Custom, Excise & Service Tax Tribunal
M/S. Super Trading Company vs Cce, Delhi-Iv on 27 August, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. III Excise Appeal No. 2569, 2685, 2705/2010-EX[SM] [Arising out of Order-In-Original No. 58-60/CE/Appl/DLH-IV/2010 dated 26.05.2010 passed by CCE, Delhi-IV] For approval and signature: Honble Ms. Archana Wadhwa, 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 Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? M/s. Super Trading Company Appellants 2. Faridabad Autocomp System Pvt. Ltd. 3. Ayushi Steel company Vs. CCE, Delhi-IV Respondent
Appearance:
Shri N.K. Sharma & Shri Rajiv Agnihotry, Advocate for the Appellants Shri A.K Jain, AR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Date of Hearing: 05.07.2013 Date of Decision: 27.08.2013 FO ORDER NO._57402-57404/2013_ Per Archana Wadhwa:
All the three appeals are being disposed of by a common order as their arise out of the same impugned orders vide which demand of duty of Rs. 76,123/- stands confirmed against M/s. Faridabad Autocomp Systems Pvt. Ltd. by denying them the benefit of Modvat credit of duty, along with imposition of penalty of identical amount. In addition identical penalty stands imposed on the two other appellants who are first stage and 2nd stage dealers.
2. As per facts on record M/s. Faridabad Autocomp Systems Pvt. Ltd. are engaged in the manufacture of motor vehicle parts falling under Chapter 87 of Central Excise tariff Act 1985 and were availing the benefit of Cenvat credit of duty paid on various input received from M/s. Super Trading Company, second stage dealer the said second stage dealer in tern received the same from M/s. Ayushi Steels Company Pvt. Ltd., who is registered as a first stage dealer. The said M/s. Ayushi Steels Company procured the goods from the manufacturer M/s. Khemka Ispat Ltd.
3. As a result of certain investigations conducted at the end of M/s. Khemka Ispat Ltd. by the officers of DGCEI, New Delhi, it was gathered that the said manufacture unit was only issuing the invoices to the first stage dealer i.e. M/s. Ayushi Steel Company Pvt. Ltd, without actual supply of the goods. Shri Amit Kumar, director of Khemka Ispat Ltd., in his statement dated 24.02.2007 admitted the above fact.
4. Accordingly, investigations were conducted at the end of M/s. Ayushi Steels Company. In his statement of Shri Rupesh Bansal, Director was recorded on 01.02.2007, wherein, he admitted the above fact. As a result records of second stage dealer i.e. M/s. Super Trading Company were called and scrutinized and it was found that they have availed Cenvat credit based upon the invoices issue by the first stage dealer and have further issued invoices to the manufacturing unit i.e. M/s. Faridabad Autocomp Systems Pvt. Ltd., on the basis of which they have availed the Cenvat credit.
5. The statement of Shri Amit Kumar, Proprietor of second stage dealer M/s. Super Trading Company was recorded wherein he deposed that he was receiving the goods from M/s. Ayushi Steels Company Pvt. Ltd., which were being transported in truck/tampo and the cost of the freight used to be included in the value of the goods. All payment were made to M/s. Ayushi steels Company Pvt. Ltd. through bank; that they were maintaining proper RG-23D register. He was shown the statement of the first stage dealer and that of M/s. Khemka Ispat Ltd. and after seeing the same he said deposed that he could say that he did not received those goods which were manufactured and duty paid by M/s. Khemka Ispat Ltd.
6. On the above basis proceeding were initiated for denial of Cenvat credit claim of M/s. Faridabad Autocomp Systems Pvt. Ltd. and for imposition of penalty on various facts noticees. The said proceedings resulted in confirmation of duty and imposition of penalty by the original adjudicating authority and on appeal, upheld by Commissioner (Appeals).
Hence, the present appeal.
7. I have heard Shri Rajiv Agnihotry appearing for the appellant and Shri A.K. Jain for the Revenue.
8. As regards the availment of credit by the M/s. Faridabad Autocomp Systems Pvt. Ltd., stand strongly pleaded before me that the goods were received from M/s. Super Trading Company, which was duly registered as second stage dealer, under the cover of the invoices. In terms of the provisions of Rule 7 of Cenvat credit Rules, the recipient of inputs is required to know his supplier of the inputs. There is no dispute about the fact that M/s. Super Trading Company were known to the appellant on account of their personal knowledge and long standing business relations. The identity of Super Trading Company is knows to them on account of being a legal dealer and their address is duly mentioned on the invoices issued by them. As such, they fulfill all the requirement of Rule 7(2) inasmuch as they have taken sufficient steps to identify the seller of the goods. It further stand contended before me that the payments of the inputs were made through cheque and all such inputs so received by them were duly entered in their Cenvat credit account. The same were used in the manufacture of their final product i.e. motor vehicle parts supplied to various reputed car manufactures. The said motor parts were cleared by the appellant on payment of duty. As such there could be no doubt about the availability of the Cenvat credit in respect of input which were duly received by them.
9. After hearing learned DR, I find that the entire case of the revenue is based upon investigation conducted at the end of the manufactures M/s. Khemka Ispat Ltd. and the statement of their authorized representative and the statement of the first stage dealer. I have gone through the said statement and find that there is no reference to any particular invoices and the same are general statement. The statement of the authorized representative of Khemka reveals that with the loss of business in the year 2002, they entered into an arrangement with the first stage dealer for issuing invoices without the supply of goods so as to reflect some sale purchase books on accounts. Though as per the said statement the arrangement was entered into in the year 2002, I find that the disputed period in the present appeal is February and March 2004. In any case I find that has procured the inputs from the second stage dealer M/s. Super Trading Company said who in his statement has agreed to have supplied the goods to the manufacturing unit. Inasmuch as Rule 7(2) of Cenvat credit rule requires the recipient of the inputs to know the identity of the supplier of the goods, which in the present case was second stage dealer, I am of the view that the said rule stand satisfied by the manufacture with Shri Amit Kumar proprietor of second stage dealer having deposed that they had in fact supplied to the manufacture, payment for which were made by them in cheque, I find no reasons to uphold the findings of the lower authorities that no inputs were actually received by them. There is neither any allegation nor any evidence on record to show that such inputs were procured from some other alternative source. Admittedly, the said appellant could not have manufactured final product, without the receipt of the inputs, in which case revenue findings that no inputs were actually received cannot be upheld. Recipient of the inputs is expected to know his immediately supplier and there is no further requirement to find out as to from where his supplier has procured the inputs. Accordingly, I set aside the confirmation of demand of duty and imposition of penalty of M/s. Faridabad Autocomp Systems and Super Trading Company. As regards, the imposition of penalty of M/s. Ayushi Steels Company, I find that they have taken and alternative plea that even if the Revenues case accepted that they dealt only with the invoices without actually dealing with the goods even then no penalty can be imposed upon them inasmuch as the provision for imposition of penalty on the dealers were introduced vide Notification No. 8/2007 CE (NT) dated 01.03.2007. Inasmuch as the period for the present case is prior to the said date, I set aside the penalty imposed upon M/s. Ayushi Steels Company Pvt. Ltd. also.
10. All the three appeals are allowed in above terms.
(Pronounce in the open Court on 27.08.2013) (Archana Wadhwa) Member (Judicial) Jyoti* ??
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