Custom, Excise & Service Tax Tribunal
M/S. Sri Suguna Machine Works, Unit Ii vs Cce, Coimbatore on 1 November, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. E/360/2012
(Arising out of Order-in-Appeal No. 99/2012 dated 21.5.2012 passed by the Commissioner of Customs, Central Excise and Service Tax (Appeals), Coimbatore)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
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 should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
M/s. Sri Suguna Machine Works, Unit II Appellant
Vs.
CCE, Coimbatore Respondent
Appearance Shri S. Kandasamy, Consultant, for the Appellant Shri P. Arul, Superintendent (AR) for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Date of Hearing: 01.11.2013 Date of Decision: 01.11.2013 Final Order No.40682/2013 The relevant facts of the case, in brief, as per record are that the appellants are engaged in the manufacture of cast articles of irons, Motor Vehicle Parts and Parts of Escalator wheels falling under Heading 7325 00 00, 8708 00 00 and 8431 00 00 of the CETA, 1985. The appellant received the inputs namely MS scrap from the registered dealers and availed CENVAT credit under CENVAT Credit Rules, 2004. A show-cause notice was issued proposing to deny the CENVAT credit of Rs.58,940/- availed during the month of July August 2006 on the basis of the invoices issued by the dealers M/s. Leadsman Enterprises.
2. The adjudicating authority confirmed the demand of duty of Rs.58,940/- along with interest and penalty of Rs.15,000/- under Rule 15(1) of CENVAT Credit Rules, 2004 and Rule 15(2) of the said Rules read with Section 11AC of the Central Excise Act separately. Further, penalties were imposed on the first and second stage dealers.
3. The assessee filed appeal before Commissioner (Appeals) for setting aside the adjudication order. Revenue also filed appeal before the Commissioner (Appeals) for imposition of mandatory penalty. By the impugned order, the Commissioner (Appeals) disposed both the appeals and upheld the demand of duty along with interest and also enhanced the penalty equal amount of duty under Rule 15(2) of the said rules r/w Section 11AC of the Central Excise Act. The penalty of Rs.15,000/- imposed under Rule 15(1) of the CENVAT Credit Rules, 2004 was set aside. Hence, the assessee/appellant filed this appeal.
4. The learned Consultant on behalf of the appellant submits that the appellant purchased CI scrap as evident from the Invoice No.36 dated 28.7.2006 and No. 38 dated 2.8.2006 as per purchase order from the dealers. They have also received the CI scrap from the dealers which was utilized in the finished products and duly recorded in the CENVAT accounts. The appellant has taken sufficient steps as provided under the CENVAT Credit Rules, 2004 in respect of genuinity of the issue of CENVAT invoices. It is contended that CENVAT credit cannot be denied on the ground of alleged irregularities at the hands of dealers, when it is established that the appellant received duty paid goods. He relied upon the decisions of the Tribunal as under:-
(a) Transpek Industry Ltd. Vs. CCE 2010 (249) ELT 91
(b) Uni Deritend Ltd. Vs. CCE 2011 (272) ELT 280
(c) Centricast Enterprises Vs. CCE 2007 (219) ELT 680
(d) R.S. Industries Vs. CCE 2003 (153) ELT 114
3. On the other hand, the learned AR on behalf of the Revenue submits that during the investigation, it was found that the dealers supplied the scrap from the local market which is not duty paid. It is further submitted that they have received the goods on much lower value than the purchase price of the dealer. Thus, it is clearly evident that the appellant had connived with the dealers in respect of receipt of the goods fraudulently. He relied upon the decision of the Tribunal in the in the case of Amex Alloys Pvt. Ltd. & Or. Vs. CCE 2013 (296) ELT 229 and V.K. Enterprises Vs. CCE 2010 (249) ELT 462.
4. After hearing both sides and on perusal of the records, It is seen from the adjudication order that during the investigation Mr.P.R. Gabriel, Manager and authorized signatory of the appellant in his statement dated 24.1.2008 stated as under:-
That they have purchased scrap M/s. Leadsman Enterprises vide the CENVAT invoice Nos. 36 dated 28.7.2006 and 38 dated 2.8.2006; that they have specifically placed purchase orders for scrap with M/s. Leadsman Enterprises; that they had received the scrap with CENVAT invoices and from which they have availed CENVAT credit, since the material received and the description mentioned are only as scrap. In the Leadsman Enterprises Invoices, the description mentioned as scrap even in the 1st stage dealer and manufacturers; that as far as the bonafide nature of the goods purchase, he informed that they checked whether the goods received by them are in agreement with purchase orders and proper CENVAT bills are accompanied; that the duty payment particulars are correctly mentioned in the bills; that Central excise registration number is furnished and on satisfaction of all the above points, they availed the cenvat credit as genuine; that with regard to the enquiry as to whether M/s. Leadsman Enterprises had supplied the scrap sourced from open market without cenvat bills and furnished false source document details in cenvat invoices issued to them, he stated in affirmative that they had transacted in good faith only.
5. The learned Consultant placed the invoices as referred in the statement, before the Bench. It is seen that the dealers supplied CI scrap and issued invoices under the description of CI scrap. The Commissioner (Appeals) observed that it has been made out in the show-cause notice that the appellant received the goods at much lesser value than the purchase price. It is also observed that if they have looked into the pricing of the goods received by them, it would have come to their knowledge that the invoices issued by the dealers are prices much lower than the purchase price by the dealers themselves.
6. It appears that the appellant issued the purchase order for purchasing the CI scrap. They received the CI scrap accompanied with invoices indicated as CI scrap. Rule 9(3) of the CENVAT Credit Rules as it stood at the material period provides that the manufacturer of excisable goods taking CENVAT credit on inputs shall take reasonable steps to ensure that the input or capital goods in respect of which he has taken the CENVAT credit on which the appropriate duty of excise as indicated in the documents accompanying the goods has been paid. The Explanation to Rule 9(3) of the said Rules provides that the manufacturer shall be deemed to have been taken reasonable steps if he satisfies himself about the identity and address of the manufacturer or supplier as the goods may be showing the documents evidencing payment of excise duty either from his personal knowledge or on the basis of the certificate given by a person. In the present case, there is no dispute that the dealer is registered under Central Excise Rules and they are in existence in their address. There is no material available that the CENVAT invoices accompanied with goods are not genuine. So, in my considered opinion, the appellant had satisfied the conditions as provided under Rule 9(3) of the said Rules. Hence, there is no reason to deny the credit on the appellant. The dispute raised by the Revenue of value of the goods, cannot be reason for denial of CENVAT credit subject to fulfillment of condition of CENVAT Credit Rules. Apart from that, the transaction of the goods at a lower price is within the domain of buyer and seller.
7. The case law relied upon by the learned AR would not apply in the facts of the present case. In that cases, the appellants received MS scrap accompanied with the CENVAT credit invoices under the description of MS rounds, coils etc. Hence those cases are not applicable to the present case.
8. In view of the above discussions, the impugned order is modified insofar as the demand of duty along with interest and penalty imposed on the appellant are set aside. The appeal filed by the appellant is allowed with consequential relief, if any.
(Dictated and pronounced in open court) (P.K. Das) Judicial Member Rex 6