By TIOL News Service

AHMEDABAD, APRIL 29, 2013: A demand of almost Rs.50 lakhs has been confirmed & upheld by the Commissioner(A) against the appellant along with imposition of equivalent penalty and interest.

The reason for this confirmation is the following allegation made by the Revenue - that the appellant has clandestinely removed the goods manufactured; that for such surreptitious manufacture & clearance they had received imported polyester chips on which duty liability was discharged by one M/s Shri Kami Enterprises.

During the proceedings at the lower level, the appellant had already made a pre-deposit of Rs.17 lakhs.

Before the CESTAT, it is the submission of the appellant that all along they have been pleading before the lower authorities that presuming the allegations levelled are true, they may be given copies of the Bills of Entry under which the polyester chips were allegedly imported on payment of duty by M/s Shri Kami Enterprises since this would enable them to avail CENVAT credit of the CVD paid. However, none of authorities have responded to this claim of theirs and which proves the hollowness of the investigation.

The Revenue representative submitted that it is a modus operandi adopted by the appellant - inasmuch as they created a fictitious company in the name of M/s Shri Kami Enterprises and imported the polyester chips and after consuming the same clandestinely cleared the finished goods without payment of duty. It is also submitted that for availment of CENVAT Credit, there are some procedures to be followed, which includes that the duty paying documents are to be in the name of the appellant and in the absence of these documents in the hands of the appellant they are not eligible for CENVAT Credit.

The Bench observed -

“7. We find strong force in the contentions raised by ld. Counsel that if it is the case of the Revenue that the appellant has used imported polyester chips for clandestine manufacturing and clearing of polyester yarn, it is for them to provide the evidences regarding the consignment which were imported and consigned to the appellant. In our view, the issue needs to be reconsidered by the adjudicating authority by providing the evidences relied upon in the show cause notice for arriving at conclusion that the appellant had received the consignment of polyester chips which were imported by M/s Shri Kami Enterprises, the issue also needs to be re-considered by the adjudicating authority, on granting the copies of Bills of Entry on which reliance has been placed for arriving at the quantum of polyester chips received by the appellant from M/s Shri Kami Enterprises. The lower authorities are directed to grant the copies of such documents to the appellant. The appellants, on receipt of such documents, would make their submissions before the lower authorities as and when called for by the adjudicating authority to present case.”

In fine, the CESTAT remanded the matter to the adjudicating authority and also made it clear that the appellants will not seek refund of amount which has been deposited by them during the course of investigation till the adjudication of the case.

In passing : Heads I win, tails you lose!

(See 2013-TIOL-660-CESTAT-AHM)