Custom, Excise & Service Tax Tribunal
Arvind Enterprises vs Cce, Delhi-Iv, Faridabad on 12 June, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI COURT NO. III SINGLE MEMBER BENCH Appeal No. E/1698/2011-Ex (Arising out of OIA No.30/CE/APPL/DLH-IV/2011 dt.19.4.2011 passed by the CE(Appeals), Delhi-IV, Faridabad) Date of Hearing: 28.10.2013 Date of Pronouncement:12.06.2014 Arvind Enterprises Appellants Vs. CCE, Delhi-IV, Faridabad Respondent
Appearance:
Shri Tech Chand, Assistant of Advocate for the Appellants Shri M.S.Negi, DR for the Respondent CORAM:
Hon'ble Mr. Manmohan Singh, Member (Technical) FINAL ORDER No.52435/2014 Per MANMOHAN SINGH:
Appellant M/s.Arvind Enterprises have come in appeal against OIA No.30/CE/APPL/DLH-IV/2011 dt.19.4.2011 passed by the Commissioner(Appeals), Central Excise, Delhi-IV, Faridabad wherein he has rejected the appeal of the appellant and upheld the order of adjudicating authority.
2. Brief facts of the case are that during the course of investigations conducted by the Directorate General of Central Excise Intelligence (DGCE), New Delhi, it transpired from the seized documents & statements of various persons recorded under Section 14 of the Central Excise Act, 1944 that M/s Haryana Steel & Alloys Ltd., 48 Km Stone, GT Road, PO- Engineering College, Murthal, Sonepat (Haryana) herein after referred to as HSAL) indulged in clandestine removal of SS Flats to certain manufacturers located elsewhere in India and engaged in fraudulent issuance of Cenvatable invoices of alloy steel bars & rods, AS/MS Billets, Rounds, Carbon steel Billets & Ferro alloys and passing of irregular CENVAT Credit to various manufacturers/dealers located at Chandigarh, Faridabad & Rohtak etc. without dispatching any goods to them. M/s Arvind Enterprises, B-203, 1st floor, Nehru Ground, Faridabad (hereinafter referred as dealer) is one of the dealer recipient of such fraudulently issued Cenvatable Invoices without accompaniment of corresponding goods. The investigation further revealed that M/s Arvind Enterprises, B-203, 1st floor, Nehru Ground, Faridanad had further issued 12 cenvatable invoices involving Cenvat Credit of Rs.98,000/- to M/s Advance Engineers, Faridabad, (hereinafter referred as manufacturer) on the strength of fraudulent invoices issued by HSAL & manufacturer availed cenvat credit on the said invoices.
3. Shri Ramesh Rawat, Executive Director of HSAL in his statement dated 29.6.2006, tendered under Section 14 of the Central Excise Act, 1944, admitted said facts of fraudulently issuance of Cenvatable invoices without supply of goods. Shri Arvind Tiwari, Authorized Signatory of dealer firm and Son of the owner of dealer firm under his statement dated 17.2.2008 tendered under Section 14 of the Central Excise Act, 1944, admitted that since they were receiving the material through Shri Subhas Goel, a broker to whom they usually place the supply order as per requirement. He further stated that in the light of evidence shown to him i.e. statement dated 29.6.2006 of Shri Ramesh Rawat, Executive Director of HSAL, he could say that material received through broker might have not been manufactured by HSAL & they had received goods with Cenvatable invoices manufactured by someone else alongwith invoices of HSAL. Shri Alok K. Bisht, Proprietor of M/s Advance Engineers, Faridabad, in his statement dated 22.9.2009, tendered under Section 14 of the Central Excise Act, 1944, on being shown the statements of said persons, admitted that invoices received from dealer were not accompanied by the same goods that were described therein & manufactured by HSAL. He understood the irregularities about fraudulent cenvat credit invoices issued by dealer for inputs showing manufactured by HSAL and inadmissibility of cenvat credit availed on the basis of such invoices, debited such irregular cenvat credit amounting to Rs.98,000/- (Rs.96,078/- towards cenvat credit and Rs.1,922/- education cess vide GAR 7 dated 1.10.2009. Show cause notice dated 1.10.2009 was issued to the manufacturer for proposing recovery of irregular cenvat credit with interest and for imposition of penalty on them as well as on the appellant in view of his act of fraudulent issuance of Cenvatable invoices to the manufacturer. The adjudicating authority confirmed the demand alongwith interest and imposed penalty of equal amount of confirmed demand on them.
4. Commissioner (Appeals) observed that that show cause notice has alleged that appellant has contravened the provisions of Rule 11 of the Central Excise Rules, 2002 read with Rule 7 of Rule Cenvat credit Rules, 2002/Rule9 of the Cenvat Credit Rules, 2004, as they deliberately issued fake Cenvatable invoices wherein manufacturer were liable for penal action under Rule 25 of the Central Excise Rules, 2002. Commissioner (Appeals) at page 5 of para 5(2) upheld the findings of adjudicating authority.
5. Relevant para is reproduced for ready reference:-
I find that show cause notice describes that Shri Ramesh Rawat, Director HSAL, in his statement tendered under Section 14 of the Central Excise Act, 1944, has clearly admitted that they had only issued Cenvatable invoices to the manufacturer/dealer and no goods were accompanied with their invoices. The show cause notice further revealed that Sh. Arvind Tiwari authorized person of dealer firm, in his statement tendered under Section 14 of the Central Excise Act, 1944, on seeing the statements of Shri Ramesh Rawat, Director of HSAL, has also stated that in light of evidence shown to his, he could say that material supplied to them by the broker may not have been manufactured by HSAL. He further stated that they received the goods through broker and they did not verify manufacturers details appearing on the invoices issued by the HSAL. On inquiry, he could not intimate the address or telephone numbers of the broker and only stated that broker was resident of Hisar. The show cause notice also described that Sh. A.K Bhist of Advance Engineers, in his statement tendered under Section 14 of the Central Excise Act, 1944, on being asked whether they ensured that they received same duty paid goods manufactured by the manufactured reflected in the invoices received from M/s Arvind Enterprises, Faridabad to which he replied that they had not ensured the same; that after seeing the statements of Shri Ramesh Rawat and Shri arvind Tiwari, he understood that the invoices which they received from M/s Arvind Enterprises were not accompanied by the same goods that were described in, that were not manufactured by M/s HSAL and Cenvat Credit Rs.98,000/- was not admissible to them. In view of the said facts as described in the show cause notice, I find that the adjudicating authority has correctly held that M/s Arvind Enterprises and M/s Advance Engineers, Faridabad were indulged in goods less transaction and availing of inadmissible credit on the basis of Cenvatable invoices issued by dealer.
6. Appellant pointed out that statement of Shri Ramesh Rawat, Director of HSAL was recorded on 29.56.2006 before DGECEI officers wherein he has stated that they used to manufacture carbon steel billets, alloys and MS billets and further stated that no goods were sent to some firms/company and no invoices were issued. Allegation was levelled against M/s.Arvind Enterprises regarding issue of such invoices deliberately wherein details of manufacturer and duty payment details were fictitious and manipulated. He contended that department has relied upon only on statement of Ramesh Rawat, Director of HSAL and no further corroborative evidence either in the shape of transporters statement or driver has been furnished. He further stated that appellant procured the goods from broker but broker has not been brought on record. He also referred to the statement of Ramesh Rawat, Director of HSAL wherein he stated that they used invoices of carbon steel billets, alloys and MS billets whereas the goods sold by them were alloy steel bars/rods. He raised doubt that dealers might have arranged the goods from sources and supplied alongwith invoices.
7. He also referred to the Honble Tribunals judgement in similar case vide Final Order No.A/55185-55187/2013-SM (Br) dt.14.1.13 reported as 2013 (296) ELT 253 (Tri.). Relevant para 8 of above judgement is reproduced below:
8.?The said order of Commissioner (Appeals) is impugned before Tribunal. After hearing both the sides and after going through the impugned order, I find that entire case of the Revenue is based upon the statement of Shri Ramesh Rawat, Executive Director, HSAL. It stands deposed in the said statement of Shri Rawat that in respect of certain items, he was only issuing the invoices and was not supplying the goods. The said statement of Shri Rawat does not stand agreed upon by the two dealers, i.e., M/s. Arvind Enterprises and M/s. Avon Steels. In his statement Shri Arvind Tiwari, authorized signatory of said two dealers have clearly deposed that they were receiving the goods from HSAL along with the invoices. It is not the Revenues case that HSAL was not manufacturing the raw material or were clearing/diverting their final product to other persons. Further the statement of Shri Tiwari stands corroborated by the statement of Shri K.K. Sharma of the manufacturing unit, M/s. J.L. Autoparts. It is also seen that all the payments were made to the dealers by cheque and there is no allegation much less any proof of flow back of the money from dealers to the appellant. Revenue has also not made any enquiries from the transporters as regards the transportation of the goods in question. As such the denial of Cenvat credit on the sole statement of manufacturer of the inputs, without taking into consideration the statement of the first stage dealer as also the statement of the manufacturing unit is not justified. It is further seen that manufacturing unit has entered all the inputs in their records which stands shown to have been used in the manufacture of their final product and cleared on payment of duty. If the Revenues case as regards non-receipt of inputs is accepted, a vacuum remains to be answered as to how the final product stands manufactured by M/s. J.L Autoparts. Revenue has not shown any alternate procurement of the raw material, in the absence of which M/s. J.L Autoparts could not have manufactured their final product. At this stage, I may refer to some of the precedent decisions. Tribunal in the case of the Prachi Poly Products Ltd. reported as 2005 (186) E.L.T. 100 (Tri.) observed that where the appellants have taken all reasonable steps to ensure that duty has been paid on inputs received by them and on which they took credit - Credit cannot disallowed on account of denial by manufacturer as regards payment of duty. In the case of Varanasi Domestic Appliances (P) Ltd. reported as 2007 (213) E.L.T. 286 (Tri.), it was observed that in the absence of any evidence to show that manufacturer were party to fraud or misrepresentation by supplier of inputs, denial of credit not justified.
8. In the above case, manufacturer M/s.HSAL was same. Statement dt.29.6.2006 of Ramesh Rawat, Director of HSAL. Statement of appellant dated 17.12.2008 was the same. purchase material was same, investigation agency i.e. DGCEI was same and period of dispute was same, only user of cenvatale goods was different. He submitted that the facts of above quoted decision may be applicable to the facts of present case.
9. On the other hand, ld.DR reiterated the findings contained in the Order-in- Original which were confirmed by the Commissioner (Appeals).
10. Heard both sides. I have gone through the ground of appeal taken by the appellant as well as finding of the adjudicating authority and Commissioner (Appeals).
11. The main issue involved in the appeal before Tribunal is whether there is any force in the contention of the appellant despite clear admittance of Shri Ramesh Rawat, Director of HSAL that they were issuing fake invoices and no goods of declared description were actually sent to such firms/company and only invoices were issued to them and this was done to cover part of their despatch of stainless steel to Jodhpur unit and to pass on cenvat credit to these parties who were obtaining only cenvatable invoices from them without receiving the goods mentioned in such invoices. No other evidence in the form of statement from the trader or transporter or broker was required.
12. Once duly admitted facts have come on record indicating that no movement of goods have taken place and only invoice having moved, no question of goods showing existence and subsequent movement arises. Further statement of Shri Arvind Tiwari, authorised signatory, Faridabad on being confronted with the question whether they received duty paid goods with the invoices received from M/s Arvind Enterprises, he stated that they received duty paid goods with all the invoices received from M/s Arvind Enterprises, Faridabad. On being further asked whether they ensured that they received that same duty paid goods manufactured by the manufacturer reflected in the invoices received from M/s Arvind Enterprises, Faridabad, he stated that they had not ensured the same; that he had been shown the statement dated 29.6.2006 of Shri Ramesh Rawat, Executive Director, of M/s Haryana Steel & Alloys Ltd., Murthal & statement dated 17.12.2008 and 23.12.08 of Sh. Arvind Tiwari, Authorised Signatory of M/s Arvind Enterprises, B-203 (1st floor), Nehru Ground, Faridabad; that he had seen & understood the same and appended his dated signature on all of these statements and after seeing the said statements, he understood that the invoices which they received from M/s Arvind Enterprises were not accompanied by the same goods that were described in them, those were not manufactured by M/s Haryana Steel & Alloys Ltd., Murthal; that number of such invoices were twelve (12); that he had put his dated signature on the chart containing details of all such 13. invoices received by them from M/s Arvind Enterprises; that he understood that the Cenvat Credit amounting to Rs.98,000/- (Ninety Thousand only) was inadmissible to them ad the same was utilized wrongly by them; that he promised to debit the same by 01.10.2009 positively through PLA and would submit the copy of PLA & GAR 7 challan on 01.10.2009 to our office.
14. Necessary payment was made through PLA and GAR-7 challan on 1.10.2009.
15. The material facts, outcome of investigation, gravity of allegation and strength of evidence on record clearly show that Revenues interests have been prejudiced by the appellants causing loss to it. It is also evident that fraudulent activities have been undertaken. Otherwise also tax evasion is looked at very seriously by courts since that hinders growth of the country. As per best established legal principles, fraud and justice do not dwell together. Further fraud nullifies everything. Passing of fraudulent cenvat credit through fake invoices has been clearly admitted and credit was also deposited back. Confessional statements coupled with fake invoices do not require any other evidence to prove.
16. In view of above, I do not find any ground to intervene the findings recorded by Commissioner (Appeals). Accordingly appeal is dismissed.
(Pronounced in the open court on 12.06.2014)
( Manmohan Singh) Member(Technical)
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