Case Law Details
Encop Wires Private Limited Vs Commissioner of Central Tax (CESTAT Bangalore)
CESTAT Bangalore held that allegation of the department that the quantity of goods as shown in the purchase invoices were brought into the factory, processed, converted into finished goods and removed clandestinely without payment of duty are not supported with sufficient evidence are liable to be set aside.
Facts- The appellants are engaged in the manufacture of copper wire and super enamelled copper wire falling under Chapters 74 and 85 of the CETA, 1985. They avail CENVAT credit on the inputs, input services and capital goods under the relevant rules. During the course of audit of their records in 2014, it was noticed that they purchased goods and later sold the same without payment of duty. The appellant explained that the goods were purely traded without bringing into their factory for which permission has been sought from time to time to undertake trading activity from their factory, to which, no response was received from the Department. But the audit party was of the opinion the Copper wires were cleared from the factory in the guise of trading.
On completion of investigation by the Preventive Department, endorsed the view of the Audit party. Accordingly, show-cause notice was issued to the Appellant demanding total duty of Rs.18,63,254/- being the clearances made from their factory without payment of duty from March 2012 to March 2013 along with interest and proposal for penalty. On adjudication, the demand was confirmed with interest and equivalent penalty. On appeal, the learned Commissioner (Appeals) upheld the order of the adjudicating authority and rejected their appeal. Hence, the present appeal.
Conclusion- Held that the Department has not carried out thorough investigation of the matter even though the investigation took two years after the audit objection. Also, the intimation letters written by the appellant to the Range Superintendent from time to time informing the invoice no, vendor’s name, quantity of material purchased and received in transporter’s premises viz. Kamal Roadways duly acknowledged by the Inspector of the Range Office, being not contradicted by the Revenue about its genuineness, weighs in favour of the appellant. No investigation was carried out after intimation letters were received in the Range office even though these were addressed from time to time, much before the audit objection, no verification was carried out. Therefore, it is difficult to accept the allegation of the department that the quantity of goods as shown in the purchase invoices were brought into the factory, processed, converted into finished goods and removed clandestinely without payment of duty. In the result, the impugned order is set aside and the appeal is allowed.
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