50% pre deposit ordered for the wrong credit availed on the allegation of receipt of invoice without goods.

PJ-Case law-2013/14-1582

Case:-M/s FERRO CAST INDUSTRIES Vs COMMISSIONER OF CENTRAL EXCISE, COIMBATORE

Citation:-2013-TIOL-672-CESTAT-MAD

Brief Facts:-The applicant filed the stay application for waiver of pre-deposit of duty of Rs.14,79,922/- imposed under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A (2) of the Central Excise Act, 1944 and penalty of equal amount imposed under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 along with appropriate interest imposed under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944.

Appellant’s Contention:-The applicant submits that the applicants are the manufacturers of iron castings, textile machinery parts and automobile components. They procured scrap and other useable steel items from various dealers and manufacturers. The applicant availed CENVAT credit on the basis of the invoices issued by the dealers. The goods supplied by the dealers were used as scrap in the manufacture of final product which has been duly recorded in the statutory records. Thus, there is no evasion of duty and the entire demand is barred by limitation. He further submits that on an identical issue a single member of the Tribunal in the case of M/s. San Turbo Industries Ltd. Vs Commissioner of Central Excise & Service Tax, Coimbatore vide Stay Order No.771 /12, dated 29.08.2012 granted unconditional stay. He also submits that the Hon'ble Delhi High Court in the case of Commissioner of Service Tax, Delhi-II Vs RR Industries reported in 2008 (228) E.L.T.347 (Del.) dismissed the appeal filed by the Revenue on a identical issue.

Respondent’s Contention:-Respondent submits that in this case there is a clear evidence that the applicant connived with the dealers and availed illegal credit. He relied upon the Single Member Bench decision of this Tribunal Ellen Industries Vs Commissioner of Central Excise, Coimbatore reported in2012 (282) E.L.T.590 (Tri.- Chennai) = (2012-TIOL-1115-CESTAT-MAD). He submits that the Tribunal in that case directed the applicant to pre-deposit 50% of duty on the stay application.

Reasoning of Judgement:- After hearing both sides and on perusal of the records, it is found from the impugned order that the applicant received scrap on the basis of invoices issued by M/s. Leadsman Enterprises. The proprietor of M/s. Leadsman Enterprises in his statement admitted that he had not received any scrap from M/s. Karpagam Steel, M/s. Sky & Sky Corporation but only received invoices. It is also stated that he has supplied only scrap material to the applicant purchased from open market. Thus, it is apparent that the goods received by the applicant from M/s. Leadsman Enterprises are not duty paid. Prima facie, we find that there is connivance between the applicant and the dealer and, therefore, the case laws relied upon by the learned counsel would not apply. It is noted that the adjudicating authority also imposed penalties on all the persons involved in the racket of "illegal dealer invoices". Hence, the applicant failed to make out a prima facie case for waiver of pre-deposit of entire amount of duty and penalty. Accordingly, the applicant is directed to deposit 50% of duty within eight weeks from the date of receipt of this order. After deposit of the said amount, pre-deposit of balance amount of duty and penalty alongwith interest would be waived and recovery thereof stayed during the pendency of the appeal.

Decision:-50% Pre-deposit ordered.

Comment:-The substance of this case is that denial of cenvat credit is for sure when the credit is taken on the basis of manipulated invoices without any receipt of goods.

Comments

PJ-Case law-2013/14-1582

Post a Comment

Query