CESTAT Kolkata Rejects Revenue Appeal In Alleged Bogus Clearance And CENVAT Credit Case
Background Of The Dispute
The matter in Commissioner of C.G.S.T. And Central Excise Vs C.P. Re-Rollers Limited arose out of departmental proceedings alleging misuse of CENVAT credit and issue of central excise invoices without actual movement of goods. The core dispute revolved around whether central excise duty of Rs.1,28,39,192/- could be demanded again when it was undisputed that duty on the same clearances had already been paid by the assessee.
The adjudicating authority had earlier dropped the demand, interest and penalty, which prompted the Revenue to challenge that decision before the CESTAT, Kolkata.
Facts As Emerged From Investigation
Intelligence And Initial Allegations
Departmental intelligence suggested that the respondent, C.P. Re-Rollers Limited, was:
- Availing and utilizing CENVAT credit on
M.S. Scrapallegedly shown as procured fromM/s. Shyam Sky Steel, Kolkatawithout actual receipt of raw materials, and - Issuing central excise invoices to the same dealer (
M/s. Shyam Sky Steel) without physically supplying any finished goods.
It was alleged that these were merely paper transactions aimed at availing irregular CENVAT credit and manipulating statutory records.
Search And Scrutiny Of Records
On 17.01.2017, a search was conducted at the factory premises of the respondent. Scrutiny of records for financial year 2014-15 revealed:
- CENVAT credit of
Rs.97,93,739/-had been taken on the strength of invoices issued byM/s. Shyam Sky Steel. - The respondent had issued central excise invoices in favour of
M/s. Shyam Sky Steelshowing clearances of3360.400 M.T. of TMT bars, involving central excise duty ofRs.1,28,39,192/-during the same period.
Thus, both on the input and output sides, the Department alleged transactions without actual movement of goods.
Statements Recorded
During investigation:
Proprietor of M/s. Shyam Sky Steel
- In his statement, he claimed that all purchases and sales shown in their books with the respondent were only book entries.
- He categorically stated that no physical transfer of goods had taken place against these invoices.
Representative of the respondent (assessee)
- His statement did not support or accept the version given by the proprietor of
M/s. Shyam Sky Steel. - On this basis, the Department built a case that the respondent had issued invoices without accompanying supply of goods.
- His statement did not support or accept the version given by the proprietor of
Proceedings Before The Adjudicating Authority
Department’s Case At Original Stage
The Revenue alleged that:
- The respondent had issued invoices for
TMT barsweighing3360.400 M.T.involving duty ofRs.1,28,39,192/-without actually removing goods from the factory toM/s. Shyam Sky Steel. - The same quantity had been shown as cleared in the stock register, implying that the goods had, in fact, left the factory.
- Since the dealer allegedly never received the goods, the clearances were characterized as clandestine removals to unidentified buyers without proper accounting or documentation.
Consequently, the Department proposed:
- Demand of central excise duty of
Rs.1,28,39,192/- - Recovery of interest
- Imposition of penalty on the respondent
Findings Of The Adjudicating Authority
The adjudicating authority examined the evidence and arrived at the following key conclusions:
Duty Paid Is Undisputed
- It was accepted on record that central excise duty was actually paid by the respondent on all the clearances covered by the disputed invoices.
No Evidence Of Actual Diversion
- Though the Revenue alleged that the goods had been diverted to other customers instead of `M/s.