Custom, Excise & Service Tax Tribunal
Ms Quality Flavours Exports vs Chandigarh-I on 27 September, 2024
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 60182 of 2019
[Arising out of Order-in-Original No. CHD-GST-CEX-COM-29-47-2018 dated
28.09.2018 passed by the Commissioner of Central Excise, Chandigarh-II]
M/s Quality Flavours Exports ......Appellant
Mora Industrial Estate,
Prem Nagar Export Zone,
Kanth Road, Moradabad, U.P. 244001
VERSUS
Commissioner of Central Excise, ......Respondent
Chandigarh-II Central Revenue Building, Plot No. 19, Sector 17-C, Chandigarh 160017 WITH Excise Appeal No. 60271 of 2019 [Arising out of Order-in-Original No. CHD-GST-CEX-COM-29-47-2018 dated 28.09.2018 passed by the Commissioner of Central Excise, Chandigarh-II] Smt. Veena Gupta, ......Appellant Partner of M/s Quality Flavours Exports Mora Industrial Estate, Prem Nagar Export Zone, Kanth Road, Moradabad, U.P. 244001 VERSUS Commissioner of Central Excise, ......Respondent Chandigarh-II Central Revenue Building, Plot No. 19, Sector 17-C, Chandigarh 160017 AND Excise Appeal No. 60318 of 2019 [Arising out of Order-in-Original No. CHD-GST-CEX-COM-29-47-2018 dated 28.09.2018 passed by the Commissioner of Central Excise, Chandigarh-II] 2 E/60182, 60271 & 60318/2019 Sh. Rajiv Kumar Gupta, ......Appellant Manager of M/s Quality Flavours Exports Mora Industrial Estate, Prem Nagar Export Zone, Kanth Road, Moradabad, U.P. 244001 VERSUS Commissioner of Central Excise, ......Respondent Chandigarh-II Central Revenue Building, Plot No. 19, Sector 17-C, Chandigarh 160017 APPEARANCE:
Sh. R. M. Saxena, Advocate for the Appellants Sh. Anurag Kumar with Sh. Harish Kapoor, Authorized Representatives for the Respondent CORAM:
HON'BLE Sh. S. S. GARG, MEMBER (JUDICIAL) HON'BLE Sh. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO. 60550-60552/2024 DATE OF HEARING: 03.06.2024 DATE OF DECISION: 27.09.2024 PER : S. S. GARG These three appeals are directed against a common impugned order dated 28.09.2018 passed by the Commissioner of Central Excise, Chandigarh-II, whereby the ld. Commissioner has confirmed the demand of Cenvat Credit amounting to Rs.2,53,56,256/- along with interest and penalties and also rejected the refund amounting to Rs.70,67,060/- already paid to the appellant. Since all the three appeals are arising out of a common impugned order, therefore, all the three appeals are taken up together for discussion and decision.
2.1 Briefly stated facts of the present case are that the appellants, a partnership firm, were registered with the Central Excise 3 E/60182, 60271 & 60318/2019 department as 100% EOU and were engaged in the manufacture of menthol crystal, menthol powder, menthone etc falling under sub-
heading 2906.11 and distilled/rectified peppermint oil, distilled/rectified spearmint oil, distilled/rectified piperita oil, mint terpenes etc falling under sub-heading 3301.25.90. Smt. Veena Gupta (appellant no.2) has 42% shares and is the main partner of the firm and Shri Rajiv Kumar Gupta (appellant no.3) is the Manager of the appellant, on whom penalties under Rule 26 of the Central Excise Rules, 2002 have been imposed.
2.2 During the period of dispute i.e. April, 2007 to March, 2009, the appellant availed Cenvat Credit on the inputs, viz. rectified mentha oil, piperita oil, terpenes, and dementholized oil ("DMO" for short) purchased from the units located in the states of J&K, namely, (I) M/s. Mint Mates, Kathua (20 consignments); (II) M/s. Natural Herbal Products, Kathua (2 consignments); (III) M/s. Amarnath Industries (1 consignment); (IV) M/s. Maa Durga Ind. (2 consignments); (V) M/s. Jai Ambey Corporation (3 consignments); (VI) M/s. Rajdhani Aromatics (3 consignments); (VII) M/s. Gaurav Agro Chem Ind., Kathua (6 consignments); (VIII) M/s. Narbada Ind. (11 consignments); (IX) M/s. Khazana Corporation (1 consignment); (X) M/s. Alpha Menthol, Gangyal (1 consignment); and (XI) M/s. Eldorado Holdings (3 consignments). Total 53 consignments of excisable inputs were received by the applicant. The supplier units located in the J&K were availing benefit of exemption under Notification No. 56/2002-CE & 57/2002-CE both dated 14.11.2002 4 E/60182, 60271 & 60318/2019 and the unit of Assam was availing exemption under Notification No. 32/99-CE & 33/99-CE both dated 08.07.1999. 2.3 On receipt of the said inputs in the factory, the appellant made entries in their RG23A (Part-1) Register i.e. Record of inputs and sent intimation letters of receipt of the inputs to the jurisdictional Range Superintendent who deputed his Inspector to verify the inputs. Inspector visited appellant's unit on the date of receipt of inputs and verified receipt of the inputs and signed the RG23A (Part-1) Register. Copies of the said intimation letters in respect of all the consignments of inputs received and copies of RG23A (Part-1) record bearing signatures of the Inspector have been produced in the appeal-papers. The inputs so received were used in the applicant's EOU for manufacture of excisable final products which were exported without payment of duty and were also cleared in the DTA as per law. The appellant subsequently claimed refund of accumulated Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004 which were sanctioned by the jurisdictional Assistant Commissioner. 2.4 The jurisdictional Range Superintendent of the appellant sent 'Form Annexure-D' to the Range Superintendents of manufacturer- suppliers of inputs in respect of all the 53 consignments of inputs for verification of the cenvatable invoices. In all the cases, the Range Superintendent at consignor's end (in J&K and Assam) found the invoices of the suppliers to be genuine.
5 E/60182, 60271 & 60318/2019 2.5 The Revenue entertained the view that the appellant has not received the inputs and has taken the Cenvat Credit as well as the refund on the basis of fake invoices. On this apprehension, the Commissioner, C.E., Meerut-II, had issued the impugned SCN on the allegation that the appellant has fraudulently availed the Cenvat Credit on the strength of fake invoices against which no goods as claimed had been received by the appellant in their factory; that the appellant had fraudulently claimed refund of Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004; that the suppliers of inputs of Jammu and Assam were instrumental in passing on Cenvat credit fraudulently by issuing fake invoices to the appellant; and that the suppliers had shown bogus purchase of crude mentha oil from U.P. based commission agents and had not manufactured the goods allegedly supplied to the appellant. After following the due process, the ld. Commissioner has confirmed the demand along with interest and penalties. Hence, the present appeals.
3. Heard both the parties and perused the material on record. 4.1 The learned Counsel for the appellants submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law; and binding judicial precedents on the identical issue involved in arising out of the same investigation.
4.2 He further submits that the SCN had been issued on the basis of assumptions and presumptions, in the absence of any evidence, 6 E/60182, 60271 & 60318/2019 making a false case against the appellant. He further submits that the SCN had also been issued to the J&K based suppliers of inputs to the appellant by the Commissioner, C.E., Jammu based on the investigations conducted by the Commissioner, C.E., Meerut-II, without making any investigations at Commissioner, C.E., Jammu's end, even though the Commissioner, C.E., Jammu, in his letter dated 21.05.2010 addressed to the Chief Commissioner, C.E., Chandigarh had admitted that on close scrutiny of records the following facts had emerged: -
(i) most of the consignments of raw material of Jammu units were found entered at the Toll barrier;
(ii) officers of the D.I.C., who had assessed and fixed manufacturing capacity of the units, had been regularly verifying their purchase consignments;
(iii) the Central Excise Range staff, who had been visiting those units for PBC checks and verification of plant & machinery, had reported nothing adverse against those units.
4.3 He further submits that the cases made by the CCE, Jammu against 7 out of the 11 input suppliers of the appellant, against whom penalties had been imposed in the impugned OIO, penalties have already been set aside by the Tribunal, in the appeals filed by various J&K based units. Therefore, this issue is no more res integra and has been settled by the Tribunal in various decisions by setting aside the 7 E/60182, 60271 & 60318/2019 demand on the assessees. In this regard, he relies on the following cases:
Sangam Aromatics & others vs. CCE & ST, Chandigarh - Final Order No. 60498-60506/2019 dated 03.04.2019 (Tri. Chandigarh) Rohit Aggarwal, Akash Traders and S.B. Aromatics vs. CCE & ST - 2018 (11) TMI 830 - CESTAT CHANDIGARH G. Tech Industries, Shiva Mint Industries, Fine Aromatics, Ambika International, Jay Ambey Aromatics vs. CCE, Chandigarh - Final Order No. 63602-63606/2018 in Appeal Nos. E/61558, 61567-61570/2018 (Tri. Chandigarh) Nanda Mint & Pine Chemicals Ltd. vs. CCE, Chandigarh-II - Final Order No. 63177/2018 in Appeal No. E/60052/2016 (Tri. Chandigarh) M/s Vaishno International vs. ССЕ, Chandigarh - Final Order No. 63600/2018 in Appeal No. E/60423/2016 (Tri. Chandigarh) Neeru Enterprises, Abhay Chemicals, Sudhanshu Agarwal, Himanshu Agarwal, M/s. Siddhant Chemicals vs. CCE - 2019-TIOL-3071- CESTAT-CHD Nectar Lifesciences Ltd., Narbada Ind., etc. vs. CCE & ST, Chandigarh - Final Order No. 63193-63196/2018 in Appeal Nos. E/60916/2017, E/60002-60004/2018 (Tri. Chandigarh) Arora Aromatics, Narbada Industries, V.S. Industries, etc. vs. CCE - Final Order No. A/71939-71959/2017-EX(DB) dated 01.11.2017 (Tri. Allahabad) Marico Ltd. vs. CCE - 2020 (371) ELT 916 (Tri. - Chandigarh) SKM Egg Products Export (I) Ltd. vs. CCE - 2016 (341) ELT 411 (Tri. Chennai) 4.4 He further submits that the Adjudicating Authority, overlooking and ignoring the incontrovertible documentary evidence of receipt
8 E/60182, 60271 & 60318/2019 inputs in the appellant's unit, as 'not cogent evidence', has held that the appellant had knowingly and willingly indulged in fraudulent availment of Cenvat Credit on the strength of fake Cenvat invoices against which no goods as claimed had been received by the appellant in their factory; and on the basis of assumptions and presumptions; the transporters had not responded to the summons/letters sent to them; the addresses provided by the transporters were incomplete; there was no manufacture of finished goods by the supplier-manufacturers; there could not be any question of transportation and receipt of non-existent raw materials by the appellant; and the appellant had fraudulently claimed refund of Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004. 4.5 He further submits that the two refund claims, in respect of the goods exported by the appellant during July, 2007 to September, 2007 and October, 2007 to December, 2007 (i.e. during period of dispute) were sanctioned by the Assistant Commissioner vide Orders dated 16.07.2009. The Revenue had challenged the said refund sanction Orders by filing appeals before Commissioner (Appeals), Meerut-II; but the said appeals were rejected by the Commissioner (Appeals) vide O-I-A dated 25.02.2010. The said O-I-A had been placed before the Adjudicating Authority who rejected it as being not cogent evidence. The appellant had also placed the following documents before the Adjudicating Authority to justify taking the Cenvat Credit and the refund of Cenvat Credit, namely -
(i) ER-2 returns;
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(ii) sample refund sanction orders which were passed after due verification of facts;
(iii) VAT form-31s passed by VAT authorities of U.P. in respect of all the 53 consignments of inputs received by the appellant;
(iv) party-wise ledgers in respect of all the 11 input suppliers;
(v) proof of passing of all the 53 consignments through Madhopur Check Post in Punjab showing signatures of officers verifying receipt of inputs;
(vi) copies of intimations of receipts of inputs sent to the Range Superintendent.
But the Adjudicating Authority ignored the above incontrovertible evidences and confirmed the demands against the appellants as proposed in the SCN.
4.6 He further submits that the demands of Cenvat Credit and alleged erroneous refund are time-barred, since all the facts were informed to the jurisdictional Range and Divisional officers. The appellant produced the overwhelming incontrovertible documentary evidences which show that the appellant had exercised due diligence in following all the prescribed procedures and declared all requisite information in their ER-2 Returns. Therefore, fraud, collusion, suppression or contravention of the Act or Rules with intent to evade 10 E/60182, 60271 & 60318/2019 payment of tax cannot be invoked for recovery of demand beyond the normal period of one year and therefore, the demands for the entire period are hit by limitation.
4.7 As regards penalties imposed on Smt. Veena Gupta, partner of the appellant and Shri Rajiv Kumar Gupta, Manager of the appellant on the ground that they were concerned with the transporting, removing, depositing, keeping, concealing, selling, or purchasing and dealing with offending goods, the ld. Counsel submits that the case made out against the appellants was that no goods had accompanied the invoices, therefore, the question of transporting, removing, depositing, keeping, concealing, selling, or purchasing and dealing with offending goods does not arise. Moreover, the language of Rule 26 of the Central Excise Rules, 2002 does not talk about any offending goods, instead it talks about dealing etc with goods liable to confiscation; therefore, penalties under Rule 26 ibid on the partner and manager of the appellant are erroneous and incorrect.
5. On the other hand, the learned Authorized Representative for the department reiterates the findings of the impugned order.
6. We have considered the submissions made by both the parties and perused of the material on record; and have also gone through the various decisions arising out of the same investigation conducted by the Commissionerate, C.E., Meerut-II, on the basis of which, SCN was issued. Further, we find that the issuance of SCN is based on assumptions and presumptions and no investigation was made at the 11 E/60182, 60271 & 60318/2019 end the consigners who have issued the invoices on the basis of which, the appellant had taken the Cenvat Credit. We also find that the appellant had produced a number of evidences in respect of all 53 consignments such as copies of toll-receipts evidencing crossing of J&K border and the report of Excise & Taxation Authority, Patiala (Punjab) evidencing the entry of all vehicles carrying consignments at Madhopur Check Post etc., but the same were completely ignored by the Adjudicating Authority to confirm the demand.
7. We also find that this issue is no more res integra and the Tribunal has already decided a number of cases arising out of the same investigation and evidence put forth by Meerut-II, Commissionerate and all the appeals have been allowed by the Tribunal in favour of the assessees. In this regard, we may refer to the decision of this Tribunal in the case of Sangam Aromatics & others (supra) wherein this Tribunal has decided a bunch of appeals vide Final Order No. 60498-60506/2019 dated 03.04.2019 and held as under:
"9. We find that in this case the sole allegation against the Jammu based manufacturer are based on the investigation conducted by Commissioner of Central Excise, Meerut, and as per the investigation, it is alleged that farmers from whom the inputs were purchased were non-existence. Therefore, commission agents never supplied inputs to the Jammu based manufacturer and the Jammu based manufacturer did not manufacture the goods. Consequently, they have not sold the goods and 12 E/60182, 60271 & 60318/2019 it was alleged that the Jammu based manufacturer has not manufactured the goods at all.
10. We further take note of the fact that, the investigation was not conducted at the end of the Jammu based manufacturer and whole case has been based on the investigation conducted at Commissioner Central Excise, Meerut-II. Without investigation, it cannot be held that the Jammu based manufacturer were not manufacturer during the impugned period. Moreover, the entries of vehicles at the toll barriers also certified that the movements of raw material and finished goods. We further take note of the fact that the during the period of investigation itself, the Jammu based manufacturer were allowed continue their activity by procuring inputs from UP based supplier and selling goods manufacturing to their buyer/appellant. During the course of investigation, itself shows that the allegation is only on the basis of the assumption and presumption, therefore, it cannot be held that the appellants were not manufactured the goods during the impugned period. Moreover, as per the report of Jurisdictional Commissioner to Chief Commissioner dated 21.05.2010 reveals as under:
"5. Thus the officers of Meerut-II Commissionerate, instead of selecting the consignments where no excisable goods were manufactured/supplied, have generalized that all the purchases of crude Mentha oil by these Mentha units located at Jammu were bogus units, these units did not have any infrastructure to manufacture the said products, were nonfunctional and Transporters who did not turn up for tendering statements were declared non-existent etc. however, on close scrutiny of the records, the following facts emerges:
(i) Most of the consignments of raw material were found entered at the Toll barrier.
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(ii) The Officers of District Industry Centre, who have assessed and fixed the capacity of manufacturing units, have been regularly verifying their purchase consignments.
(iii) The Range staff had also been visiting these units for PBC Checks/verification of plant/machineries and reported nothing adverse against these units.
6. Therefore, it may not be strongly alleged with certainty that during the period 2005-2006 to 2008- 2009, these 27 units have not purchased crude Mentha oil and therefore have not manufactured any Menthol products in their units at all. There is hardly any time left for further investigation to strengthen the case as process is very time consuming and most of these of units have closed their factories due to withdrawal of Central Excise Duty on all Mentha products w.e.f 27.02.2010. Thus, the investigation may not be in tune with the investigations conducted by the Central Excise Commissionerate Meerut-II."
11. We further take of the fact that the similar issue on identical facts came up before this Tribunal in the case of Nanda Mint and Pine Chemicals Ltd. (Supra), wherein this Tribunal observed as under:
"6. We find that in this case the sole allegation against the appellant is based on the investigation made by Commissioner of Central Excise, Meerut, and as per the investigation, it is alleged that farmers from whom the inputs were purchased were nonexistence. Therefore, commission agents never supplied inputs to the appellant and the appellant did not manufacture the goods. Consequently, they have not sold the goods and it was alleged that the appellant has not manufactured the goods at all.
7. We take a note of the fact that the check post movement of trucks which were carrying inputs as well as finished goods were found entered. We further take note of the fact that the appellant has produced the evidence of the entry of all the transport vehicles i.e. trucks which have entered in the state of Punjab and have left the state of Punjab, as the same has been 14 E/60182, 60271 & 60318/2019 certified by the Punjab Sales Tax Department having entries of entry and exit all the vehicles, therefore, it cannot be said that the raw material/finished goods have never entered or left in the state of Jammu & Kashmir, therefore, the allegation on the basis of the investigation conducted by the Commissioner of Central Excise, Meerut is not sustainable.
8. Further, we take note of the fact that during the period of investigation itself, the appellant continued their activity by procuring inputs from U.P and selling the goods after manufacturing to the U.P based buyers and the Department allowed to continue the same during the course of investigation which shows that the allegation on the basis of investigation conducted at the end of Commissioner of Central Excise, Meerut is not sustainable that the appellant is not manufacturer the goods. Admittedly, duty is payable on the manufacture of goods and as per the report of the Commissioner of Central Excise, Jammu dated 25.02.2010, it has been revealed as under:
"5. Thus the officers of Meerut-II Commissionerate, instead of selecting the consignments where no excisable goods were manufactured/supplied, have generalized that all the purchases of crude Mentha oil by these Mentha units located at Jammu were bogus units, these units did not have any infrastructure to manufacture the said products, were nonfunctional and Transporters who did not turn up for tendering statements were declared non-existent etc. however, on close scrutiny of the records, the following facts emerges:
(i) Most of the consignments of raw material were found entered at the Toll barrier.
(ii) The Officers of District Industry Centre, who have assessed and fixed the capacity of manufacturing units, have been regularly verifying their purchase consignments.
(iii) The Range staff had also been visiting these units for PBC Checks/verification of plant/machineries and reported nothing adverse against these units.
6. Therefore, it may not be strongly alleged with certainty that during the period 2005-2006 to 2008-
15 E/60182, 60271 & 60318/2019 2009, these 27 units have not purchased crude Mentha oil and therefore have not manufactured any Menthol products in their units at all. There is hardly any time left for further investigation to strengthen the case as process is very time consuming and most of these of units have closed their factories due to withdrawal of Central Excise Duty on all Mentha products w.e.f 27.02.2010. Thus, the investigation may not be in tune with the investigations conducted by the Central Excise Commissionerate Meerut-II."
9. The said report also support the case of the appellant wherein it has been clearly mentioned that during the periodical checks by the departmental officers, the appellant found manufacturing the goods. Moreover, no discrepancy was found and on toll barriers it was found that the vehicles carried inputs/finished goods found entered. Moreover, the District Centre also certified the said fact.
10. We further take note of the fact that the various other departments namely Pollution Control Department, District Industries Department, Electrical Department have visited the factory of the appellant and found functioning. All these facts have not been disputed by the Revenue. As there is no corroborative evidence to show that the appellant were not manufacturing the goods, therefore, the allegation alleged in the show cause notice is not sustainable.
11. We further take note of the fact that on the basis of the same investigation conducted by the Commissioner of Central Excise, Meerut, the case was booked against the various parties namely M/s Arora Aromatic & Others Vide Final Order No. 71939-71959/2017 dated 01.11.2017, this Tribunal observed as under:
"10. Having considered the rival contentions and on perusal of the facts on record, we find that the basic allegations in the Show Cause Notice was that M/s Arora Aromatics did not receive inputs on which they availed Cenvat credit basically on the contention of Revenue that M/s Ruchi Infotech System, Jammu did not have facility to manufacture the inputs received by 16 E/60182, 60271 & 60318/2019 M/s Arora Aromatics and that the goods did not move from Jammu & Kashmir to the appellants factory and therefore, Cenvat credit was not admissible. The evidence submitted by the appellant in the form of Order-in-Original passed by Commissioner of Central Excise, Jammu on 31/03/2008, wherein it was held that M/s Infotech System, Jammu was manufacturing the goods was not accepted by the Original Authority stating that the said Commissioner, Jammu did not see himself that the goods have been manufactured. If such a logic is accepted then the basic system of assessment by Authorities under tax statute needs to be concluded to have been not properly understood by the Adjudicating Authority. The present system of assessment in Central Excise is record based. The Officer assessing the duty is not required to be present when the goods are being manufactured to witness the process of manufacture. The adjudication is to be done on the basis of evidence produced before the Adjudicating Authority. As per Evidence Act evidence in totality is to be taken into consideration and therefore, finding recorded in the impugned Order by the Original Authority who passed the said Order dated 29/01/2010 is bad in law. The Original Authority did not understand the process either of assessments or of adjudication. Further the investigations were not undertaken to find out wherefrom the inputs were received by the appellant for the goods they manufactured and on which they paid duty and which were exported, if they had been received the inputs from M/s Ruchi Infotech System, Jammu or the other suppliers of inputs. Further, the additional evidence submitted by the appellant indicated that in respect of units in Jammu, Central Excise Officers visited the factory premises and seen that the manufacturing process going on was evidence by them and such evidences being on record and submitted by the appellant it was the duty of the Original Authority to accept them and not to discard by saying that the Officers have not seen the goods being manufactured by their own eyes. Further, the receipt of inputs was verified by the Officers of Central Excise Department and sample of the same were also drawn and forwarded for Chemical Examination. Such evidence was also not accepted by the Original 17 E/60182, 60271 & 60318/2019 Authority, Therefore, it appears that the Original Authority was pre-determined to adjudicate the matter in the manner in which he has decided the issue and he was not just and fair and did not discharge his duty as an independent adjudicator. We, therefore, set aside both the impugned Ordersin-Original dated 29/01/2010 & 29/03/2011 and allow all the appeals filed by appellant. The appellant shall be entitled for consequential relief. All the demand and penalties imposed are also set aside. All the Miscellaneous/Stay Applications stand disposed, as infructuous."
12. In view of the above observations, we hold that without bringing any concrete evidence against the appellant on record, the proceedings against the appellant are not sustainable, therefore, the show cause notice issued to the appellant is only on the basis of the assumption and presumption and investigation conducted by the Commissioner of Central Excise, Meerut, but without conducting any investigation at the end of the appellant, therefore, on the basis of evidences available on record, we hold that the appellant were manufacturing unit in the state of Jammu & Kashmir is entitled for benefit of the exemption Notification No. 56/2002-CE dated 14.11.2002 and claimed the refund of duty paid through PLA.
In view of this, we set aside the impugned order and allow the appeal with consequential relief if any."
12. We also take a note of the fact that in the case of M/s Narbada Industries as well as M/s Aar Bee Industries, this Tribunal has entertained the issue and held that they are Jammu based manufacturer of the goods in question, therefore, they have rightly paid the duty and consequently the appellant M/s Sangam Aromatics is entitled to avail cenvat credit on the goods cleared by the Jammu based manufacturer.
13. In view of the above analysis, we hold that the Jammu based manufacturer were manufacturer during 18 E/60182, 60271 & 60318/2019 the impugned period and paid the duty on the goods manufactured by them. Consequently, the cenvat credit can't be denied to the recipient of goods located in the State of U.P i.e. M/s Sangam Aromatics. We also held that the allegations against the appellants are based on assumption & presumption which is not sustainable. In view of above, no penalty is imposable on the appellants.
14. In view of the above, we set aside the impugned orders and allow the appeals with consequential relief."
8. Further, we find that on the basis of the same investigation conducted by the Commissioner of Central Excise, Meerut, the case was booked against the various parties namely M/s Arora Aromatic & Others and the Allahabad Bench of the Tribunal vide Final Order No. 71939-71959/2017 dated 01.11.2017, has allowed all the appeals of the parties by observing in para 10 as under:
"10. Having considered the rival contentions and on perusal of the facts on record, we find that the basic allegations in the Show Cause Notice was that M/s Arora Aromatics did not receive inputs on which they availed Cenvat credit basically on the contention of Revenue that M/s Ruchi Infotech System, Jammu did not have facility to manufacture the inputs received by M/s Arora Aromatics and that the goods did not move from Jammu & Kashmir to the appellants factory and therefore, Cenvat credit was not admissible. The evidence submitted by the appellant in the form of Order-in-Original passed by Commissioner of Central Excise, Jammu on 31/03/2008, wherein it was held that M/s Infotech System, Jammu was 19 E/60182, 60271 & 60318/2019 manufacturing the goods was not accepted by the Original Authority stating that the said Commissioner, Jammu did not see himself that the goods have been manufactured. If such a logic is accepted then the basic system of assessment by Authorities under tax statute needs to be concluded to have been not properly understood by the Adjudicating Authority. The present system of assessment in Central Excise is record based. The Officer assessing the duty is not required to be present when the goods are being manufactured to witness the process of manufacture. The adjudication is to be done on the basis of evidence produced before the Adjudicating Authority. As per Evidence Act evidence in totality is to be taken into consideration and therefore, finding recorded in the impugned Order by the Original Authority who passed the said Order dated 29/01/2010 is bad in law. The Original Authority did not understand the process either of assessments or of adjudication. Further the investigations were not undertaken to find out wherefrom the inputs were received by the appellant for the goods they manufactured and on which they paid duty and which were exported, if they had been received the inputs from M/s Ruchi Infotech System, Jammu or the other suppliers of inputs. Further, the additional evidence submitted by the appellant indicated that in respect of units in Jammu, Central Excise Officers visited the factory premises and seen that the manufacturing process going on was evidence by them and such evidences being on record and submitted by the appellant it was the duty of the Original Authority to accept them and not to discard by saying that the Officers have not seen the goods being manufactured by their own eyes. Further, the receipt of inputs was verified by the Officers of Central Excise Department and sample of the same were also drawn and 20 E/60182, 60271 & 60318/2019 forwarded for Chemical Examination. Such evidence was also not accepted by the Original Authority, Therefore, it appears that the Original Authority was pre-determined to adjudicate the matter in the manner in which he has decided the issue and he was not just and fair and did not discharge his duty as an independent adjudicator. We, therefore, set aside both the impugned Orders-in-Original dated 29/01/2010 & 29/03/2011 and allow all the appeals filed by appellant. The appellant shall be entitled for consequential relief. All the demand and penalties imposed are also set aside. All the Miscellaneous/Stay Applications stand disposed, as infructuous."
9. We also find that substantial demand is barred by limitation because the appellants have not concealed any facts from the department and have been regularly filing ER-2 Returns. The copies of all the returns have also been produced on record. The appellants have also produced a number of documentary evidences to show that they had exercised due diligence in following all the prescribed procedures and also declared all requisite information in their ER-2 Returns
10. Further, as regards the penalties on the partner and the Manager, there is nothing on record to show that they have violated the provisions of Rule 26 of the Central Excise Rules, 2002 because the said rule does not talk about any offending goods, instead it talks about dealing etc with goods which are liable to confiscation; therefore, we hold that penalties under Rule 26 ibid on the partner and manager are incorrect in law.
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11. In view our discussion above and following the ratios of the various decisions cited above on identical issue, we are of the considered opinion that the impugned order is not sustainable in law and is liable to be set aside and we do so by allowing all the three appeals of the appellants with consequential relief, if any, as per law.
(Order pronounced in the court on 27.09.2024) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) RA_Saifi