Unclear Whether Excise Duty can be Demanded on Alleged Diversion of Goods when Duty already Paid: CESTAT Rejects Appeal [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Kolkata Bench, rejected an appeal wherein it was unclear whether excise duty can be demanded on alleged diversion of goods when the duty was already paid.

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The facts of the case are that intelligence was gathered to allege that the respondent-company, M/s. C.P. Re-Rollers Limited, was engaged in issuing central excise invoices only to M/s Shyam Sky Steel without supplying any goods. On 17.01.2017, after search and scrutiny, it was found that the respondent had availed CENVAT Credit on the strength of invoices issued by Shyam Sky Steel.

Shyam Sky Steel, through their proprietor, recorded that all the sales and purchases made by them were book entries and that no transfer of goods took place. The respondent contradicted this statement.

The adjudicating authority noted that the goods had been diverted to some other customers, and no other customer has been identified, and so dropped the charges against the respondent along with interest and penalty.

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The authorized representative (AR) of the Revenue then appealed before the CESTAT. The tribunal observes that the Revenue is itself confused as to whether duty can be demanded from the respondent on alleged diversion of the goods, when duty has already been paid by the respondent.

Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) did not find any merit in the appeal filed by the Revenue and dismissed the same.

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