2010 (1) TMI 1004 - AT - Central Excise

Summary

Issues involved: Fraudulent availment of Cenvat credit based on bogus invoices without material supply, validity of show cause notice, evidentiary value of statements, capability of vehicle for material transportation, imposition of penalty.

Fraudulent Cenvat Credit: The appellant, a manufacturer of PVC insulated wire, was found to be issuing invoices without dispatching any material, enabling customers to avail Cenvat credit without actual receipt of goods. Investigation revealed invoices for material quantities exceeding the capacity of the vehicle mentioned, a Maruti Van, owned by the manufacturer. The Asst. Commissioner confirmed the demand of Cenvat credit fraudulently availed, imposing a penalty. On appeal, the Commissioner (Appeals) set aside the order citing lack of evidence and time-barred notice.

Validity of Show Cause Notice: The Commissioner (Appeals) held that the statements of the manufacturer's proprietor, recorded without cross-examination, lacked evidentiary value and the show cause notice was time-barred due to insufficient evidence of fraud or willful misstatement. The Revenue contended that the statements, admitting non-supply of material, and the vehicle's incapacity to transport the mentioned quantities, supported fraudulent Cenvat credit availment.

Evidentiary Value of Statements: The Tribunal noted discrepancies in the invoices, the vehicle's capacity, and the proprietor's statements admitting non-supply of material. The Commissioner (Appeals)' finding on the statements' evidentiary value was deemed incorrect, as circumstances indicated fraudulent Cenvat credit availment without material supply, justifying the longer limitation period for recovery.

Imposition of Penalty: Considering the evidence of bogus invoices, non-supply of material, and discrepancies in the statements and transportation capacity, the Tribunal held the Commissioner (Appeals)' order unsustainable. The original order confirming the demand of Cenvat credit and imposing a penalty was reinstated, allowing the Revenue's appeal.