Custom, Excise & Service Tax Tribunal
M/S.Nsp Forging Pvt.Ltd vs Cce, Delhi-Iv, Faridabad on 28 December, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
SCO 147-148, SECTOR 17-C, CHANDIGARH-160017
SINGLE MEMBER BENCH
Court-I
Appeal No.E/431-432/2012
(Arising out of OIA No.152-153/CE/Appl/DLH-IV/11 dt.1.11.2011 passed by the CCE(Appeals), Delhi-IV, Faridabad)
Date of Hearing: 13.10.2017
Date of Decision:28.12.2017
1.M/s.NSP Forging Pvt.Ltd Appellant
2.Shri Dinesh Kumar Goyal, Director
Vs.
CCE, Delhi-IV, Faridabad Respondent
Present for the Appellant: Shri N.L.Jangir, Advocate Present for the Respondent: Shri G.M.Sharma, AR Coram: Honble Mr.Devender Singh, Member (Technical) FINAL ORDER NO.62162-62163/2017 PER: DEVENDER SINGH The brief facts of the case are that the appellant No.1 is engaged in the manufacture of rough steel forgings falling under Chapter 73 of the Central Excise Tariff. In the course of an investigation by DGCEI, Delhi it emerged that a dealer M/s.Shiv Shakti Steels, Faridabad had passed inadmissible credit to the appellant No.1 without actually receiving the inputs. In these invoices, name of the manufacturer was shown as M/s.Haryana Steel & Alloys Limited (HSAL), Murthal. The investigations revealed that M/s.HSAL was engaged in clandestine manufacture and clearance of SS flats and were fraudulently passing on Cenvat credit to various manufacturers/dealers by way of issuance of cenvatable invoices of alloy steel bars and rods, A.S./M.S. Billets and rounds, carbon steel billets and ferro alloys in their names. But the said goods were actually being diverted elsewhere. The dealer M/s. Shiv Shakti Steel, was one of the recipients of such invoices. Scrutiny of the records of dealers firm revealed that the appellant No.1 have availed the Cenvat credit amounting to Rs.1,39,053/- on the basis of invoices issued by the dealer. The statement dated 19.11.2008 of Shri Ashok Bansal, partner in the dealers firm was also recorded and other investigation was caused. Further, on scrutiny of the documents, pertaining to the purchase of raw material of the appellant firm revealed that they had also shown the purchase of raw material directly from M/s.HSAL involving Cenvat credit of Rs.10,84,303/-.
The department also recorded the statement dated 29.6.2006 of Shri Dinesh Kumar Goyal, Director of the appellant No.1 in which he stated that they had purchased goods from M/s.Shiv Shakti Steels in 2004-05 and 2005-06. The statement of Shri Ramesh Rawat, Executive Director of M/s.HSAL was also recorded in which he admitted categorically that they had issued invoices without sending any goods. In his subsequent statement dated 23.12.2009, Shri Dinesh Kumar Goyal, Director of the appellant No.1 stated that their firm was also issued show cause notice No.F.No.DZU/INV./F/204/2008 dated 02.12.2008 by DGCEI, Delhi for fraudulent availment and utilization of Cenvat credit amounting to Rs.11,11,503/- for the invoices received from the said manufacturer during the period from 28.11.2003 to 27.11.2004. For the period subsequent to 28.11.2004, he also admitted his fault of wrong availment of Cenvat credit and undertook to deposit the same voluntarily. Shri Dinesh Kumar Goyal started that he understood thtat the material covered under these 24 invoices was not manufactured by HSAL and as such the Cenvat credit of Rs.10,84,303/- availed by them was also wrong. Based on this statement, in relation to 24 invoices and evidence which the department had used in relation to the show cause notice dated 2.12.2008, a show cause notice was issued to the appellant on 22.2.2010. The matter was adjudicated and the original adjudicating authority confirmed the demand of Rs.12,23,356/- against the appellant along with interest and imposed equivalent amount of penalty on appellant No.1 and appellant No.2. Besides, penalty was also imposed on M/s.Shiv Shakti Steel and M/s.HSAL. In appeal, the Commissioner (Appeals) upheld the order of the adjudicating authority. Aggrieved from the same, the appellant have filed these appeals.
2. Ld. Advocate for the appellants submits that second show cause notice was based on the same investigation with no new facts. He invited attention to the previous show cause notice dated 2.12.2008, which was for the period 28.11.2003 to 27.11.2004. The period in the present case show cause notice is April, 2005 to June, 2006. He also invited attention to the para 4 of order of this Tribunal in the stay application. He, therefore, argued that in view of the judgment of Honble Supreme Court in the case of Nizam Sugar Factory vs. CCE, AP- 2006 (197) ELT 465 (SC) and in the case of ECE Industries Ltd. vs. CCE, New Delhi-2004 (164) ELT 236 (SC), the department was not correct in issuing the second show cause notice on the basis of same investigation, especially when the period in the second show cause notice covered in the first show cause notice. He further submitted that there was no dispute about the supply, receipt and consumption of the goods. He invited attention to page 158 of the paper book in which VAT D-3 forms showing Alloys bars and rods to be consigned to M/s.NSP Forging (P) Ltd. He further submitted that no statement of the driver of any truck have been recorded and the statements of only transporters were recorded. He further contended that in the statement of Shri Ramesh Rawat, Executive Director M/s.HSAL, the name of the appellant was not mentioned. He invited attention to the statement of Shri Dinesh Kumar Goyal, Director of the appellant, who had stated that the payment was made to M/s.Haryana Steel.
3. On the issue of penalty on the Director of the appellant, he submitted that the penalty equivalent to the amount of Cenvat credit had been imposed under Rule 26 (1) of the Central Excise Rules, 2002. He argued that the penalty was not sustainable as the Director did not issue any invoice and the company was only recipient of the goods. He relied on the case law of M/s.Taj Forgings (P) Limited vs. CCE, Faridabad vide Final Order No.116/2016-CHD dt.21.01.2016 in appeal No.E/54489/14-SM. He also relied on the case law of CCE, Mumbai-I vs.Lal Mining Engg. Works-2007 (82) RLT 286 (SC).
4. Ld.AR appearing for the Revenue contended that the second show cause notice has correctly been issued as there was mis-statement by the Director in his statement dated 27.8.2008. In this regard, he invited attention to the para 3 of the impugned statement on page 229 of the paper book and stated that new facts, which were suppressed earlier, came to the notice only in second statement dt.22.12.2009. He also stated that the statement has not been retracted. He also stated that the dealer M/s.Shiv Shakti Steels was not involved in the first show cause notice. He further contended that the categorical admission of the Director that he had not received any material invoiced by M/s.HSAL does not require any further evidence. He relied on the following case laws:
(1) Speed-O-Graph vs. CCE, Mumbai-2014 (314) ELT 283 (Tri.-Del.) (2) Shalini Steels vs. Hyderabad-2010 (258) ELT 545 (Tri.Bang.) (3) Alladi Drilling Equipment P.Ltd. vs. CCE, Hyderabad-2011 (263) ELT 438 (Tri.-Bang.) (4) CCE, Mumbai vs. Kalvert Foods India Pvt.Ltd.-2011 (270) ELT 6432 (SC).
5. Ld.AR also stated that the Executive Director of M/s.HSAL, Shri Ramesh Rawat had admitted that they had diverted the goods to Rajasthan and have given only invoices to the appellants. He also pointed out that in their statements the transporters had denied transporting the goods to the appellants premises. He also relied on the para 10 of the impugned order pertaining to Form 38.
6. On the issue of penalty, he relied on the following judgments:
(i) Nashik Strips Pvt.Ltd. vs. CCE, Nashik-2010 (256) ELT 307 (Tri.-Mumbai).
7. In his rejoinder, Ld.Advocate referred to the para 8 of the show cause notice and stated that the material had been supplied from the market and not manufactured by the supplier. He also invited attention to the statement of Shri Ramesh Rawat, Director of the appellant at page 231 of the paper book and stated that M/s.HSAL not only manufacture stainless steel billets but also manufactures other items like alloy steel billets, M.S.billets, bars and alloys steels ,etc.
8. Heard both sides and examined the record.
9. I find that the main argument of the appellant is that this is the second show cause notice issued to them on the same ground and on the basis of same investigations. In support, they have relied upon the case laws of Nizam Sugar Factory vs. CCE (supra) and ECE Industries Ltd. vs. CCE, Delhi (supra) to contend that the extended period of limitation is not invokable in subsequent proceedings when the earlier proceedings on same subject matter are decided/pending. I find that there two types of invoices in the show cause notice dt.23.2.2010:-
(i) 24 invoices on which purchase of raw material was shown directly from M/s.HSAL
(ii) 2 invoices on which purchase of raw material was allegedly made via the first stage dealer M/s.Shiv Shakti Steels.
10. With regard to the 24 invoices, I find that these invoices were not known to the Department when the first show cause notice for the period 28.11.2003 to 27.11.2004 was issued on 2.12.2008 in which the duty of Rs.11,11,503/- was demanded. In the said show cause notice, the demand was based on the statement dt.27.8.2008 given by Shri Dinesh Kumar Goyal, Director wherein Shri Goyal stated as below:
Further on being asked specifically about the business transaction with M/s. HSAL, Sonepat, I state that we have business transaction with them since November, 2003, that we have availed a sum of Rs.11,11,503/- on the invoices issued by them. On being asked, whether we have received any material from M/s.HSAL against invoices issued by them in the name of our company, I state that the material was provided to us by M/s. HSAL from local market at Faridabad but invoices were raised by them from the factory gate at Sonepat........
11. Based on the above statement and other evidence, the show cause notices dated 2.12.2008 was issued, which was adjudicated resulting in confirmation of demand of Rs.11,11,503/- and penalty was imposed of Rs.2 lakh on the Director. Another statement of Shri Goyal was recorded on dated 23.12.2009 wherein he stated as under:
I have been asked regarding purchase of raw material from M/s.Haryana Steel & Alloys Ltd., Sonepat for the subsequent period i.e. after 28.11.2004 we have purchased from them vide invoice No.197 dt.22/5/06, 198 dt.23.5.06, 205 dt.26.5.06, 211 dt.27.5.06, 212 dt.28.5.06, 213 dt.29.5.06, 216 dt.31.5.06, 217 dt.31.5.06, 219 dt.1.6.06, 227 dt.7.6.06 and few more bills (as reflected in the chart enclosed duly signed by me) total bills 24 from the said manufacturer. I have been confronted with the seizure that material.
12. Scrutiny of record revealed that 24 invoices referred to in the subsequent statement dated 23.12.2009 had not been mentioned by Shri Dinesh Goyal in his first statement dated 27.8.2008, in which he had categorically stated that they had availed Cenvat credit of Rs.11,11,503 against invoices of M/s.HSAL since November, 2003. Hence I am in agreement with finding of the Commissioner (Appeals) that the appellant knowingly and deliberately suppressed the vital fact of availment of inadmissible credit on 24 invoices in the first proceedings before the DGCEI. The factum of existence of these invoices emerged only on 23.12.2009.
Had the appellant informed the DGCEI about availment of credit in complete details and come fully clear on 27.8.2008 itself, the same would have become part of the first show cause notice itself. Since it was deliberate suppression and positive act of mis-declaration by the Director of the NSPL, which was discovered after his second statement dt.23.12.2009, I find that the Department had no option but to issue second show cause notice. However, a different picture emerges with respect to 2 invoices pertaining to M/s. Shiv Shakti Steels. I find that the transactions, which have been made by M/s.HSAL through the dealer M/s.Shivshakti Steels, were in the knowledge of the Department when first show cause notice was issued on 2.12.2008. This is evident from the fact that the statement of Ashok Bansal, partner in M/s. Shiv Shakti Steels was recorded on 19.11.2008 wherein he was questioned about these invoices. Hence, these two invoices could not be included in second show cause notice.
13. The case laws relied upon by the appellant are not applicable to the facts of this case relating to 24 invoices of M/s.HSAL because in the case of Nizam Sugar Factory (supra) all the relevant facts were in the knowledge of the department and no new facts had emerged at the time of second show cause notice. In the instant case, it is evident that new facts relating to 24 invoices came to the notice of the Department only after second statement of Shri Dinesh Goyal. In the case of ECE Industries Ltd.(supra) subject matter of the two proceedings was similar and there was no suppression of facts unlike in the present case. The appellant have also referred to para 4 of stay order where the Bench had given prima facie finding on limitation. In this context, it is settled position in law that interim order is not binding in finally deciding an appeal. In this regard, Honble Supreme Court in the case of Amresh Tiwari vs. Lalta Prasad Duby & another, 2000) 4 SCC 400 = 2000 5 SCC (Cri) 806 held as under:
It is settled law that interim order, even though they may have been confirmed by the higher courts, never bind and do not prevent passing of contrary order at the stage of final hearing. Hence, the observations in stay order can have no bearing on the final order.
14. While some part of the investigation, in both proceedings are undoubtedly common, but the suppressed information relating to 24 transactions directly with M/s.HSAL between 18.2.2006 and 7.6.2006 were not included in his categorical statement given by Shri Goyal on 27.8.2008 and deliberately withheld. Hence I hold that the department is justified in invoking the extended period for the second show cause notice in respect of 24 invoices. I also find that the self inculpatory statement dt.23.12.2009 of the Director has not been retracted at any stage.
15. I find that besides the facts brought out in the statement dt.23.12.2009 of Shri Dinesh Kumar Goyal, there is corroborative evidence in the form of statements of Sh. Ramesh Rawat, Executive Director of M/s HSAL in his statement dt.29.6.2006, who had admitted that they were having arrangements only with M/s Bedi Golden Transport Company for arrangement of trucks for transportation of SS Flats to Jodhpur and other places; that M/s Bedi Golden Transport Co. did not have their own trucks and were arranging trucks from other transport companies; that however GRs were issued by M/s Bedi Golden Transport only in respect of the trucks arranged by them; that M/s Bedi Transport had kept blank GR books at their factory and sometimes one of their employee used to come in their factory to issue GR and sometimes their own employees used to issue GRs; that they were also using GRs of M/s Komal Transport Co. and M/s New Delhi Haryana Goods Carrier; that these two transport companies were not in existence and they had got the GR books printed through M/s. M/s Bedi Golden Transport; that the GRs of these two transport companies were made available to them by M/s Bedi Golden Transport for use as and when required by them for covering the consignment to jodhpur as well as to accompany the invoices issued to various manufacturers and dealers to whom only invoices were issued and no goods were actually dispatched. It has also been brought out in the investigations that Shri Vijay Kumar, Manager of M/s Bedi Transport Co. in his statement dated 19.5.2006 categorically stated that their company never transported any goods manufactured by M/s.HSAL to Faridabad. Shri Dinesh Gupta, Partner of M/d.Gupta Motors, YST-3, Loha Mandi, Naraina, New Delhi vide his fax letter dated 18.1.2010 informed that on 31.05.2006 his vehicle No.HR 38C 9065 and HR 38 G 3390 (for which GRs were issued in their GR books) did not belong to him and he had no knowledge about the same. Similar facts were narrated by Shri Anil Kumar Gupta of M/s. Gupta Motors, Naraina, New Delhi in his statement dated 28.01.2010. The appellant have not disputed these statements of Shri Ramesh Rawat, Shri Vijay Kumar, Shri Dinesh Kumar and Shri Anil Kumar. Their only argument is that the appellants name does not figure in the statement of Shri Rawat and the statements of drivers were not recorded. I find that the statement of Shri Ramesh Rawat clearly brings out that goods were only sent to Jodhpur and no goods were transported to Faridabad where only invoices were sent. Besides, there is admission by Shri Dinesh Goyal, Director that material received in these 24 invoices was not manufactured by M/s. HSAL. I also find that the evidence from the transporter companies is further corroborative and clinching. Hence, non -recording of statements of drivers does not create lacunae in the case of Department.
16. I find that Sh. Ramesh Rawat Executive Director of M/s HSAI in his statement dt. 29.6.06 has categorically admitted that no goods were supplied by them but only invoices were supplied to various dealers and manufacturers so as to pass on the fraudulent Cenvat credit. The transporters in their respective statements have categorically denied having transported any goods from HSAL to Faridabad. The transporters have even stated that the vehicles which were shown to have carried goods under their GRs actually did not pertain to them. I further find that none of these persons have retracted their respective statements and therefore the statements have evidentiary value. I further note that the statement narrating true facts has got an evidentiary value and needs no further corroboration as held by Honble Supreme Court in the case of CCE, Mumbai vs. M/s Kalvert Foods India Ltd 2011-TIOL-76-SC-CX. The relevant finding of the Apex Court is as under:
Central Excise- Statements recorded by Central Excise officers should be relied on The statements were recorded by the Central Excise officers and they were not police officers. Therefore, such statements made by the Managing Director of the Company and other persons containing all the details about the functioning of the company which could be made only with personal knowledge of the respondents and therefore could not have been obtained through coercion or duress or through dictation. No reason why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon.
17. The appellant have also argued that there was no dispute on supply/receipt/consumption of the goods. However, by the admission of their own Director, the goods which were received by the appellant No.1 were not the goods which were manufactured by M/s.HSAL and should have accompanied the impugned invoices. In the absence of same, the credit taken on such invoices was patently fraudulent and inadmissible.
18. The appellant have referred to the VAT form D-3 submitted by them to contend that the goods had been checked by State Excise Taxation Officer. I find that these forms were produced before the Commissioner (Appeals) and after considering the findings of first appellate authority, I am in full agreement with the finding of fact given by the Commissioner (Appeals) in para 10 of his order, which is reproduced below:
10. The appellants have relied on the Form 38 issued by State Government of Haryana in respect of the said 24 invoices covering the transactions between HSAL and the appellants. Here I note that blank Form 38 is issued by State Government of Haryana where particulars of the consignments are filled by the originating point. It is not the case that any Government agency supervises the movement of goods under the cover of Form 38. On perusal of the copies of Form 38 brought on record by the appellants, I do not find any endorsement by Stage Agency to the effect that the goods covered under the said Form 38 were delivered under their supervision. The particulars filled in Form 38 at best can be equated by issuing an invoice under Rule 11 of the Central Excise Rules, 2002, where the person issuing invoice himself fills the details of the goods covered under it. Rather I find that the act of HSAL amounts to breach of trust deposed upon them where they were supposed to act in a bonafide manner, which they have failed to do.
19. I also find that the appellant have relied upon the judgement of the Honble Allahabad High Court in the case of CCE vs. Juhi Alloys Ltd. (Supra). In the said case, the assessee was engaged in the manufacture of MS bars, rounds etc. and had procured raw material from M/s. MK Steels (P) Ltd. The inputs covered by the invoices raised by M/s.MK Steels (P) Ltd. were received by the assessee and entered in Cenvat credit account. On enquiry by the Central Excise Officers, it was found that the original manufacturers of MS ingots, namely, Sarla Ispat (P) Ltd. was non-existent. The assessee had availed credit on the strentght of invoices which was issued by M/s. MK Steels, who was first stage dealer. In these set of facts, the Honble court held that it was impracticable for an assessee to go behind the record maintained by the first stage dealer. Since the portion of show cause notice pertaining to two invoices on which goods were supposedly received through M/s.Shiv Shakti Steels, has already been held to be as time barred, the applicability of the judgment has to be examined for the remaining part of the demand in relation to 24 impugned invoices. However, in respect of 24 impugned invoices, I find that the assessee received invoices directly from M/s.HSAL and not through first or second stage dealer, hence the ratio of decision does not apply to demand against these invoices. In respect of 24 invoices directly from M/s.HSAL since there were no accompanying goods supplied by M/s.HSAL, which by appellants own admission had been procured from local sources and not manufactured by M/s.HSAL, the appellant are not entitled for the credit. The appellant have also relied upon the decision of this Tribunal in the case of Taj Forging Ltd. (supra) and in the case of Arvind Enterprises (supra) to contend that the credit should be allowed. I find that the decision in the case of Arvind Enterprises, which is a Single Member decision, the statement of Shri Rawat was not agreed upon by the two dealers and all the payments were purported to be made by cheque to the dealers. Since the credit in that case was on the basis of invoices issued to dealers and the facts were distinct from 24 invoices referred to above, the same is not applicable to the facts of this case. Likewise the case of Taj Forging Ltd. is entirely on the basis of case of Arvind Enterprises (supra), which has been referred above and distinguished. Besides, the facts given in the Taj Forging Ltd. order are very scanty, hence no reliance can be placed on this. The appellant have also relied on the decisions sof CCE, Chandigarh vs. Shakti Rolls Cold Strips (P) Ltd.-2008 (229) ELT 661 (P&H). However, the facts of said case are different as there was a finding by the Tribunal that the inputs were obtained on transit sales made by the dealer and there was proof of their use in manufacture. On the contrary, in this case, it has been admitted by Director that the 24 invoices were not accompanied by the inputs manufactured by M/s.HSAL and were therefore bogus invoices. The appellant have also relied on CCE, Chandigarh vs. Hitkari Industries Limited-2008 (226) ELT 583 (Tri.-Del.), which is a Single Member decision; besides the said case was booked on the basis of invoices issued by a dealer, who did not have records of consignment in his sales tax registers. However, on specific verification with Sales Tax authorities submitted details of consignments that crossed the Parwanoo border and the payments were made by cheque. No such verification was done in this case in view of clear admission by the Director and there is no proof of payment for the goods, which never accompanied the invoices. Hence, this decision does not help the appellant. For the other case relied on by appellant CCE, Chandigarh vs. Neepaz Steel Ltd.-2008 (230) ELT 218 (P&H), the inputs supplied by the dealer were received by the manufacturer and used in the manufacture of goods cleared on payment of duty. On the contrary, in this case it is admitted fact that goods which were received were not manufactured by M/s.HSAL, who issued bogus invoices only. Hence, this case too is of no assistance to the appellant.
20. In view of foregoing, the demand in respect of 24 invoices issued by M/s.HSAL is sustained.
21. As for the penalty on M/s.NSP Forging Pvt.Ltd., I find that since there was fraudulent availment of credit, suppression and mis-declaration, the penalty of equivalent amount to credit pertaining to 24 invoices referred hereinabove is thus sustained.
22. The appellant have argued that the penalty on the Director under Rule 26(1) equal to the amount of demand was completely unjustified. The appellant have also argued that the penalty is not imposable on the Director as he did not issue invoices and was only recipient of the invoices.
23. As for the penalty on the Director, I find that Shri Hitesh Gupta, Accountant adn authorized Signatory, in his statement dt.17.12.2009 has stated that Shri Goyal was the person responsible for procurement of raw materials and maintenance of statutory records and other records. Hence, it is evident that Shri Goyal has played a vital role in receipt of only invoices from M/s.HSAL to give appearance that the transactions were genuine. Besides, he did not disclose full information as required of him under law in his earlier statement 27.8.2008 and the details of 24 invoices in the show cause notice dt.23.2.2010 came to light in his statement dt.23.12.2009. I find that the Division Bench of this Tribunal in the case of Nashik Strips Pvt.Ltd. vs. CCE, Nashik (supra) has held that the penalty on the Director is imposable in case the company has availed the credit without actual receipt of the inputs.
24. The appellant have relied upon the judgment of CCE, Mumbai-I vs. Lal Mining Engineering Works to argue that penalty under Rule 26 (1) was not applicable during impugned period and the same cannot be applied retrospectively. I find that the period in respect of 24 impugned invoices is from 18.2.2006 to 7.6.2006. Since the penalty has been proposed in the show cause notice under Rule 26(1) which was on the statute at the time of commission of offence, the plea of the appellant is not sustainable.
25. In view of above, penalty on the Director is justified. However, I find that quantum of penalty is excessive considering the duty evaded and the same is therefore reduced to Rs.6 lakh.
26. In the result, the following order is passed:
(i) the demand of Rs.1,39,053/- pertaining to cenvat credit taken on 2 invoices of M/s.Shiv Shakti Steel is not sustainable and is therefore set aside. Interest on the same and equivalent penalty of Rs.1,39,053/- is also set aside;
(iii) the demand of Rs.10,84,303/- pertaining to 24 invoices of M/s.HSAL is upheld along with interest thereon;
(iii) Penalty of Rs.10,84,303/- on M/s. NSP Forgings Pvt.Ltd. under Section 11AC of Central Excise Act, 1944 read with Rule 15 of CCR, 2004 is upheld;
(iv) Penalty on Shri Dinesh Kumar Goyal, Director is reduced to Rs.6,00,000/- (Rupees six lakh)
27. The appeals are disposed of as above.
(the order pronounced in the court on 28.12.2017) (DEVENDER SINGH) MEMBER (TECHNICAL) mk 1 Appeal No.E/431-432/2012 M/s.NSP Forging Pvt.Ltd. vs. CCE, Faridabad