Custom, Excise & Service Tax Tribunal
M/S. Sti Industries vs Commissioner Of Central Excise & S.T., ... on 2 July, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad Appeal No. : E/1243/2011 (Arising out of OIA-SA/143/VAPI/2011 dated 21.09.2011, passed by Commissioner (Appeals) Central Excise, & S.T., Vapi) M/s. STI Industries : Appellant (s) VERSUS Commissioner of Central Excise & S.T., Vapi : Respondent (s)
Represented by :
For Appellant (s) : Shri Alok Barthwal, Advocate For Respondent (s) : Shri Jitendra Nair, Authorised Representative For approval and signature :
Mr. P.K. Das, Honble Member (Judicial) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. P.K. Das, Honble Member (Judicial) Date of Hearing : 05.06.2015 Date of Decision : 02.07.2015 ORDER No. A/10956/2015 Dated 02.07.2015 Per : Mr. P.K. Das;
The relevant facts of the case, in brief, are that the appellants were engaged in the manufacture of Electrical Wiring Accessories falling under Chapter 85 of the Schedule to the Central Excise Tariff Act, 1985. They were availing CENVAT credit under Cenvat Credit Rules, 2004. On 11.01.2007, the Central Excise officers of Preventive Section of Vapi Commissionerate visited the appellants factory and withdrew records under Panchnama dated 11.01.2007. During investigation, it was found that the appellant availed CENVAT credit amounting to Rs. 11,59,698/- on the basis of invoices issued by M/s. Annapurna Impex Pvt. Limited, Ludhiana (M/s. Annapurna in short) without receiving the inputs. The Central Excise officers recorded the statements of the employee of the appellants, broker of M/s. Annapurna and Angadias of Ludhiana.
2. A show cause notice dated 31.03.2008 was issued proposing demand of duty of Rs. 11,59,698/- alongwith interest and to impose penalty on the ground that the appellant wrongly availed CENVAT credit on the strength of duty paying documents of M/s. Annapurna, without actual receipt of inputs. It has also proposed to appropriate amount deposited by the appellant during the course of investigation. The adjudicating authority denied the CENVAT credit and confirmed the demand of duty alongwith interest and imposed penalty of equal amount. It has also appropriated the amount deposited by the appellant, during investigation. By the impugned order, Commissioner (Appeals) upheld the adjudication order and rejected the appeal filed by the appellant.
3. The learned Advocate on behalf of the appellant submits that the appellant purchased the materials from M/s. Annapurna and directly sent to the Job Workers. After processing of the raw materials, received from the input suppliers, the Job Workers delivered the processed materials to the appellant alongwith Challans and Bills of labour charges, which were used in the manufacture of final products and cleared of payment of duty. It is submitted that the entire transaction was recorded in the CENVAT records and other statutory records. He submits that the appellant produced all the documents before the adjudicating authority and no dispute was raised. It is further submitted that both the authorities have held that M/s. Annapurna was a non-existing firm. He placed a copy of letter dated 31.7.2012 of Assistant Commissioner (Preventive) of Ludhiana, in reply to their application under Right to Information Act, 2005 that M/s. Annapurna was in existence during the material period and they issued invoices and also paid duty. Learned Advocate filed compilation of the Documents showing correlation of the goods received from M/s. Annapurna to return of semi-processed goods with copy of the invoices Challans, Bills, etc. which were also placed before the Adjudicating authority. He relied upon the following decisions of the Tribunal:-
(a) Super Trading Company vs. CCE, Delhi [2014 (299) ELT 75 (Tri. Del.)]
(b) Arvind Enterprises vs. CCE, Delhi [2013 (296) ELT 253 (Tri. Del.)]
(c) CCE, Chandigarh vs. Shakti Roll Cold Strips Pvt. Limited [2008 (229) ELT 661 (P&H)]
4. On the other hand, the learned Authorised Representative on behalf of the Revenue reiterates the findings of the Commissioner (Appeals). He particularly drew attention of the Bench the relevant portion of the statement of the employee of the appellant Company and broker of M/s. Annapurna from the adjudication order that the appellant availed cenvat credit on the basis of the invoices without actual receipt of the goods. He submits that the investigation was conducted on various points namely, broker, Agandias, Bank Accounts of M/s. Annapurna etc. and they admitted supply of the invoices without supply of goods to the appellants and paid cash money. He relied upon the decision of the Tribunal in the case of Mahesh C. Kadakia vs. CCE, Nasik 2007 (217) ELT 223 (Tri. Mumbai) and the decision of the Punjab & Haryana High Court in the case of CCE, Ludhiana vs. Krishna Wire Products (P) Limited 2010 (252) ELT 161 (P&H).
5. After hearing both the sides and on perusal of the records, I find that the appellants was engaged in the manufacture of Electric Wiring Accessories. They sent the raw materials to the job workers, Star Metal & Tubes, Mumbai and M/s. Ex-tube Industries, Ahmedabad for the purpose of processing. It is stated that the job workers were used to receive the raw material directly by contacting the manufacturer/ suppliers. The raw material namely Copper Wire Bars, Copper Ingots were received by the job workers directly from the manufacturer/ suppliers and the job workers were processing the material and then returned the copper tubes to the appellant. The appellants were carrying out the manufacturing process on the semi finished goods, which were either exported or cleared in the domestic market on payment of duty, in compliance with the Central Excise law. The Central Excise officers visited the appellants factory on 11.01.2007 and recorded the statements of the employee of the appellant Company. It has been alleged that the appellant availed cenvat credit against the invoices of M/s. Annapurna, without actual receipt of the goods. The demand of cenvat credit was raised in respect of five invoices during the period December 2003 to January 2006.
6. The Commissioner (Appeals) observed that the investigation revealed that M/s. Annapurna was not having any plant or machinery to manufacture the copper bars/ ingots and no record relating to production and clearances of the goods, were available at the factory; that they had fraudulently availed cenvat credit, without receipt of raw materials and they do not manufacture any goods that they prepared only invoices in the names of the customers. It has relied upon the statement of Shri Asok Bandmal Bafna, the broker of M/s. Annapurna. The learned Advocate placed a copy of letter dated 31.07.2012 of Assistant Commissioner (Prev.), office of the Commissioner, Ludhiana addressed to the appellants Advocate in response to information under RTI Act, 2005. It has provided the details of duty payment and mode of payment and also forwarded the attested copy of RG 23A Part-II and ER-1 return of M/s. Annapurna. Thus, it is clearly evident from the record that M/s. Annapurna had paid the duty and filed returns and therefore, the findings of the Commissioner (Appeals) that M/s. Annapurna was not in existence during the material period, cannot be accepted.
7. The Commissioner (Appeals) heavily relied upon the statement of the broker of M/s. Annapurna. There is no reference in the statement of the broker, with whom he has dealt with the appellant Company. The statement of the broker is not corroborated with any evidence. The statement of Agandias would also not corroborated with evidence in respect of invoices in question. In any event, it is seen from the adjudication order that appellant enclosed the statement as Exhibit A showing correlation of the material purchased (arranged by Star Metal & Tubs from AIPL), went to job workers, receipt of processed goods from them, issue of processed goods to production and manufacture of final products from the same and claimed that this shows that there has been complete compliance with the provisions of Central Excise Rules, 2002 and Cenvat Credit Rules, 2004. Shri Shashank R. Desai, employee of the appellant Company in his statement stated that they never contacted any person of M/s. Annapurna, Ludhiana for purchase of raw materials from M/s. Annapurna. They had placed an order on M/s. Star Metal & Tubes Corporation, Powai and as they could not get their material on time, they suggested the appellant about M/s. Annapurna. It was told by Shri Dhrunal C. Patel who is the Karta of HUF of M/s. Star Metal & Tubes Corporation, Powai that he could arrange from M/s. Annapurna. They have never met the broker of M/s. Annapurna. They gave order for supply of invoices of Copper Ingots and Copper Wire Bars (Ingots), with details like ECC No. Companys address, Commissioner of Service Tax No. etc., necessary for issuing Central Excise invoices and those invoices alongwith Lorry Receipts were received. He also stated that they have taken correct credit after receiving the material from the job-workers.
8. On perusal of the Compilation of documents, showing correlation of the goods received from M/s. Annapurna and return of semi-finished goods, I find that the appellant had produced copy of invoices of M/s. Annapurna along with transport documents and Bills of labour charges paid to the job workers. For example, the appellant availed credit on Copper Wire Bars to the quantity of 10963Kgs, vide Central Excise Invoice No. 415 dated 05.11.2003 of M/s. Annapurna, transported by New Satkar Tempo Transport Union vide Bilty No. 239 dated 05.11.2003 which was delivered to the job worker vide Central Excise Challan No. 609 dated 13.11.2003, in compliance with the provisions of Central Excise Rules. The job worker issued Bills for labour charges alongwith delivery challans issued from time to time. It is particularly noted that purity check result of the goods by electrolysis method was recorded in the printed form of the appellant. These evidences were not refuted by the lower authorities. I find that the charge of availment of cenvat credit on the basis of invoices without receipt of the goods was on the basis of statements of various persons. The appellant refuted the charges particularly by showing various evidences of receipt of goods, Lorry Receipt, Purity Check report, Payment of Labour Bills and other details, which were not disputed by the lower authorities. The Tribunal in the case of Super Trading Company vs. CCE, Delhi (supra), held as under:-
9.?After hearing learned DR, I find that the entire case of the revenue is based upon investigation conducted at the end of the manufactures M/s. Khemka Ispat Ltd. and the statement of their authorized representative and the statement of the first stage dealer. I have gone through the said statement and find that there is no reference to any particular invoices and the same are general statement. The statement of the authorized representative of Khemka reveals that with the loss of business in the year 2002, they entered into an arrangement with the first stage dealer for issuing invoices without the supply of goods so as to reflect some sale purchase books on account. Though as per the said statement the arrangement was entered into in the year 2002, I find that the disputed period in the present appeal is February, and March, 2004. In any case I find that has procured the inputs from the second stage dealer M/s. Super Trading Company said who in his statement has agreed to have supplied the goods to the manufacturing unit. Inasmuch as Rule 7(2) of Cenvat Credit Rules requires the recipient of the inputs to know the identity of the supplier of the goods, which in the present case was second stage dealer, I am of the view that the said rule stand satisfied by the manufacture with Shri Amit Kumar proprietor of second stage dealer having deposed that they had in fact supplied to the manufacture, payment for which were made by them in cheque, I find no reasons to uphold the findings of the lower authorities that no inputs were actually received by them. There is neither any allegation nor any evidence on record to show that such inputs were procured from some other alternative source. Admittedly, the said appellant could not have manufactured final product, without the receipt of the inputs, in which case revenue findings that no inputs were actually received cannot be upheld. Recipient of the inputs is expected to know his immediately supplier and there is no further requirement to find out as to from where his supplier has procured the inputs. Accordingly, I set aside the confirmation of demand of duty and imposition of penalty of M/s. Faridabad Autocomp Systems and Super Trading Company. As regards, the imposition of penalty of M/s. Ayushi Steels Company, I find that they have taken and alternative plea that even if the Revenues case accepted that they dealt only with the invoices without actually dealing with the goods even then no penalty can be imposed upon them inasmuch as the provision for imposition of penalty on the dealers were introduced vide Notification No. 8/2007-C.E., (N.T.) dated 1-3-2007. Inasmuch as the period for the present case is prior to the said date, I set aside the penalty imposed upon M/s. Ayushi Steels Company Pvt. Limited also.
9. The Honble Punjab & Haryana High Court in the case of CCE, Chandigarh vs. Shakti Roll Cold Strips Pvt. Limited (supra) observed that cenvat credit cannot be denied on the ground of non-receipt of inputs when the Tribunal found that department is not able to prove that any alternative raw material was received and used in the final products. The Tribunal has also noted that the findings of the Commissioner established that RT-12 returns have been assessed finally by the Range Officer which contains all the documents including the invoices under dispute on the basis of which the modvat credit has been availed and utilised and that payments of the purchase of inputs have been made through cheque/ demand draft. In the present case, I find that appellant had produced several evidence in respect of receipt of inputs and the same were not disputed and the officers proceeded merely on the basis of statements and in this situation, denial of cenvat credit cannot be sustained.
10. The case laws relied upon by the learned Authorised Representative are not applicable in the present case as, in that case, the assessee had not produced any document. The Commissioner (Appeals) had relied the various case laws where it has been held that as per general rule of law, it is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to the property to be purchased prior to committing in any manner and if he does not, it is at his peril. In the present case, I find that appellant produced documents that M/s. Annapurna was in existence during the material period as established by their invoices and the Central Excise monthly returns. So, the appellant has discharged their responsibility and therefore, CENVAT credit availed on the basis of invoices of M/s. Annapurna cannot be denied.
11. In view of the above discussions, the impugned orders cannot be sustained. Accordingly, the impugned order is set-aside. The appeal filed by the appellant is allowed with consequential relief.
(Order pronounced in the Court on 02.07.2015) (P.K. Das) Member (Judicial) .KL 7