Custom, Excise & Service Tax Tribunal
Inder Singh Rathore vs Mumbai-Iii on 16 March, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Excise Appeal No. 86104 of 2013
(Arising out of Order-in-Original No. 11/COMMR/M-III/WLH/2012-13 dated
27.11.2012 passed by the Commissioner of Central Excise, Mumbai-III)
M/s. Neosym Industry Ltd. Appellant
(Earlier known as Indian Smelting & Refining Co. Ltd.)
1st Floor, Industry House,
Backbay Reclamation,
Churchgate, Mumbai 400 020.
Vs.
Commissioner of Central Excise, Mumbai-III Respondent
3rd & 4th Floor, Vardaan Centre, MIDC, Wagle Industrial Estate, Thane (W), Mumbai 400 604.
WITH Excise Appeal No. 86105 of 2013 (Arising out of Order-in-Original No. 11/COMMR/M-III/WLH/2012-13 dated 27.11.2012 passed by the Commissioner of Central Excise, Mumbai-III) Inder Singh Rathore Appellant General Manager (Stores), Neosym Industry Ltd.
1st Floor, Industry House, Backbay Reclamation, Churchgate, Mumbai 400 020.
Vs. Commissioner of Central Excise, Mumbai-III Respondent 3rd & 4th Floor, Vardaan Centre, MIDC, Wagle Industrial Estate, Thane (W), Mumbai 400 604.
WITH Excise Appeal No. 86189 of 2013 (Arising out of Order-in-Original No. 11/COMMR/M-III/WLH/2012-13 dated 27.11.2012 passed by the Commissioner of Central Excise, Mumbai-III) Dhuleva Metal Corporation Appellant 1, 3rd Floor, Chaman Chambers, 10A, Cinema Road, Marine Street Talao, Mumbai 400 020.
Vs. Commissioner of Central Excise, Mumbai-III Respondent rd th 3 & 4 Floor, Vardaan Centre, MIDC, Wagle Industrial Estate, Thane (W), Mumbai 400 604.
AND Excise Appeal No. 86190 of 2013 2 E/86104,86105,86189,86190/2013 (Arising out of Order-in-Original No. 11/COMMR/M-III/WLH/2012-13 dated 27.11.2012 passed by the Commissioner of Central Excise, Mumbai-III) Nitin N. Mehta Appellant Accountant, Dhuleva Metal Corporation, 1, 3rd Floor, Chaman Chambers, 10A, Cinema Road, Marine Street Talao, Mumbai 400 020.
Vs. Commissioner of Central Excise, Mumbai-III Respondent 3rd & 4th Floor, Vardaan Centre, MIDC, Wagle Industrial Estate, Thane (W), Mumbai 400 604.
Appearance:
Shri S.S. Gupta, Chartered Accountant for appellants in appeals E/86104 & 86105/2013 and Shri Vinay Sejpal, Advocates, for the appellants in appeals E/86189 & 86190/2013 Shri Amrendra Kumar Jha, Deputy Commissioner, Authorised Representative for the Respondent CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) HON'BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Date of Hearing: 16.03.2023 Date of Decision: 16.03.2023 FINAL ORDER NO. 85774-85777/2023 PER: SANJIV SRIVASTAVA These appeals are directed against order in original No 11/COMMR/M-III/WLH/2012-13 dated 27.01.2013 of the Commissioner Central Excise Mumbai III. By the impugned order following has been held.
"ORDER
(a) The extended period envisaged under Section 11A(4) [earlier proviso to Section 11A(1)] of The Central Excise Act, 1944 is hereby invoked to demand the Cenvat Credit wrongly availed by Indian Smelting & Refining Company Ltd., Bhandup;
(b) The CENVAT credit of duty amounting to Rs. 99,80,304/-
(Ninety nine lakhs eighty thousand three hundred and four only)[CENVAT: Rs. 97,84,614/- + Education Cess: Rs.
1,95,690/-)] is hereby disallowed and ordered to be recovered in terms of the provisions contained in Rule 14 of 3 E/86104,86105,86189,86190/2013 CCR2004 read with provision of the then Section 11A(2) of The Central Excise Act, 1944;
(c) Penalty of Rs.99,80,304/-(Ninety nine lakhs eighty thousand three hundred and four only) is hereby imposed upon Indian Smelting & Refining Company Ltd., Bhandup, under section 11AC of The Central Excise Act, 1944, read with Rule 15(2) of Cenvat Credit Rules, 2004;
(d) Interest, at the appropriate rates & as applicable, in force is hereby ordered to be paid and recovered forthwith under Section 11AB of The Central Excise Act, 1944, read with Rule 14 of Cenvat Credit Rules, 2004 on the Cenvat Credit amounting to Rs. 99,80,304/- availed by Indian Smelting and Refining Co. Ltd.
(e) The inputs valued at Rs. 6,11,53,838/-, on which CENVAT credit has been wrongly availed are liable for confiscation under Rule 15(1) of Cenvat Credit Rules, 2004, however since the said Inputs were neither seized nor are available otherwise, these inputs cannot be confiscated under Rule 15(1) of Cenvat Credit Rules, 2004, therefore confiscation in this regard is refrained.
(f) The excisable goods valued at approx. Rs. 6,11,53,838/-, manufactured and cleared by Indian Smelting & Refining Company Ltd., Bhandup by utilising irregularly availed CENVAT credit are liable for confiscation under Rule 25 of Central Excise Rules, 2002, however since the said goods were neither seized nor are available otherwise, these goods cannot be confiscated under Rule 25 of Central Excise Rules, 2002, therefore order of confiscation in this regard is refrained.
(g) Penalty of Rs.5,00,000/- (Rupees Five lakhs only) is hereby imposed upon Shri Inder Singh Rathore, Sr. General Manager (Stores & Excise) in IndianSmelting and Refining Co. Ltd. under Rule 26 of Central Excise Rules, 2002.
(h) Penalty of Rs. 10,00,000/- (Rupees Ten lakhs only) is hereby imposed upon Dhuleva Metal Corporation under Rule 26 of Central Excise Rules, 2002.
(i) Penalty of Rs.5,00,000/- (Rupees Five lakhs only) is hereby imposed upon Shri Niten Nathalal Mehta, Accountant of 4 E/86104,86105,86189,86190/2013 Dhuleva Metal Corporation under Rule 26 of Central Excise Rules, 2002."
1.2 The details of the appeals filed and present status is listed in table below:
Appeal No Appellant Present Status
E/86104/2013 Indian smelting & Neosym Industries Ltd.
Refining Co Ltd Pursuing the appeals
before us
E/86105/2013 Shri Inder Singh Expired Copy of death
Rathode, Senior Certificate produced.
General Manager Hence appeal abates as
(Stores & Excise) in per Rule 22 of CESTAT
M/s Indian Smelting & Procedure Rules, 1982
Refining Co. Ltd
E/86189/2013 M/s. Dhuleva Metal Proprietor Expired Copy
Corporation of death Certificate
produced. Hence
appeal abates as per
Rule 22 of CESTAT
Procedure Rules, 1982
E/86190/2013 Shri Niten Nathalal Pursuing the appeal
Mehta Accountant, before us
M/s. Dhuleva Metal
Corporation
1.3 Thus we dismiss Appeal No E/86105,86190/2013 as
abated in terms of Rule 22 of the CESTAT Procedure Rules, 1982.
1.4 Thus appeal No E/86104/2013 of M/s Neosym Industries Ltd. (formerly known as Indian smelting & Refining Co Ltd) (Appellant 1), E/86190/2013 of Shri Niten Nathalal Mehta Accountant, M/s. Dhuleva Metal Corporation (Appellant 2) remain for consideration. Counsel for the appellants are present.
2.1 Appellant 1 holding Excise Registration No.AAACT3782DXM001, are engaged in the manufacture of excisable goods viz. Copper Bars, Strips, Plates, Foils etc. falling under Chapter 74 of the First Schedule to the Central Excise Tariff Act (CETA), 1985.
2.2 Intelligence gathered by the Directorate General of Central Excise Intelligence (DGCEI), Mumbai Zonal Unit indicated that Appellant 1 had indulged in wrong availment of Cenvat credit on the basis of Cenvatable invoices issued by a registered dealer 5 E/86104,86105,86189,86190/2013 namely Dhuleva without physical receipt of inputs. On the basis of intelligence report, officers of DGCEI, MZU visited factory premises of IndianSmelting on 17.05.2007 and conducted enquiries which revealed that during the month of February, 2007, IndianSmelting received 214 MT of Copper Wire Rods, Copper Wire and Copper Cathode from Dhuleva. The enquiry further revealed that entries regarding receipt of goods from Dhuleva were reflected in the Goods Receipt Notes maintained in the Computer System of IndianSmelting, but copies of the Cenvatable invoices were not accompanied by any Lorry receipt or Octroi receipt which in normal case should have been accompanied/available in the case of receipt of goods from outside Mumbai.
2.3 During course of investigation statements of various persons including octroi agent Shri Pragnesh Mohanlal Manek were recorded. On completion of investigation revenue was of view that there was a well planned evasion of duty by arrangement with the supplier Dhuleva by receiving only duty paying document and not the actual inputs. The appellant 1 attributing non-movement of inputs as certified by Octroi to the supplier Dhuleva's, bribing the Octroi officials does not certify the receipt of inputs by the Appellant 1. A company of their repute should have always been alert to verify whether their suppliers pays all applicable taxes including Octroi.
2.4 A show cause cum demand notice 06.03.2012, has been issued to Appellant 1 asking them to show cause as to why:
(a) The extended period envisaged under Section 11A(4) [earlier proviso to Section 11A(1)] of CEA1944 should not be invoked to demand the Cenvat Credit wrongly availed by them for the reasons discussed above;
(b) CENVAT credit of the duty amounting to Rs. 99,80,304/-
[CENVAT: Rs. 97,84,614/- + Education Cess: Rs. 1,95,690/-)] as detailed in Annexures-A to SCN should not be disallowed and subsequently demanded and recovered from them in terms of the provisions contained in Rule 14 of CCR2004 read with proviso to Section 11A(4) [earlier proviso to Section 11A(1)] of CEA1944, 6 E/86104,86105,86189,86190/2013
(c) Penalty should not be imposed upon them under Rule 15 (1) of CCR2004 on the grounds discussed above,
(d) Penalty should not be imposed upon them under section 11AC of CEA 1944, read with Rule 15(2) of CCR2004 read with Rule 25 of CER2002 on the grounds discussed above.
(e) Interest, at the appropriate rates & as applicable in force, under section 11AB of CEA1944, read with Rule 14 of CCR2004, should not be recovered from them, on the said CENVAT credit that would be determined to be so payable by them, from the date on which the said CENVAT credit became due to be recoverable/payable & until the same is paid by them.
(f) The inputs valued at Rs. 6,11,53,838/-, on which CENVAT credit has been wrongly taken by them, should not be confiscated under rule 15(1) of CCR2004 for the reasons stated in the foregoing paras,
(g) The excisable goods valued at approx. Rs. 6,11,53,838/-, manufactured by IndianSmelting, and cleared, by utilising the CENVAT credit towards payment of duty which was irregularly taken by them, should not be held liable to confiscation under Rule 25 of CER2002 for the reasons stated in the foregoing paras.
2.5 Other three noticee have namely Shri Inder Singh Rathore, General Manager (Stores), Indian Smelting, Dhuleva Metal Corporation, Thakurdwar, Mumbai, Shri Niten Nathalal Mehta, Accountant, Dhuleva, have been called on to show cause as to why penalty be not imposed on them under Rule 26 of the Central Excise Rules, 2002 2.6 The show cause notice has been adjudicated as per the impugned order. Aggrieved by the impugned order Appellants have filed these appeals.
3.1 We have heard Shri S S Gupta, Chartered Accountant for Appellant 1, Shri Vinay Sejpal Advocate for Appellant 2 and Shri Amrendra Kumar Jha Deputy Commissioner Authorized Representative for the revenue.
3.2 Arguing for Appellant 1 learned Chartered Accountant submits that 7 E/86104,86105,86189,86190/2013 Demand has been confirmed only on the basis that Octroi check post has confirmed that truck numbers indicated in the Annexure of show cause notice have not crossed Mulund Check Naka. The department has called for report from two Check Nakas located at Mulund and Bhandup LBS Marg. The report of Mulund Check Naka has confirmed that no such vehicle has passed through Check Naka in Feb- 2007. Whereas the report of Bhandup LBS Check Naka has confirmed that there is no such record maintained by Check Naka.
The factory of the appellant is located in Bhandup Lal Bahadur Shastri Road (LBS). Therefore, the evidence produced by the department cannot conclusively prove that no trucks have passed, more particularly due to the following submissions:
o The Transporter namely M/s. Chaganlal B. Nandu owing Truck No. MH04CA 1440 has confirmed that he has delivered the goods to the appellants. The other transporters whose statement is recorded has merely confirmed that he does not have any details as it is a very old matter.
o The cross examination of Dy. Assessor was not given without any reason.
o The octroi agent Shri. Pragnesh Mohanlal Manek has not produced the details of payment of octroi. He has produced the records for the period 2002-2003 and 2006-2007 along with all the supportings. He was never asked specifically about these consignments, it is a general statement of computing octroi and method of payment of octroi. The cross examination of Shri. Pragnesh Mohanlal Manek was also not allowed.
o Mathadi workers unloading records are not available. The appellants have submitted that the purchase orders placed on M/s. Dhuleva Metal Corporation are for delivery at work. Therefore, the appellants are not concern with the payment of octroi. It is upto the supplier to pay the octroi and deliver the goods to the appellants. Therefore,
8 E/86104,86105,86189,86190/2013 appellant is unable to produce octroi receipt. The appellants relied on the following judgements:
o M/s. Basant Rubber Factory Ltd. 2005-(185)-ELT- 280 (Tri.Mum), affirmed by the Bombay High Court reported in 2011-(264)- ELT-16 (Bom.) o A.K. Jain 2006-(205)-ELT-230 (Tri. Mum) 2006-205-
ELT-230 (Tri. Mum) The Commissioner has in his findings in para 93 & 94 of the Order distinguished on the ground that the dealer has failed to produce payment of any octroi and the freight amount. Further, in both case issue was with regard to different description of material on the invoice. Therefore, the ratio of the judgment in these cases does not apply does not apply. He has relied upon the judgements which are distinguishable.
No findings on the following submissions by the appellant:
o Documentary evidence in the form of gate register, goods received note, bank statements for payment to supplier, purchase orders, etc. were produced. No findings against these documentary evidence substantiating the receipt of material. It has been consistently held that the statement cannot be relied upon unless supported by documentary evidence. The appellants rely on the following judgments:
Malerkolta Steels & Alloys Pvt. Ltd. 2008- (229)-ELT-607 (Tri. Del.) Malerkolta Steels & Alloys Pvt. Ltd. 209-(244)-
ELT-48 (P&H) Davinder Sandhu Impex Ltd. 2016-(337) ELT-
99 (Tri. Del.) Cross examination by Dy. Assessor of BMC and octroi agent Shri. Pragnesh Mohanlal Manek was not allowed. Therefore, the statement of these persons cannot be relied upon. The appellants rely upon the following judgements:
o Andaman Timber Industries 2015-(324)-ELT-641 (SC) o Suresh Udayalal Jain 2000-(126)-ELT-1143 (Tri.) Statement of transporter confirms delivery of goods to the appellants.
9 E/86104,86105,86189,86190/2013 Duty paying nature of inputs not disputed. The proper records have been maintained by M/s. Dhuleva Metal Corporation which is admitted in para 90 of the Order.
There is no allegation or findings that after payment of amount through bank to supplier any amount has been reported in cash. The appellants rely on the following judgments:
o P.P. Oxide 2015-(329)-ELT-16 (P&H) o Ashoka Steel Corporation 2014-(306)-ELT-666 (Tri.- Del) The show cause notice is issued in March-2012 whereas the credit of Feb-2007 is proposed to be denied. It is submitted that there is no malafide intention in availment of credit in as much as the appellants have paid the amount to the supplier. The appellants have produced evidence of payment of amount like vouchers, bank statement to suppliers before the Adjudicating Authority.
There is no findings against the said submissions by the Original Authority. It is submitted that when the tax amount has been paid to the supplier there can be no malafide intention in availment of credit. Hence, the extended period of five years will not apply. The entire demand is time barred. The appellants rely on the following judgments:
o Cosmic Dye Chemical [1995 (75) ELT 721 (SC)]. o Chemphar Drug and Liniments [1989 (40) ELT 276 (SC)] o Pushpam Pharmaceuticals Company [1995 (78) ELT 401 (SC)]:
o Tamil Nadu Housing Board [1994 (74) ELT 9 (SC)] Continental Foundation Jt. Venture [2007 (216) ELT 177 (SC)] 3.3 Arguing for the Appellant 2, learned advocate submits that his client was merely an accountant with the Dhuleva Metal Corporation and was acting bonafidely as per the directions of the proprietor (now expired). He had no malafide intentions for which the penalty is imposed on him.
10 E/86104,86105,86189,86190/2013 3.4 Arguing for the revenue learned authorized representative reiterates the findings recorded in the impugned order.
4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 For holding against the appellants impugned order records following findings:
"89. The submissions made by IndianSmelting are mostly an attempt to point out faults in the investigation. Thus, IndianSmelting have contended that:
a. SCN does not dispute documents to substantiate the receipt of the inputs are fake or fabricated b. SCN does not dispute duty paying nature of the inputs c. SCN does not dispute that purchase orders were placed with Dhuleva for door delivery basis d. no investigation has been carried out at Dahisar check naka (lorry could have entered from the Dahisar check naka) e. only two transporters have been examined during the investigation f. no allegation that cash has been received back from the suppliers g. investigation is incomplete at the registered dealer's end h. Dhuleva's proprietor is clearly setting the case for non payment of Octroi i. SCN has not disputed the consumption details j. There's no allegation in SCN of clandestine removal from Dhuleva and no investigation No statement of Shri Mohan Lal Jain or Shri Ramesh Jain(proprietor of Dhuleva), no search Dhuleva, also mostly alleging shortcomings in the investigation, have contended as follows:
90. There is no dispute regarding receipt of inputs by Dhuleva as a Registered Dealer from manufacturer supplier under cover of excise invoice to their registered godown. There is no dispute on the fact that Dhuleva had maintained appropriate stock register as per Rule 9(3) and had filed appropriate return as per Rule 9(8) of CCR, 2004. There is no dispute that the goods have 11 E/86104,86105,86189,86190/2013 been cleared through local Trucks to IndianSmelting. There is no dispute that IndianSmelting have produced evidences to establish the receipt, storage and consumption of the inputs in the manufacture of dutiable goods at their end. There is no evidence of the said goods being diverted to any other premises.
There is no evidence of the said consignment being received by any other buyer nor there is any evidence of any supplier stating that the goods were not supplied by them nor there is any evidence of any transporter either denying the delivery/transportation or not being in existence.
91. Rather than defending the points raised in SCN regarding the statements, Octroi authorities reports, the mathadi records etc. which are evidence brought out against them, the noticees have preferred to allege shortcomings in the above mentioned aspects of investigation. Once the evidence of alleged wrong doing is brought out in SCN, the onus is on IndianSmelting to rebut and disprove them - rather than focussing on what is not covered in SCN and what is, as perceived by IndianSmelting, lacking in the investigation.
92. However, it is appropriate to evaluate whether the points brought out in the investigation are in conformity with:
a. The contraventions alleged and sections invoked in SCN b. The essential inquiries to be made during the investigation of such cases, as observed in the recent judgements in such cases.
93. Firstly, the judgements highlighted by Indian Smelting has been gone through. In the case of Basant Rubber Factory- 2005(185) ELT 280 (Tri. Mumbai) relied upon by IndianSmelting, the case was that the goods in question mentioned in the duty paying documents issued by dealers were other than those received by the party. In other words, the basis of the case made out by the department was that the description/characteristics of the goods was different. The registered dealers and the assessee failed to produce any documents showing payments of freight and octroi, thereby failing to establish any co- relation in terms of the material received by the assessee and that supplied by the dealers.
12 E/86104,86105,86189,86190/2013
94. Regarding the case of AK Jain 2006(205) ELT 230 (Tri. Mumbai) relied upon by IndianSmelting, again, the said case is different from that of IndianSmelting's. In the AK Jain case also, the dispute arises out of the difference in the description/ characteristics of material. In the AK Jain case, the Department's contention is that the dealers supplied a different material to the appellant company - material different from what the assessee could have used in production.
95. The said cases are different from that of IndianSmelting. In IndianSmelting's case, the allegation is not arising from the difference in description in the documents issued by dealer and the assessee. The basic allegation in IndianSmelting's case is that the dealer did not send the material at all and IndianSmelting never received any material. Only the documents existed, which have been used to take Cenvat credit. Hence the assessee is not justified in equating their case to the Basant Rubber factory and AK Jain cases.
96. In IndianSmelting's case, it is not the case that only the dealer has been heard to make out the case, unlike in the above two cases. Apart from the dealer, the Octroi agent's statement, the transporters' statement and the Octroi authorities' written stand have also been considered during the investigation. This cements the department's contention in a very strong way. The reliance placed upon, in IndianSmelting's case, is not solely based on the Octroi part nor solely based on a single statement by an individual - as is in the above two cases relied upon by IndianSmelting.
97. Apart from the above, there are judgments pronounced in higher judicial forums which emphasise the importance of Octroi receipts in evidencing the actual receipt of goods. In the case of Sterling coach Builders (P) Ltd. vs. CCE, Mumbai-III (2010 (259) E.L.T. 502 (Bom.)), The Bombay High Court has held that " In the absence of octroi receipts, one has to conclude for want of evidence that the goods did not travel from Nashik to Thane. It is a common knowledge that if the goods are to be removed from one Municipal or Corporation area to another Municipal or Corporation area, the entry tax, namely; Octroi is required to be paid. Had goods been transported from Nashik to Thane, the 13 E/86104,86105,86189,86190/2013 octroi duty ought to have been paid by the Appellants. The very fact that, there is no material on record evidencing payment of octori duty leads us to conclude against the Appellants defence that goods were taken from Unit at Nashik to Unit at Thane."
98. The above judgement is more specific to the case at hand than the ones relied upon by IndianSmelting and Dhuleva. The judgement clearly provides guidelines that the absence of octroi receipts is enough to conclude that there is want of evidence that goods have been transported.
99. Moreover, irrespective of the above judgement by Bombay High Court clearly assailing the noticees' defence, other recent judgements on similar issue have also been examined. The judgements are being referred below to emphasise the points to be considered in adjudicating cases similar to the instant case of IndianSmelting.
a. In the case of CCE, Chandigarh vs Swastik Steel Alloys( 2009(243) ELT 343 (P&H ), the High court of Punjab and Haryana held that "There is no connecting evidence on record to show that the Octroi receipts could be connected to M/s. Surbhi Gas Service as these Octroi receipts do not contain any reference to their name or bill numbers." b. In the case of CCE, Chandigarh vs. Modern Alloys 2010 (258) E.L.T. 364 (P & H), the High Court of Punjab and Haryana held that "No enquiry was made by the Revenue from the Octroi Post Authorities as to how and on what basis Octroi receipts were issued and, therefore, the charges against the dealer-assessee remained unsubstantiated." c. In the case of Mahavir Metal Industries vs. CCE, Daman 2008 (232) E.L.T. 71 (Tri. - Ahmd.), the CESTAT, Wets Zonal Bench, Ahmedabad had observed that "no statement of the appellants Octroi agent from whose custody the vouchers seems to have been recovered, has been recorded. Further, there is no investigation and verification at the Octrol check post. The above evidence cannot be said to be clinching enough so as to uphold the charge of clandestine removal." d. In the case of Tejal Dyestuff Industries vs. CCE, Ahmedabad 2007 (216) E.L.T. 310 (Tri.Ahmd.), the CESTAT, West Zonal Bench, Ahmedabad has remarked that "The Octroi receipts 14 E/86104,86105,86189,86190/2013 constitute a very important and independent documentary evidence in support of the fact that, the inputs covered by the invoices drawn in the name of the assessee, were, in fact, carried in the tankers and brought within the municipal limits in which the factory of the assessee was situated." e. In the case of CCE, Haryana vs. Dashmesh Castings Pvt. Ltd. 2010 (257) E.L.T. 225 (P & H), the High Court of Punjab & Haryana have observed that "There is no connecting evidence on record to show that the Octroi receipts could be connected to the assessee as these Octroi receipts do not contain any reference to their name or bill numbers."
100. The above judgements/orders have been considered irrespective of whose favour each of the judgements/orders has gone in. The judgements/orders have been considered to highlight the points being considered in judicial forums while arriving at a conclusion in such matters.
101 In dealing with such cases, it is to be appreciated that two cases can be at best similar, not identical the circumstantial differences will weigh upon the merits in investigation and the case judgement itself. From the requirements/observation in the judgements above, it is observed that:
a. The department has indeed done investigation and verification at the Octroi check post as required. The department relies upon strong documentary evidence obtained from the relevant Octroi authorities.
b. The department has recorded statement of the Octroi agent too.
c. The department has indeed sought the Octroi receipts from the noticees. The noticees have not produced the required Octroi receipts showing the name of the factory or bill numbers by any of the noticees.
d. The department has also found corroborating ground/evidence regarding the non-receipt of the material at IndianSmelting's premises in the form of the non-entry /absence of mathadi workers' unloading records, which was otherwise a regular activity at IndianSmelting.
15 E/86104,86105,86189,86190/2013
102. Also, in another case of Santogen Textile Mill Ltd. vs CCE, Mumbai-II 2007 (214) E.L.T. 386 (Tri. - Mumbai) before the CESTAT, West Zonal Bench, Mumbai, the appellants had submitted that "in all these cases raw material was received in their factory and was used in the manufacture of exported goods under various shipping bills. In support thereof, he refers to the re-warehousing certificates duly signed by the jurisdictional Central Excise officers, D-3 intimation filed with the department, documents regarding removal of yarn and receipt of grey fabrics from the job worker which were countersigned by the Central Excise Officers and show that the goods were duly received and consumed within the factory of production". The appellant in the said case had further submitted (similar to IndianSmelting's submissions in the instant case) that "mere non entry in the octroi record does not establish that the goods were not transported". The CESTAT had, however, while disposing off the appeal, observed that" the goods were not transported to the premises of 100% EOU in view of the statements of suppliers/transporters, delivery orders and the octroi receipts which do not show entry of any vehicles in which it is claimed that the goods have been transported upto Mumbai."
103. Dhuleva have made a brazen submission that it is a matter of common knowledge that the vehicles are regularly passing through the Thane Mulund Check Post without payment of Octroi and without entry in the BMC record. Dhuleva also state about numerous Octroi agents who have nexus with the respective authorities and are able to clear the goods without payment of Octroi at a very reasonable price. The above said submissions by Dhuleva cannot serve as a cover or shield to any of their own activities; neither does it help them in proving that Dhuleva have cleared the goods on payment of proper Octroi. In fact, this submission could only suggest that they chose to continue engaging such Octroi agents who were in nexus with the authorities, hinting at their possible continual intent to evade duty liable to be paid to any authority. Even IndianSmelting, during the personal hearing, have stated that the Octroi is settled by the dealer in cash. Even in their written submissions, 16 E/86104,86105,86189,86190/2013 IndianSmelting are making an attempt to shield themselves using the reason that Dhuleva have settled Octroi payments in cash.
104. Irrespective of this submission, in view of all evidences brought out in the investigation and the requirements in investigation perceived from all the aforesaid judgements, the allegations against the noticees IndianSmelting and Dhuleva, are found to be evidenced enough.
105. Vijay Prakash Pandey, Raw materials In-charge of IndianSmelting stated that apart from maintaining Raw Material related records he also maintained a record about the work done by the Mathadi which showed the unloading, stacking and transfer of raw materials. He has also stated that he was maintaining this record on the directions given by the stores in charge ISRathore. He stated that he was unable to produce the record of work done by mathadi workers in the month of Feb.2007 as it had been destroyed on the instructions given by ISRathore. These submissions in the statement of Shri Vijay Prakash Pandey has not been rebutted by any of the noticees.
106. During the investigation with the transporters, the transporters could not tender any Lorry receipt etc. nor any documentary evidence to substantiate the payment received by them for carrying out the transport of the transactions in question.
107. During the investigation with the Octroi agent, the agent could not give any documentary evidence showing the payment of Octroi on the goods in question in February 2007, though he produced the ledgers of the work done for Dhuleva till 31st March 2007.
108. The written replies from the Dy. Assessor and Collector(Octroi), Brihan Mumbai Mahanagar Palika that the motor vehicles with the goods as described have not entered into Mumbai during February 2007, is a clinching evidence brought out during the investigation taken up at the Octroi post.
109. From all the above mentioned highlighted aspects of investigation and other details explained in SCN, it is self-evident that the goods in question have not been transported to Indian 17 E/86104,86105,86189,86190/2013 Smelting and IndianSmelting have taken the Cenvat credit on documents without actual receipt of goods by resorting to a well planned evasion of duty by arrangement with the supplier Dhuleva. Consequently, the Department is also justified in contending that the finished goods cleared by using the said ineligible Cenvat credit are liable to confiscation. The statements and other evidences built up during investigation are found to be sufficient enough to conclude that ISRathore was the decision maker and the main person concerned with the above manipulation and misuse of Cenvat credit by IndianSmelting in league with Dhuleva. For an accountant, NN Mehta (accountant of Dhuleva) was having knowledge more than merely book entries - he was in full knowledge about all the wrong doings of Dhuleva and its Directors regarding the cash transactions, which he has disclosed in his statements. Dhuleva have stated that as and when they have paid Octroi, the same has been duly accounted in their financial books of accounts along with the Truck charges duly paid/borne by them. NN Mehta has thus committed offence by being concerned in concealing facts in the accounts while transferring illegitimate Cenvat credit because no inputs have been supplied along with the invoices issued by Dhuleva.
110. The argument of the specific clause under Rule 26 of CER2002 does not hold true because at the material time, i.e. February 2007, there was only Rule 26 provisioned the segregation of sub-rules (1) and (2) were provisioned from March 2007. The three co-noticees have facilitated IndianSmelting in availing inadmissible credit, thereby resulting also in evasion of Central Excise duty on the final products. In any case, the investigation has sufficiently unearthed convincing basis to impose penalty upon IndianSmelting, Dhuleva, ISRathore and NN Mehta."
4.3 Commissioner has totally ignored the documentary evidences produced by the appellant during the course of adjudication to establish the receipt of the inputs and their consumption. He has placed heavy reliance on certain statements recorded during the investigations. He has not permitted the cross examination of the concerned persons.
18 E/86104,86105,86189,86190/2013 Tribunal has in similar circumstances held in favour of allowing the credit on the strength of the documentary evidences produced rejecting the averments made in the statements recorded during the investigation. The demand of CENVAT credit has been made only relying on the report received from the octroi naka check post. Appellant 1 have contended that there are more than one octroi naka check post leading to their premises and the trucks carrying the said goods could have entered their unit through the other route. Further cross examination of Deputy Assessor Octroi and the Octroi Agent on whose statement sole reliance has been placed has not been allowed. In case of Andaman Timber [2015 (324) E.L.T. 641 (S.C.)], Hon'ble Supreme Court has observed as follows:
"6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.
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7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross- examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions.
8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice."
4.4 In case of Basant Rubber factory Ltd. [2005 (185) ELT 230 (T-Mum)] following was held in similar circumstances-
"2.1 After hearing both sides & considering the material on record it is found-
(a) The Show Cause Notice & the Commissioner arrived at conclusions of the goods not having been received based on that the assessee could not produce any evidence of transportation from dealers premises to the factory of the assessee & on failure to produce freight & octroi vouchers. They rely on the statement of one K. Mehta proprietor of the dealer M/s. Shipyard Company.
This is the only statement out of the more than a score of dealers involved as supplies whose statement recorded is relied by the Department. This relied upon statement very clearly discloses.
20 E/86104,86105,86189,86190/2013 "On being asked as to who used to pay the Octroi charges from deliveries made to M/s. Basant Rubber factory Limited which is situated inside the Octroi unit. I have to state that as per the statement of M/s. Basant Rubber Factory Limited Octroi & freight charges are to be borne by our company and the details of the freight payment and octroi if any shall be submitted by me."
Underlining supplied From the emphasised portion of this statement, relied upon by Revenue, it is apparent that goods were to be paid for & paid on basis of factory door delivery and the freight & octroi was to be borne out by M/s. Shipyard Company. The non- production/availability of freight & octroi payment vouchers with the assessee, which is the bottom on which the foundation of charge of non-receipt of the inputs is being based, would crack and the entire case would fall. It is not brought on record by Revenue that the freight & octroi charges were paid by M/s. Shipyard or not as promised by him in the statement relied. The assessee can only produce such vouchers of payments which they have made. They have, as per evidence relied, not paid and were not required to pay freight & Octroi. Putting the onus on the appellant to produce such payment proof & thus liability on them is not called for since no onus lies on them to produce that evidence as per the relied upon material."
Payment of Octroi at the Octroi check post can be an goods evidence for movement of the goods through the check post as have been held in the various decisions. But cannot be the evidence to deny the receipt of the goods by the Appellant if the receipt of the same is established by the other evidences. In present case even the transporter has confirmed the delivery of the goods to the Appellant 1 and the same is supported by the payment made through the banking transactions. Other evidences need to be considered to establish the receipt of the goods and given due weightage. In case of A K Jain [2006 (205) ELT 230 (T.Mum)] bench observed "This Tribunal has been consistently holding that proof of payment of Octroi or the absence of it cannot be a sole ground to deny credit or allow it."
21 E/86104,86105,86189,86190/2013 4.5 In case of Malerkotla Steels and Alloys Pvt Ltd. [2008 (229) ELT 607 (T-Del)] following was held:
"3. Contention of the appellants is that there were 3 invoices in dispute wherein vehicle numbers were mentioned as HR 3A 8001, PB 23 1795 & PCU 624. Contention is that the appellants purchased the inputs from M/s. Vishal & Co. under invoice which shows truck No. as HR 3A 8001. G/R issued by the transport company also shows the same number. The appellants also produced copy of octroi receipt showing the same number and the description of the same goods. The weighment slip at the time of receipt of goods at the factory also shows the same vehicle number. Same is the situation in case of other truck numbers. As the inputs received in the factory are used in the manufacture of final product which were cleared on payment of duty, therefore, denial of credit on the ground of truck number mentioned in the invoices are not sustainable. There is no evidence on record that the appellants procured the raw material from some other source which are used in the manufacture of final product. Therefore, credit cannot be denied.
4. Contention of the Revenue is that inquires were made from the transport office regarding registration of truck number mention in invoices under which inputs were received by the appellants. Inquires show that number mentioned in the invoices are not of the truck, therefore, credit was rightly denied.
5. I find that the appellants produced copy of invoice showing truck number and also produced G/R issued by the transport company showing the same truck numbers. Octroi receipts also bearing the same truck number and the weighment slip also bearing the same truck numbers. In these circumstances, it cannot be held that the appellants had not received inputs in question. As the appellants received the inputs from registered dealer under the cover of invoice showing payment of duty, therefore, denial of credit on the ground that registered dealer has not received the material is not sustainable. Impugned order is set aside and appeals are allowed."
4.5 In case of Transpek Industry ltd. [2010 (249) ELT 91 (T- Ahmd)] following was observed:
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(i) The Modvat credit of Rs. 2,83,191/- stand denied to M/s.
Dhanlaxmi Tubes & Metals Industries (for short DTMI) along with imposition of penalty upon various persons on the ground that the inputs such as copper scrap, copper wire scrap, copper rod etc. have not actually been received by them and only invoices have been issued by the dealer PMM. For the above finding, the lower authorities have, though admitted, movement of trucks to Nadiad under the cover of LR issued by the transporter, but have denied the credit on the ground that delivery register of the transporter showed that the goods were of miscellaneous nature and not copper. I find that apart from the above, there is no other evidence to reflect upon the fact that the inputs were not actually received by the appellant. In the present case, there is no dispute that the LRs were issued by the transporter showing the appellant as the consignee of the goods. However, Revenue has based his case on the Goods Register maintained by the transporter indicating the description of the goods as 'Miscellaneous'. This fact, by itself, cannot be held to be sufficient for arriving at conclusion that the inputs were never transported to the appellant's factory. All the documentary evidence on record supports the appellant's case about the receipt of the input whereas there is no independent corroborative evidence by the Revenue produced on record.
(ii) The above findings find support from the Tribunal's order in case of M/s. Ajay Industrial Corporation v. CCE, Delhi - 2009 (237) E.L.T. 175 (Tri.-Del.) as also from the Tribunal's decision in case of M/s. Shree Jagdamba Castings (P) Ltd. v. CCE, Bhopal, 2006 (206) E.L.T. 695 (Tri.-Del.). It has been held in said judgments that the credit availed on the basis of invoices issued by the registered dealer, cannot be denied on the ground that the transporters have admitted the fact of non- transportation of the goods and the addresses of truck owners were found to be fake. Similarly, in the case of M/s. Malerkotla Steels & Alloys Pvt. Ltd. v. CCE, Ludhiana, 2008 (229) E.L.T. 607 (Tri.-Delhi), it was held that a manufacturer cannot be denied the credit on the ground that registered dealer had not received the inputs. The Tribunal in case of M/s. Lloyds Metal Engg. Co. v. CCE, Mumbai, 2004 (175) E.L.T. 132 (Tri.-Mumbai) has held that 23 E/86104,86105,86189,86190/2013 burden to prove non-receipt of the inputs is required to be discharged by Revenue by sufficient evidence. Where disputed consignments are entered in RG-23A Part I and Part II in chronological order, the allegations of non-receipt of the inputs cannot be upheld.
4.6 In case of STI Industries 2015-TIOL-2953-CESTAT-AHM
8. On perusal of the Compilation of documents, showing correlation of the goods received from M/s. Annapurna and return of semi-finished goods, I find that the appellant had produced copy of invoices of M/s. Annapurna along with transport documents and Bills of labour charges paid to the job workers. For example, the appellant availed credit on Copper Wire Bars to the quantity of 10963Kgs, vide Central Excise Invoice No. 415 dated 05.11.2003 of M/s. Annapurna, transported by New Satkar Tempo Transport Union vide Bilty No. 239 dated 05.11.2003 which was delivered to the job worker vide Central Excise Challan No. 609 dated 13.11.2003, in compliance with the provisions of Central Excise Rules. The job worker issued Bills for labour charges alongwith delivery challans issued from time to time. It is particularly noted that purity check result of the goods by electrolysis method was recorded in the printed form of the appellant. These evidences were not refuted by the lower authorities. I find that the charge of availment of cenvat credit on the basis of invoices without receipt of the goods was on the basis of statements of various persons. The appellant refuted the charges particularly by showing various evidences of receipt of goods, Lorry Receipt, Purity Check report, Payment of Labour Bills and other details, which were not disputed by the lower authorities. The Tribunal in the case of Super Trading Company vs. CCE, Delhi (supra), held as under:-
"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 24 E/86104,86105,86189,86190/2013 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 account. 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 Rules 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 Revenue's 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-C.E., (N.T.) dated 1-3-2007. 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. Limited also."
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9. The Hon'ble Punjab & Haryana High Court in the case of CCE, Chandigarh vs. Shakti Roll Cold Strips Pvt. Limited (supra) observed that cenvat credit cannot be denied on the ground of non-receipt of inputs when the Tribunal found that department is not able to prove that any alternative raw material was received and used in the final products. The Tribunal has also noted that the findings of the Commissioner established that RT-12 returns have been assessed finally by the Range Officer which contains all the documents including the invoices under dispute on the basis of which the modvat credit has been availed and utilised and that payments of the purchase of inputs have been made through cheque/ demand draft. In the present case, I find that appellant had produced several evidence in respect of receipt of inputs and the same were not disputed and the officers proceeded merely on the basis of statements and in this situation, denial of cenvat credit cannot be sustained.
10. The case laws relied upon by the learned Authorised Representative are not applicable in the present case as, in that case, the assessee had not produced any document. The Commissioner (Appeals) had relied the various case laws where it has been held that as per general rule of law, it is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to the property to be purchased prior to committing in any manner and if he does not, it is at his peril. In the present case, I find that appellant produced documents that M/s. Annapurna was in existence during the material period as established by their invoices and the Central Excise monthly returns. So, the appellant has discharged their responsibility and therefore, CENVAT credit availed on the basis of invoices of M/s. Annapurna cannot be denied."
4.7 Commissioner has in para 109 of the impugned order while discussing the roles the Appellant 2 "For an accountant, NNMehta (accountant of Dhuleva) was having knowledge more than merely book entries - he was in full knowledge about all the wrong doings of Dhuleva and its Directors regarding the cash transactions, which he has disclosed in his statements. Dhuleva have stated that as and when they have paid Octroi, the same has been duly accounted in their financial books of accounts 26 E/86104,86105,86189,86190/2013 along with the Truck charges duly paid/borne by them. NNMehta has thus committed offence by being concerned in concealing facts in the accounts while transferring illegitimate Cenvat credit because no inputs have been supplied along with the invoices issued by Dhuleva." Without assigning any specific role to the appellant 2 the order of Commissioner imposing penalty under Rule 26 just for the reason that appellant 2 was having knowledge about wrong doings of Dhuleva and its director cannot be justified.
4.8 In view of the above the impugned order to the extent it is in relation to the two appellants before us is set aside.
5.1 Appeal No E/86105, 86189/2013 dismissed as abated in terms of Rule 22 of the CESTAT Procedure Rules, 1982.
5.2 Appeal No E/86104, 86130/2012 are allowed.
(Order pronounced in the open court) (Sanjiv Srivastava) Member (Technical) (Dr. Suvendu Kumar Pati) Member (Judicial) tvu