Custom, Excise & Service Tax Tribunal
Mitc Rolling Mills Pvt Ltd vs Commissioner Of Central Excise & ... on 22 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/607 TO 609/10 [Arising out of Order-in-Appeal No. AKP/23 to 25/NSK/2010 dated 27/1/2010 passed by the Commissioner of Central Excise & Customs(Appeals), Nashik.] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
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authorities?
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MITC Rolling Mills Pvt Ltd
Champshi M Shah
Chetan D. Lodaya
:
Appellants
VS
Commissioner of Central Excise & Customs, Nashik
:
Respondent
Appearance
Shri. R.V. Shetty, Advocate for the Appellants
Shri. Ashutosh Nath, Asstt. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 22/2/2016
Date of decision: /6/2016
ORDER NO.
Per : Ramesh Nair
These appeals are directed against Order-in-Appeal No. AKP/23 to 25/NSK/2010 dated 27/1/2010 passed by the Commissioner of Central Excise & Customs(Appeals), Nashik whereby Ld. Commissioner(Appeals) upheld the Order-in-Original in toto.
2. The fact of the present case is that the appellant M/s. MITC Rolling Mills Pvt Ltd is registered for the manufacture of mild steel(M.S. ) ingots falling under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985 and availing the Cenvat facility under Cenvat Credit Rules, 2002. An information was received that M/s. MITC had availed irregular and fraudulent Cenvat credit on the invoices issued by M/s. Jindal Iron & Steel Co. Ltd.(formerly known as M/s. Jindal Steel & Alloys Ltd) from certain dealers without physically receiving the material covered therein. Investigation was conducted by the department and it was found that during the months of August to October, 2003, the appellants had availed Cenvat credit amounting to Rs. 6,55,435/- without receiving the material into their factory. Enquiries were made with the owners of 4 trucks whose registration numbers were found to have been mentioned on these 29 invoices. The transporter who shown in the Central Excise invoices for transport of the goods admitted that even though he had lifted the material from the suppliers premises he did not deliver the goods at the appellants factory but diverted them to Viramgam in Gujarat and the traders in Viramgam who purchased the material which said to have been supplied to the appellant admitted that they had received the materials and made payments for the same and the transporter had delivered the materials covered under the invoices issued to the appellant in this case. The statements of both the Directors viz. Shri. C.M. Shah ad Shri. C.D. Lodaya were also recorded but they could not offer any satisfactory explanation regarding the receipt of the goods such as consignee copy of the bilty(transport documents) by the appellants and also any evidence relating to receipt such as consignee copy of the transport documents. In the light of these evidences, a show cause notice dated 8/2/2008 was issued. The show cause notice was decided by Joint Commissioner of Central Excise & Customs, Nashik vide Order-in-original No. 27/C.Ex./2008 dated 21/11/2008. By the said OIO, he ordered recovery of Cenvat credit of Rs. 6,55,435/- under Rule 12 of CCR, 2002 read with Section 11A(1) of CEA, 1944 together with interest under Section 11AB from M/s. MITC Rolling Mills Pvt Ltd under Rule 13(2) of CCR, 2002 read with Section 11AC of CEA, 1944. Under Rule 26 of CER, 2002 he has imposed penalty of Rs. 1,00,000/- on Champshi M Shah and Rs. 50,000/- on Chetan D. Lodaya. Being aggrieved by the Order-in-Original dated 21/11/2008 appellants filed appeal before the Commissioner(Appeals) who upheld the Order-in-Original in toto and dismissed the appeal of the appellants, therefore appellants are before me.
3. Shri. R.V. Shetty, Ld. Counsel for the appellant made following submissions:
(a) As regard the transport documents he submits that the word transport documents includes bilties which were issued by M/s. Diamond Roadways. These bilties are in the name of the M/s. MITC Rolling Mills Pvt Ltd. If the goods were meant for delivery at Viramgam and if the transports had the knowledge of the aforesaid fact then what made to M/s. Jindal Iron & Steel Co. Ltd. to write the name of the M/s. MITC Rolling Mills Pvt Ltd in the excise invoices.
(b) As regard the confessional statements of the truck owners, he submits that Adjudicating authority and first appellate authorities have erred grossly while examining the transporters statements, as there is no corroboration with the material documents with the statements. He further submits that investigation was not held at M/s. Jindal Iron & Steel Co. Ltd as in the show cause notice it was held that transporter used to arrange for trucks to lift H.R. Trimmings from M/s. Jindal Iron & Steel Co. Ltd. and he was informing the registration number of truck to Viramgam based parties who, in turn, were informing M/s. Jindal Iron & Steel Co. Ltd.. He further submits that the cause of action initiated from the premises of M/s. Jindal Iron & Steel Co. Ltd. as it relates with Central excise invoices, goods and it relates with change of billing address, as no investigation was carried out at the place of M/s. Jindal Iron & Steel Co. Ltd, the allegations of all sort made against the appellants becomes unfounded and baseless.
(c) It is observed by the lower authorities that these manufacturers of Viramgam were supplied goods against fictitious commercial bills, in this regards Ld. Counsel contention is that neither a copy of the fictitious commercial bill was placed on record nor the investigating authorities had reached to the premises of the SSI manufacturers therefore it would be highly objectionable proposition, if someone says that the goods were not received by the appellants.
(d) Ld. Counsel submits that department has not discharged its burden as department has not produced any evidence regarding the procurement of market scrap. He submits that It is a blanket statement that goods were not received and only documents were received.
(e) He further submits that investigation carried out shows that only 14% invoices were investigated, that is, four in numbers which 14% of the total invoices and therefore the show cause notice is based on assumption and presumption therefore it appears clear manifestation that an attempt has been made to plant a case on appellants.
In view of the above submission he placed reliance on the decision of this Tribunal in the case of Dashmesh Castings Pvt Ltd Vs. Commr. of C. Ex. & S.T. Chandigarh[2015(320) ELT 450(Tri. Del)]
4. Shri. Ashutosh Nath, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He further submits that it is a clear case of fraud wherein the appellants took Cenvat Credit of duty paid on the materials without actually receiving the materials and there is a strong evidence adduced by the department by way of statement of transporter and statement of actual purchasers of goods. He further submits that appellants have not given any explanation whatsoever or any evidence about the transport and receipt of HR Trimmings in their factory. He submits that on the basis of evidences collected during the investigation, the impugned order is correct and demand and penalty imposed on the appellants are in order. He placed reliance on the following judgments:
(a) Amar Ispat Pvt Ltd Vs. Commissioner of Central Excise Thane-I[ Order No.A/1906-1912/15/EB(Tribunal)].
(b) Bhagwati Steel Cast Ltd. Vs. Commissioner of Central Excise, nashik [Order No. A/1950-1967/15/EB(Tribunal)].
(c) Sujana Metal Products Ltd Vs. Commissioner of Central Excise, Thane-I[A/204-215/14/EB/C-II]
(d) MTC Business Pvt Ltd Vs. Commissioner of Customs, Mumbai[2015(330) ELT 570(Tri. Mum)]
(e) Agarwal Metals & Alloys Unit-II Vs. Commissioner of C. Ex. & S.T. Vap[2015(325)ELT 276(Bom)]
(f) Harsaran Dass Sita Ram Vs. Commissioner of C. Ex. Pandhkula[2015(322) ELT 686(P&H)]
5. I have carefully considered the submissions made by both sides and perused the record.
6. I find that this is a case of fraudulent Cenvat credit availed on the invoices issued by the dealer namely M/s. Jindal Iron & Steel Co. Ltd. On the identical facts and under same investigation in many other cases, demands were confirmed. On comparison with these cases disposed of by this Tribunal in particular Amar Ispat Pvt Ltd(supra), the facts, evidences and modus operandi of the appellants as well as in case of Amar Ispat Pvt Ltd (supra) are same therefore this case also can be decided only on the basis of decisions in above referred case as no much discussion is warranted as all the evidences which are almost common in case cited above as well as in present case. This Tribunal in of Amar Ispat Pvt Ltd(supra) has considered all common facts and evidences and came to conclusion that it was case of fraudulent passing of Cenvat credit without receipt of input by the beneficiary. In the case of Amar Ispat Pvt Ltd(supra) decision important fact has been established that all the invoices issued by M/s. Jindal Iron & Steel Co. Ltd were issued in respect of scrap and addressed to the MITC Rolling Mills Pvt Ltd but goods were delivered to Viramgam based parties, are fake and without receipt and supply of the material. Thus appellant have availed passed an fraudulent Cenvat credit. Therefore following the decisions of this Tribunal in the cases of Amar Ispat Pvt Ltd(supra), the impugned order sustains. The relevant portion of said order is reproduced below:
9. In the present case, the Revenue has raised the demand in respect of 403 invoices. Invoices are pertaining to HR trimmings. Revenue's case is that the said HR trimmings were transported from Jindals, Vasind/Tarapur to Viramgam based dealers/SSI units while the corresponding invoices were made in the name of the main appellant and the said invoices did not travel along with the goods, but only the invoices were received by the main appellant and they took credit on the basis of such invoices without receiving the HR trimmings. During the investigation, the main appellant and their officials including appellant No.2 were specifically asked whether they have any evidence whatsoever to prove that the goods viz. HR trimmings covered by the said invoices were transported to their factory and received in their factory. The appellants could not produce copy of the Gate register, goods receipt note or LR or even any document evidencing payment of freight charges to the driver/transporter in respect of each invoice (whether paid in cash or by any other means). The appellant's main contention was that they have paid for the goods through banking channels and if at all the goods were not supplied, it is because of the manipulation by the supplier. We are not convinced with such argument. First of all, payment through banking channel in such manipulated transactions is a part of the manipulation only and it does not prove genuineness of the transaction. We are unable to understand that how the appellant is not able to produce any document relating to transport or receipt of the goods such as goods receipt note, independent weighment slip, gate register lorry receipt, payment receipts (which are normally given by the drivers of such vehicles) or any document of the transporter to prove that the goods covered by the invoices did travel from Jindals' units in Vasind and Tarapur to appellant's factory. We also note that almost in all transactions, the vehicle registration numbers are of Gujarat It is a common knowledge that a vehicle registered in Gujarat cannot undertake the freight movement from one place to the other within the State of Maharashtra. Such vehicle can only take the interstate freight, i.e. Maharashtra to Gujarat in this case. Moreover, HR trimmings in coil form are very different from bazaari/scavenger scrap and can be distinguished by any person in the business.
9.0 In the present case, the Revenue has presented a catena of evidences which include the transporter's record etc. as is evident from para 93 of the impugned order. These include, -
(i) -"(v) From certified copies of Annexure-1 and Annexure-2 sent by Sales Tax Officer of Bhilad Check post it was found that vehicle No. GJ 10 U 7985 carrying H.R. Trimmings had passed through the check post to Gujarat on 14.12.2002. The said vehicle number is appearing on invoice No. 1207253 dated 14.12.2002 issued by M/s. JSAL favouring M/s. AIPL It shows that the H.R. Trimmings consigned to M/s. AIPL on 14.12.2002 were in fact transported to Gujarat."
(ii) -"vi) From the records of M/s. New Shri Swaminarayan Transport it was found that 84 vehicles consigned to M/s. AIPL from M/s. JISCO & M/s. JSAL were in fact transported the goods to various destinations in Gujarat. The vehicle numbers in the above 84 cases are appearing on the invoices issued by M/s. JISCO & M/s. JSAL in the name of M/s. AIPL."
(iii) -"vii) Vehicle No. GJ 10 U 8157 and GJ 13 T 5226 owned by Shri Suresh Jayantilal Vyas, were appearing on ten invoices of M/s. JISCO & M/s. JSAL which was in fact indicating that the goods i.e. H.R. Trimmings & M.S. scrap were transported to Gujarat and not to the factory premises of M/s. AIPL.
(iv) - "viii) From the records of M/s. Gayatri Transport Service it was found that the goods covered under invoice No. 12109063 dated 31/2003 of M/s. JISCO, Tarapur issued in favour of M/s. AIPL was transported to Satej in vehicle No. GJ 11 W 2910."
(v) - "iv) Further from the records of M/s. Star Industries, Tarapur it was found that goods consigned to M/s. AIPL from M/s. JISCO, Vasind under invoice No. 1306515 dated 11.9.2003 and 1307516 dated 11.10.2003 through vehicle No. MCT 5101 and MCU 1051 respectively were in fact delivered to M/s. Star Industries, Tarapur."
(vi) - "iii) Shri Janedrasingh Ramsingh Sodha residing at Jamnagar, Gujarat vide letter dated 2.8.2004 owner of vehicle No. GJ 10 U 4367 stated that they had loaded the above vehicle from Diamond Transport during the period April, 2000 to December, 2003 for Gujarat. The said vehicle is appearing on following invoices.
Sr. No. Name of the supplier Factory location Invoice No. Date 1 Jindal Iron and Steel Co.
Shahapur 1202146 11.9.02 2 Jindal Iron and Steel Co.
Shahapur 1302059 4.6.03 3 Jindal Iron and Steel Co.
Shahapur 1308745 21.11.03 4 Jindal Iron and Steel Co.
Tarapur 13102274 5.7.03 5 Jindal Iron and Steel Co.
Tarapur 13103087 1.8.03 6 Jindal Iron and Steel Co.
Tarapur 1207371 12.8.03 7 Jindal Steel & Alloys Ltd.
Vasind 1207371 17.12.02 8 Jindal Steel & Alloys Ltd.
Vasind 1207731 28.12.02"
Many of these are in addition to the statements, as against this the appellant was not able to produce any evidence regarding transport any receipt of the goods in respect of any of the invoices. In our considered view, the only conclusion to be drawn is that the goods have not been received by the appellant.
9.1 It also defies any logic that the goods such as HR trimmings in the coil form which pan be used for the manufacture of items like nails or wires, would be used for I melting in the furnace. Even the prevailing prices of such HR trimmings will be much higher compared to normal iron and steel scrap and it does not make any economic sense for a manufacturer to use HR trimmings in coil form for purpose of melting.
10. The learned counsel for the appellants' main grievance is relating to non-permission of cross-examination by the adjudicating authority. We find in the present case that the appellant wanted to cross-examine mainly the co-noticees and as held by this Tribunal in the case of Maya Mahal Industies (supra) as also in the case of Jagdish Shanker Trivedi (supra) read with Article 20(3) of the Constitution of India, we are of the view that no prejudice has been caused to the appellants, particularly keeping in view the fact that they" themselves did not produce a single evidence that the HR trimmings were transported to their factory and were received in their factory. They have also not given any explanation with reference to the records recovered from various transporters. Thus, even if the statements of the co-noticees are ignored, the demand will still hold good. If the main appellant would have produced some evidence to contradict Revenue's claim, we would perhaps be inclined to hold that denial of cross-examination has prejudiced their case. This Tribunal in the case of Jagdish Shanker Trivedi (supra) has observed as under:-
"7. We first take up the contention that there was denial of principles of natural justice by not offering the witnesses for cross-examination by the appellant Ashish Kumar Chaurasia, despite his request that all witnesses should be examined. We have already noted that the appellant, Ashish Kumar Chaurasia had cross-examined two officers on 19-6-1995. It also transpires that summons were sent to Ram Avatar Singhal, Ram Kumar Mishra and Ram Bilas Mandal (driver), Jagdish Shanker Trivedi and Dilip Kumar Singhal, who refused to be cross-examined on the ground that they cannot be compelled to give incriminating evidence against themselves in view of their fundamental right guaranted by Article 20(3) of the Constitution under which no person accused of any offence shall be compelled to be a witness against himself. Section 124(c) which provided that no order confiscating any goods or imposing any penalty on any person shall be made under Chapter IV unless the owner of the goods or such person is given a reasonable opportunity of being heard in the matter, does not specify any right of cross-examination."
11. Another contention of the learned counsel for the appellants was that the statements a-re at times self contradictory or are contradicting each other's statements. We have gone through the statements. While there are some variations in the statements, in our considered view, these variations are not fatal in the facts and circumstances of the present case. It is a common knowledge that the persons who are familiar with the excise laws and are aware about the violations of excise law, they are indulging in them they do not disclose proper and true facts at the first instance and they tend to give at times misleading explanations. In the present case also, generally the co-noticees have said in the statements after assessing the information already available with the investigating officers. In the later statements when they were shown more details, they came out with correct facts. We also note that the above modus operandi relating to diversion of HR trimmings to Viramgam and selling of the invoices to various iron and steel furnace units was done by number of steel furnace units and with reference to number of producers of HR coils /trimmings and the statements of various persons particularly the brokers in Mumbai, transporters in Mumbai/Nagpur and the traders based in Viramgam have been recorded by Central Excise Intelligence and with reference to other cases. These persons are common in all such investigations. Few days back, we have decided a similar case in respect of Bhagwati Steelcast Ltd. wherein also some of the appellants are common and there the statements given by the appellants were more to the point. We have absolutely no hesitation whatsoever in holding that the appellant No. 3, 4 and 5 are Viramgam based brokers/traders who in fact were participating in the auction bidding process either themselves or through brokers based in Mumbai and were purchasing the HR trimmings from manufacturers such as Jindals in this case. Later on. the HR trimmings were going to Viramgam. Since the invoices of such HR trimmings were of no use to them, they were trading the invoices through brokers based in Mumbai who in turn were locating the furnace units who could fraudulently avail the credit based on such invoices. The cash amount of HR trimmings being sent through angadia or other services from Viramgam and nearby area and were being converted into Bank Draft etc. through banking channels either by such. brokers or by manufacturers of ingots or was used in cash to purchase bazaari scrap/scavenger scrap. In view of the above position, we have no hesitation in holding that the demand and penalty imposed on the main appellant is correct and the appeal of the main appellant is, therefore, dismissed. Appellant's contention on limitation is also rejected as this is clear cut case of fraud as credit is availed without receiving the duty paid goods covered by the corresponding invoices.
7. On going through decisions of this Tribunal in cases of Bhagwati Steel Cast Ltd and Sujana Metal Products Ltd, I find that facts and evidences and modus operandi are more or less same in these decisions therefore the ratio of the aforesaid decisions are squarely applicable in the present case. Therefore it is established that the appellant have availed Cenvat credit fraudulently without receipt of the goods. As regard the case law relied upon by the Ld. Counsel, I find that since on the facts of the present case this tribunal has already passed orders in various cases as stated above, judgment relied upon by the Ld. Counsel will be no help to the appellant. In view of the above discussion, I uphold the impugned order. Appeals are dismissed.
(Order pronounced in court on_________________) Ramesh Nair Member (Judicial) sk 15 E/607 TO 609/10