Customs, Excise and Gold Tribunal - Ahmedabad
Centricast Enterprises vs Cce on 18 May, 2007
Equivalent citations: 2007(120)ECC224, 2007ECR224(TRI.-AHMEDABAD)
ORDER M.V. Ravindran, Member (J)
1. These appeals are directed against order-in-appeal dt.22.5.06.
2. The appellant company is in appeal against the order for denial of modvat credit to them, while the Revenue is in appeal against setting aside the penalty on the appellant by Commissioner (Appeal).
3. The relevant facts that arise for consideration are that appellant company was availing modvat credit on the duty paying documents received by them from two registered dealers. The allegations in the show cause notice are that the appellant company availed modvat credit based only on the documents and did not receive any input as indicated in the said duty paying documents. Appellant company contested the show cause notice on the ground that the statement recorded of the proprietor of the registered dealer categorically mentions that the inputs/goods as mentioned in the invoice were supplied by them and they also challenged the show cause notice on the time bar issue. The adjudicating authority did not accept the contention of the appellant and confirmed the demand and also imposed penalty. Aggrieved with the said order, appellant company went into appeal to the Commissioner (Appeals). Learned Commissioner (Appeals) after granting personal hearing to the appellant company upheld that portion of the order which confirmed the demand against the appellant company, on the same ground as held by adjudicating authority and set aside the penalty imposed on the ground that duty has been paid before issue of show cause notice. Appellant company and Revenue both are challenging that portion of the order.
4. Considered the submissions made by both sides and perused the record. On perusal of the record, I find that duty paying documents issued by the said dealer clearly indicate that they had supplied "MS scrap" to the current appellant company. On perusal of the statement recorded of proprietor of the said registered dealer, I find that the said registered dealer had clearly indicated that they had procured these MS scrap from local scrap dealers and supplied the same to the appellant company under the duty paying documents. Though the duty paying documents indicated the credit taken by the dealer was against the invoices issued by one M/s New Siddhi Vinayak Re-Rolling Mills, the dealing between registered dealer and the said M/s New Siddhi Vinayak Re-Rolling Mills could not be considered as relevant for denying the modvat credit to the current appellant. The current appellant had, in fact, purchased M.S. scrap from several registered dealers and have paid money to them for that, it is also on record that after consuming the scrap, they had manufactured finished goods and cleared the same on payment of duty. It is settled law that when the inputs are received and consumed in the factory premises, there cannot be any denial of Modvat/Cenvat credit to the appellant. In this case, it may be an arrangement between registered dealer and the said M/s New Siddhi Vinayak Re-Rolling Mills, but that arrangement cannot cloud the transactions between appellant and registered dealer, in as much, that it is on record that the entire payment for the inputs purchased were made by the appellant to the registered dealer by cheque. It is also on record that the appellant is a person who does job work of said iron scrap, on behalf of AIA Engineering (P) Ltd. The authority has recorded the statements of senior officers of M/s AIA Engineering (P) Ltd. wherein it has been clearly recorded that they supplied the material to the current appellant for conversion. There is no contrary evidence to the appellant's claim that they converted input received as indicated in the duty paying documents, but denial of Modvat/Cenvat credit to the appellant on the ground that they have not received the input along with the duty paying documents. There is also no evidence as to any flow back of money from dealer to the appellant.
5. Further, I find that an identical issue came up before Division Bench in the case of R.S. Industries, v. CCE NDLS as , wherein it was held that We have considered the submissions of both the sides. The Revenue has not challenged the findings contained in the impugned Order to the effect that the allegation of non-receipt of goods by the Appellants has not been established beyond doubt in view of the fact that Prerna Metal Inds. had bought material from Delhi Aluminium Corporation which was substantial in nature. Once the Revenue is not disputing the receipt of goods under the cover of invoices by the appellants which contained duty paying particulars the Modvat credit cannot be denied to the appellants. As far as the appellants are concerned they have purchased the goods which are dutiable on the strength of the invoices carrying duty payment particulars. Moreover the Revenue has confirmed the demand of duty against Prerna Metal Inds. in respect of goods removed by them by utilizing wrongly availed Modvat credit. We also observe that Rule 57-I of the Central Excise Rules, 1944 at the time when the show cause notice was issued, provided for the recovery of Credit taken on account of error, omission or misconstruction on the part of officer or manufacturer or an assessee. As far as the appellants are concerned there was neither any error nor any misconstruction on their part. We also do not find any substance in the submission of the learned SDR that larger period of limitation will be invokable irrespective of the fact that fraud has not been committed by the appellants. It is evident from the impugned Order that the appellants have not committed any fraud, suppression, or wilful mis-statement as the Commissioner has given specific finding that no evidence has been brought on record to suggest active involvement of the appellants. Rule 57-I(1)(ii) clearly provides that where a manufacturer has taken a credit by reason of fraud, wilful misstatement, collusion or suppression of fact or contravention of any of the provisions of the Act or the Rules with intent to evade payment of duty extended period of 5 years will be available for issuing show cause notice. It is apparent from the wordings of Clause (ii) that fraud etc. has to be committed by the person against whom the show cause notice is being issued and not by the person at large. We, therefore, set aside the disallowance of the Modvat credit and recovery of the said amount from the appellants. All the appeals are thus allowed.
6. Accordingly, taking into consideration the facts and circumstances of the case and respectfully following the judgments of Division Bench of the Tribunal, the appeal of the assessee is allowed with consequential relief and appeal filed by the Revenue is rejected.
7. To my mind, the question of limitation need not be gone into, as I have allowed the appeal of the assessee on merits itself.
(Dictated & Pronounced in Court)