2005 (4) TMI 489 - AT - Central Excise

Summary

Issues:
1. Allegation of false entries in RG 23A Pt. I by the respondents.
2. Irregularities in maintaining records and availing input credit.
3. Invocation of extended period of limitation.
4. Non-compliance with Rule 57G(2) and denial of credit.
5. Demand for Rs. 84,80,407 and penalty on the dealer supplying inputs.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai arose from the Commissioner of Central Excise Mumbai-IV's order dropping proceedings initiated under a Show Cause Notice. The respondents, job workers of a principal manufacturer, were alleged to have made false entries in their records regarding inputs received from registered dealers. The Commissioner acknowledged the receipt of inputs without proper documentation but noted that the modvatable invoices were received later. The Commissioner held that the larger period of limitation was not applicable due to the absence of suppression by the respondents, despite acknowledging irregularities in record-keeping.

The Revenue contended that non-compliance with Rule 57G(2) and improper maintenance of accounts for inputs should lead to the denial of credit. They argued that the delay between receiving inputs and invoices made it challenging to verify duty payment. The Revenue also claimed that filing RT 12 returns did not absolve the respondents of wrong credit availing. However, the Tribunal observed that the focus should be on whether the inputs were duty paid, rather than the timing of document receipt. The Tribunal noted the complexities in billing between registered dealers and users, citing a precedent where duty paying documents were not required to accompany goods.

The Tribunal rejected the Revenue's prayer to reinstate the demand and penalty, emphasizing that credit was not taken on non-duty paid inputs. They highlighted that the procedural irregularities were technical in nature and did not warrant penalties. The Tribunal concluded that the stringent procedures were in place to prevent unauthorized credit claims, which was not the case here. Ultimately, the appeal of the Revenue was dismissed by the Tribunal.