was not sustainable. The Tribunal emphasized that the duty payment by the principal manufacturer should suffice, and no additional duty could be demanded from the job worker (Vadodara unit).3. Procedural Lapse under Rule 4(6) of the Cenvat Credit Rules, 2004:The Tribunal addressed the procedural lapse of not seeking formal permission under Rule 4(6) of the Cenvat Credit Rules, 2004. It was argued that this was a mere procedural lapse and did not result in any revenue loss. The Tribunal agreed, stating that the failure to obtain such permission did not justify denying Cenvat Credit or raising additional duty demands, as long as the duty was paid by the principal manufacturer.4. Validity of Transport Documents and Statements by Transporters:The Tribunal examined the validity of transport documents and the statements made by transporters, which were used by the revenue department to argue that goods were not transported back to the Daman unit. The Tribunal found that the evidence provided by the revenue was not concrete and that the customers had confirmed receipt of goods under invoices from the Daman unit. It was concluded that the transport documents and statements were not sufficient to prove that goods were not returned to Daman.5. Personal Penalties on Directors and Transporters:The Tribunal also addressed the personal penalties imposed on the directors and transporters. Given that the demands for Cenvat Credit and duty were not sustainable, the Tribunal held that the penalties were also not warranted. The impugned orders were set aside, and all penal actions were dropped.Conclusion:The Tribunal allowed the appeals, setting aside the demands for Cenvat Credit on the Daman unit and the duty on the Vadodara unit. It was held that the duty payment by the Daman unit was sufficient, and no additional demands could be raised. The procedural lapse under Rule 4(6) was deemed non-substantial, and all penalties were dropped. The appeals were allowed with consequential relief as per law.