Custom, Excise & Service Tax Tribunal
Cce, Delhi Iii, Gurgaon vs M/S Lakshman Tools Pvt. Ltd on 15 May, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV Excise Appeal No. 924 of 2011 with Cross Objection No. 156 of 2011 (SM) [Arising out of the Order-in-Appeal No. 42/BK/GGN/2011 dated 27/01/2011 passed by The Commissioner (Appeals), Central Excise, Delhi III, Gurgaon.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would 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 of the order? 4. Whether order is to be circulated to the : Department Authorities? CCE, Delhi III, Gurgaon Appellant Versus M/s Lakshman Tools Pvt. Ltd. Respondent
Appearance Shri Nagesh Pathak, Authorized Representative (DR) for the appellant.
Shri Rakesh Bhola, Advocate - for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 15/05/2013.
Final Order No. 56563/2013 Dated : 15/05/2013 Per. Rakesh Kumar :-
The facts giving rise to this appeal are, in brief, as under.
1.1 The respondent are manufacturers of HH Bolts, and Fasteners chargeable to Central Excise duty under sub-heading 7318.10 of the Tariff. They availed Cenvat credit of Central Excise duty paid on inputs and capital goods. The raw material for HH Bolts is steel wire rods. The jurisdictional Central Excise officers visited the respondents factory on 03/8/04 and at that time checked the stock of inputs and finished goods and it was found that RG-23A register in respect of receipt of inputs was completed upto date upto 31st July, 2004 and between this date and the date of visit, there was no receipt of steel wire rods. The recorded balance of input in the RG-23A register at that time was 115502 kgs. However on physical verification, only the stock of 29,578 kgs. was found. The officers were of the view that there was shortage of 85924 kg. in respect of which the Cenvat credit involved was Rs. 5,15,544/-. The respondent at that time pointed out that this is not real shortage, as the entries regarding issue of raw material are not upto date have been made in RG-23A register only upto 30/06/2004 and, as such, consumptions of raw material for the entire month of July has not been recorded and if that is taken into account, there would not be any shortage. However, the department being of the view that the respondent have not been able to satisfactorily explain the shortage, issued a show cause notice for recovery of Cenvat credit of Rs. 5,15,544/- alongwith interest and imposition of penalty. Matter was adjudicated by the Joint Commissioner vide order-in-original dated 05/4/06 by which he dropped this demand. This order of the Joint Commissioner was reviewed by the department by filing appeal before Commissioner (Appeals). The Commissioner (Appeals) vide order-in-appeal dated 20th March 2007 dismissed the Revenues appeal holding that there was no shortage of the input and for arriving at this conclusion, he took into account the fact that while the entries regarding receipt of inputs in the RG-23A register were up-to-date, the entries regarding issue of raw material were complete only upto 30th June 2004 and since there was continuous production during the period from 30th June 2004 to 31st July, 2004, without taking into account the issue of input for manufacture during this period, the department cannot allege the same had been clandestinely removed.
1.2 Against this order of the Commissioner (Appeals) the Revenue filed an appeal before the Tribunal and the Tribunal vide final order No. 1602/2008-SM dated 08/12/08 remanded the matter to the original Adjudicating Authority for denovo decision after updating RG 23A register regarding the receipt and issue entries and then determine whether there was shortage of cenvated raw material or not.
1.3 The matter was adjudicated denovo by the Additional Commissioner vide order-in-original dated 3/2/2010 by which he again confirmed the same demand alongwith interest and imposed penalty of Rs. 3,00,000/- on the respondent on the ground that the documents regarding consumption of raw material during the period from 30th June 2004 to 31st July 2004 are manipulated documents and no reliance can be placed on the same. However, on appeal being filed by the respondent against this order of the Additional Commissioner, the Commissioner (Appeals) vide order-in-appeal dated 27/1/11 has again set aside the Additional Commissioners order holding that there is no corroborative evidence at all to substantiate the charge of the department that the cenvated inputs had been removed clandestinely to evade the duty. Against this order of the Commissioner (Appeals), this appeal had been filed by the Revenue once again. In respect of the Revenues appeal, the respondent have filed cross objection.
2. Heard both the sides.
3. Shri Nagesh Pathak, the learned Departmental Representative, assailed the impugned order by reiterating the grounds of appeal in the Revenues appeal and emphasised that as discussed in detail in the order-in-original, the documents produced by the respondent showing the issue of raw material are manipulated document and no reliance can be placed on the same. He also mentioned that there were cuttings and over-writings in the RG-23A register. He, therefore, pleaded that the impugned order is not correct.
4. Shri Rakesh Bhola, Advocate, the learned Counsel for the respondent, pleaded that the department does not dispute that there was production during the period from 30th June 2004 to 31st July 2004 for which raw material would have been consumed, that the respondent at the time of denovo proceedings had given the details of the issue of raw material for manufacture but the same have been wrongly rejected by the Adjudicating Authority, that when the fact of production of finished product during July 2004 is not disputed, and for manufacture of finished product, some quantity of raw material must have been used, the department cannot alleged that there was clandestine removal of Cenvat credit availed raw material without payment of duty. He pleaded that in the denovo proceedings the department has not carried out the Tribunals directions and, as such, there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records.
6. There is no dispute about the fact that at the time of the officers visit to the respondents factory, in the RG-23A register, while entries regarding receipt of raw material were complete upto 31st July 2004 and there was no receipt of raw material between 31st July 2004 and the date of visit of the officers i.e. 03/8/04, the entries regarding of issue of raw material had been made in the RG-23A register only upto 30th June 2004 and, as such, there were no entries regarding issue of raw material for the entire month of July, 2004. Though in course of denovo proceedings the respondent have produced issue slips and other evidence in support of their plea that during the period of July 2004 certain quantity of raw material had been issued for manufacture of finished product and that quantity matches with the alleged shortage, this evidence had not been accepted by the original Adjudicating Authority. However, I find that department does not dispute that during the period of July 2004, there was manufacture and clearance of finished product and for manufacture of finished product certain quantity of raw material must certainly have been used. Even if the adjudicating authority doubted the figures regarding issue of raw material for manufacture during July, 2004 he could at least have found out as to how much was the quantity of finished product manufactured during the month of July, 2004 and how much quantity of inputs must have been used. But this simple exercise has not been done. In the background of the fact that the department is comparing the stock of raw material as mentioned in the RG 23A register as on 3rd August 2004 with the stock of raw material actually found in that day and the entries regarding the issue of raw material had been made only upto 30th June 2004, for determining the shortage of inputs, if any, the figure regarding the quantity of raw material consumed should have been updated after taking into account the quantity of raw material consumed during the month of July 2004 and without doing this, the question of shortage or excess cannot be determined. Though an opportunity was given to the department to rectify this mistake, this has not been done. The department has neither accepted the figures of consumption of raw material during July 2004 as given by the respondent nor has made any effort to ascertain the quantity of inputs consumed on the basis of production of finished products. The approach of the department is, therefore, absurd. Beside this, I also find two different Commissioner (Appeals) have examined this issue and have arrived on the same conclusion, that the departments case has no legs to stand. In view of this, I agree with the order of the Commissioner (Appeals) that in absence of any evidence showing clandestine removal it cannot be alleged that there was unexplained shortage of Cenvat credit availed input and the same had been illicitly removed without reversal of credit. I, therefore, do not find any merit in the Revenues appeal. The same is dismissed. The cross objection filed by the respondent also stands disposed of.
(Pronounced in the open court.) (Rakesh Kumar) Member (Technical) PK ??
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