Custom, Excise & Service Tax Tribunal
Cce-Chandigarh vs Sri Rama Steels Ltd. & Ors on 20 March, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
R.K. PURAM, WEST BLOCK, NO.2, NEW DELHI-110066
COURT NO. III
Date of Hearing: 20/03/2015
Appeal No. E/3323 to 3355/2005- EX [DB]
and E/Cross/90/2006 in appeal No. E/3355/2005
[Arising out of Order-in-Original No. 71/CE/2004 passed by Commissioner, Central Excise-Chandigarh]
1.
Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would 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 Department Authorities?
CCE-Chandigarh Appellant
Vs.
Sri Rama Steels Ltd. & Ors. Respondents
Appearance: Shri M.S. Negi, DR for the appellant.
S/ Shri R. Santhanam, Ajay Jain for the respondent.
Coram: Honble Shri Rakesh Kumar, Member (Technical) Honble Shri Ashok Jindal, Member (Judicial) Final Order No. 51501-51533/2015 Per: Ashok Jindal Revenue is in appeal against the impugned order dropping the proceedings initiated by impugned show cause notice.
2. The facts of the case are that the main respondent Shri Rama Steels Limited is located at Himachal Pradesh and is engaged in manufacture of steel ingots from melting iron and steel scrap. The scrap is procured from the dealers located in Mandi Govind Garh as well as import through ICDs situated in Punjab. Till 2000, the respondent was working under compounded levy scheme, there is no dispute. As the State of Punjab and Himachal Pradesh are involved in transactions of the respondent who has set up sales tax barrier at the main transport roads and all commercial vehicles are passing through such barriers. The commercial vehicles are required to file necessary declarations on such barriers as per the sales tax provisions of both the States. The Revenue investigated the matter with the Excise and Taxation Department of Himachal Pradesh wherein it was found that many consignment of melting scrap received by the respondent from the dealer of Mandi Govind Garh had necessary entries at Himachal Pradesh Tax Barrier Records but no corresponding entries were found with Punjab Tax Barriers. Therefore, it was alleged that the goods were not procured from Punjab as the same has not passed through Punjab barriers to be received by the respondent and it was alleged that these consignments were originated from in Delhi, therefore, allegation is concluded that respondent has not received melting scrap and only received duty paid invoices on which they have availed inadmissible CENVAT Credit during the period 1/4/2000 to 15/10/2001. Therefore, respondent is not entitled to take CENVAT Credit on paper transaction to the tune of Rs. 54,30,204/-.
3. In the case of import of melting scrap from different ICDs located in Punjab, it is alleged that the vehicle numbers which transported the goods from ICDs had no corresponding entries in the Sales Tax Barriers of Himachal Pradesh, therefore, inference was drawn that the imported goods have been disposed off in the local market of Punjab and bazaar Scrap was procured from Delhi. On these allegations, the CVD availed by the respondent to the tune of Rs. 36,17,694/- was sought to be denied for the period 1/4/2000 to 15/10/2001. Therefore, as these consignments have been procured from the local market, therefore, they are not eligible for concessional rate of duty on imported goods under notification nos. 23/1998 Customs dated 2/6/1998, 21/1999 Customs dated 28/2/1999, 16/2000 Customs dated 31/03/2000 and 17/2001 Customs dated 1/3/2009 as concessional rate of duty is available with actual user /end use conditions. Therefore, the respondent is liable to pay differential duty of Rs. 1,34,31,105/- for the period 1/2/1999 to 31/03/2000. There is also an allegation against the respondent that during period 1st April, 2000 to 17th October, 2001, the appellant cleared the finished goods on the strength of parallel invoices. Therefore, they have evaded the payment of duty of Rs. 5,58,195/-.
4. On these allegations, the show cause notice was issued to the main respondent and for denial of CENVAT Credit demanding differential customs duty and demanding of duty on the goods cleared on the strength of parallel invoices along with interest and imposing penalty on the main respondent and penalties on co-respondents. The Adjudicating Authority examined the matter in detail and hold that the charges alleged in the show cause notice are not sustainable, therefore, dropped the proceedings against the respondents.
5. Aggrieved from the said order, the Revenue is before us.
6. Ld. AR submits that statement of Shri Om Prakash Aggarwal, Managing Director of the main respondent has been recorded and he has admitted that they have availed inadmissible CENVAT Credit which was not retracted. The said piece of evidence has not been considered by ld. Commissioner while adjudicating the case. He, further submits that commercial vehicles are required to be moved only through certain land routes and same is mandatory. Requirement of State Excise and Taxation Department under Punjab and Himachal Pradesh States and vehicles moving through invariable routes are liable to be penalized. There were no entries on the tax barriers, therefore, the allegation that the respondent has not received the goods against proper invoices is correct and the respondent have received only invoices without goods. The non-examination of dealers/truck owners cannot be the ground of dropping the proceedings when the respondent deliberately flouted the provisions of Central Excise and State Sales Tax. Therefore, the dealers have deliberately abating in passing illegal CENVAT Credit to the respondent. Consequently, the dealers are also liable to penalized. He also submits that Sales Tax Barriers records are having evidential value for denying CENVAT Credit. To support this contention relied on the decision of CCE-Chandigarh Vs. Chemplast Industries reported in 2011 (266) ELT 71 (T), National Conduit Pipes Vs. CCE-Chandigarh , reported in 2010 (261) ELT 68 (T) which was confirmed the Honble Punjab and Haryana High Court reported in 2012 (281) ELT 230, (P&H) and CCE Vs. International Cylinders Pvt. Ltd. Reported in 2010 (255) ELT 68 (HP). The vehicles carrying imported scrap have not moved in the State of Himachal Pradesh as per the gate pass of ICD and no cogent evident has been produced by the respondent, therefore, conclusion drawn by the Revenue that these are bazaar scrap procured from Delhi is correct. He further submits that the parallel invoices have been received from the Sales Tax Department and the same has been produced before the authorities. Therefore, Revenue has been able to prove that respondent is clearing goods on the strength of parallel invoices. The records obtained from Excise and Taxation Department are admissible evidence has held by this Tribunal in the case of National Conduit Pipes Vs. CCE-Chandigarh (supra) and these documents have been examined by the authorized signatory. Therefore, the charge of clandestine removal has been proved. In these circumstances, he pleaded that impugned order is to be set aside.
7. On the other hand, ld. Counsel appearing on behalf of the respondent submits that in this case, the allegation that goods have not been passed through Punjab barrier is not sustainable as the goods procured from Mandi Govind Garh were duly entered at the Sales Tax Barrier of Himachal Pradesh. The allegation of the Revenue is that this is a bazaar scrap procured from Delhi but same has also not crossed the barrier of Punjab Sales Tax. Therefore, the allegation that as the scrap has not been passed through Punjab barrier, is not sustainable. Moreover, no enquiries were made with the transporters of the transporting vehicles whether they had transported the scrap from Mandi Govind Garh to the respondents premises or not. Therefore, in the absence of any corroborative evidence, the ld. Commissioner has rightly dropped the charge against the respondent.
8. With regard to the imported scrap, it is the submission of the ld. Counsel that the imported scrap was required to be utilized by the appellant as they have availed the benefit of concessional rate of duty as per notification on the condition of end user. The Range Superintendent has given the certificate that imported scrap has been used by the respondent in manufacturing their final product and these evidence cannot be ignored. Therefore, the charge that the imported scrap has not reached to the respondent is not sustainable.
9. He further submits that in case of parallel invoices, the respondent has challenged that these parallel invoices are not issued by the respondent and no original document has been produced before the adjudicating authority and the source of procurement of these parallel invoices has not been explained by the Revenue with cogent evidence. Moreover, those invoices may be procured from some fraudulent means by the Revenue. Therefore, clearance on the bases of these invoices cannot be proved by the Revenue, consequently it cannot held that it is case of clandestine removal. Therefore, impugned order is to be upheld.
10. Heard both the sides and considered the submissions.
11. In this case, three issues have been raised before us.
(a) Fraudulent availment of CENVAT Credit on melting scrap on the invoices received from the dealers of Mandi Govind Garh.
(b) Short payment of custom duty on imported melting scrap and the availment of CVD paid for melting scrap on the condition of end user as the same has not been received by the respondent and
(c) Clandestine removal of goods on the strength of parallel invoices.
(A) Fraudulent availment of CENVAT Credit on melting scrap:
The sole reason to denying the CENVAT Credit is that the Revenue did not find any entry at Punjab Sales Tax Barrier but on the other hand entry at the Himachal Pradesh Sales Tax Barrier entry point is there. Therefore, the receipt of scrap has been entered into the barrier of Himachal Pradesh. Moreover, the allegation against the respondent is that they have procured this scrap from Delhi. If the scrap is procured from Delhi to enter into Himachal Pradesh, the same has to pass through many State Barriers but Revenue has failed to prove that respondent has procured the scrap from Delhi with cogent evidence that same has passed through various barriers particularly from the Punjab Barrier of Sales Tax. Admittedly, no statement of transporters has been recorded to unearth the truth and the payment of all the scraps have been made by the respondent through account of payee cheques. In the absence of any cogent evidence against the respondent, the charge of availment of fraudulent CENVAT Credit on melting scrap on the invoices issued by the dealers of Mandi Govind Garh is not sustainable. As Revenue has failed to prove that the respondent has not received the goods, therefore, we do agree with the observation of the ld. Adjudicating Authority on this issue and rightly dropped the demand on this account and not imposed penalties on the co-respondents.
(b) Demanding of differential duty and denial of CENVAT Credit on imported melting scrap.
The respondent has availed concessional rate of duty on the condition of end user and respondent had produced the certificate from the Range Superintendent certifying that the imported scrap had been used by the respondent in manufacture of their final product. The certificate issued by the Range Superintended cannot be denied by any authority in the absence of any contrary evidence. Admittedly, in this case Revenue has not produced any contrary evidence. Therefore, the end user certificate is a reliable evidence to ascertain the fact that the respondent has received the imported melting scrap, therefore, we hold that respondent are entitled for the benefit of notifications allowing the entitlement of concessional rate of duty on the condition of end user as the respondent has complied with the conditions of notifications. Therefore, on imported melting scrap, the respondent is not liable to pay differential custom duty and cannot be denied CENVAT Credit of CVD paid by them. Therefore, we do agree with the observation of the ld. Adjudicating Authority dropping the demand on this account also.
(c) Clandestine removal on the strength of the parallel invoices.
During the course of the arguments this Bench also sought the source of procurement of these parallel invoices but Revenue has failed to produce the source of procurement of these parallel invoices, they produced only the photocopies and from where these photocopies has procured by Revenue has also not been proved by the Revenue. Merely, the statement that they have received these photocopies of invoices from Excise and Tax Department of Himachal Pradesh, in the absence of any documentary evidence, the parallel invoices are no acceptable documents, therefore, we hold that the duty cannot be demanded on this fake invoices produced by the Revenue. Therefore, demand of duty against the respondent on this account is also not sustainable. As the demand of duty is not sustainable against the main respondent, consequently, the penalties on all the respondents are not impossible.
12. With these observations, we do not find any infirmity with the impugned order and the same is upheld. The appeals filed by the Revenue are dismissed.
(Order Pronounced on 06.05.2015)
(Rakesh Kumar) (Ashok Jindal)
Member (Technical) Member (Judicial)
Ritu
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