Penalty on wrong CENVAT Credit availed solely based upon Statements cannot be confirmed unless stood the test u/s 9(D) of Central Excise Act: CESTAT [Read Order]

The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Penalty on wrong CENVAT credit availed solely based upon statements cannot be confirmed unless stood the test u/s 9(D) of Central Excise Act,1962.

Shri Sanjay Kumar Singh, Authorised Representative appeared for the Revenue and Shri Vijay Kumar, Advocate appeared for the respondent-assessee.

M/s Mittal Pigments Pvt. Ltd.is engaged in the manufacture of various excisable products viz. Lead & Alloy Ingot, Lead Chloride, Lead Acetate, Zinc Oxide, Zinc Alloy, Zinc Ingot, Tri Basic Lead Sulphate (TBLS), Litharge (Lead Oxide), Red Lead, Grey Oxide, Antimony Tri Oxide Antimony Triacetate, Antimony Metal, Ferrous Sulphate etc. They were availing Cenvat Credit of duty paid in terms of Cenvat Credit Rules, 2004 (CCR)

Department got information that Shri Amit Gupta was operating some registered dealer companies inter-alia namely (i) M/s Brilliant Metals (P) Ltd., New Delhi (“M/s BMPL”) (ii) M/s Unnati Alloys (P) Ltd., Jaipur (“M/s UAPL”) (iii) M/s Moral Alloys (P) Ltd., Delhi (“M/s MAPL”) etc. and is issuing the invoices with intent to passing on inadmissible Cenvat credit to numerous manufacturers and dealers without delivery of the goods with the invoices. 

The manufacturers used to procure the market scrap without bills on a cash basis and did not account for the same in their books of account. To cover up such unaccounted purchases and to avail of cenvat credit, they used to procure Cenvatable invoices of prime metal from the dealer companies operated by Shri Amit Gupta withoutbeing accompanied by the goods. 

The Commissioner (Appeals) has appreciated that M/s.  Mittal Pigments  Pvt Ltd. was not allowedto cross-examine Shri Amit Gupta. It was observed that theprocedure for consideration ofthe statements recorded during the investigation to be admissible intothe evidence is prescribed under section 9D of the Central Excise Act.  

The CESTAT bench consisting of P Venkata Subba Rao, member(technical) and Dr Rachna Gupta, member(judicial) held that “any findings solely based upon the statement scan not be confirmed against M/s.  Mittal Pigments Pvt Ltd. unless those statements have stood the test of Section 9(D) of the Central Excise Act. “

The bench observed that the case was based on the set of investigations, statements anddocuments and upheld the order passed by the Commissioner (Appeals).  The appeal of the Department was dismissed. 

Support our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.