Custom, Excise & Service Tax Tribunal
Cce, Jaipur vs 4. Chemical Pvt. Ltd on 13 January, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Excise Appeal No. 2982-2985/2011-EX[SM]
[Arising out of Order-In-Appeal No. 234-237(DKV)CE/JPR-I/2011 dated 13.09.2011 passed by CCE, Jaipur]
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?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
CCE, Jaipur Appellant
Vs.
M/s. Aditya Industries,
2. Surendra Industries
3. Hemank Soap &
4. Chemical Pvt. Ltd. Respondent
Coram: Honble Ms. Archana Wadhwa, Judicial Member Appearance:
Shri B.B. Sharma, DR for the Appellants Shri Bipin Garg, Advocate for the Respondent Date of Hearing: 13.01.2014 FINAL ORDER NO._50166-50169 /2014 Per Ms. Archana Wadhwa:
All the four appeals filed by the Revenue against the order in appeal passed by Commissioner (Appeals) are being disposed of by a common order as they arise out of the same impugned order.
2. I have heard Shri B.B. Sharma, learned AR appearing for the revenue, and Shri Bipin Garg, learned advocate appearing for the respondent.
3. As per fact on record all the Respondents were procuring various raw material such as Palm Kernel Fatty Acid, Coconut Acid, Palm Acid oils etc. from registered dealer M/s. Harsh & Company. The said dealer was, in terms procuring the said raw material from M/s. Gaytri Traders. The said Gaytri Traders was a registered dealer with Department with effect from 07.02.2009. However, investigations made at the end of M/s Gaytri Traders revealed that they had vacated the said registered premises on 30.04.09. As such their registration was was revoked abinitio i.e. from the initial date 07.02.09, vide order-in-original dated 31.12.09.
4. As a result of above development, proceeding were initiated against the respondent for denial of the Cenvat credit availed by them on the basis of the invoices issued by M/s. Harsh & Company, during the period October 2009 to November 2009. The Said Show Cause Notice culminated into an order passed by the original adjudicating authority confirming the demand and imposing penalties.
5. On appeal against the above order, Commissioner (Appeals) held in favour of the respondents by observing that the only reasons for denial of credit to the Respondent is that the dealer registration of M/s. Gaytri Traders stands revoked vide order in original in original dated 31.12.2009. However, he observed as under:-
10. In the matter, I observe that in the whole case it was not disputed by the department that:-
i. the appellants had not received inputs on which they had taken Cenvat credit.
ii. the documents on which they had taken Cenvat credit did not contain the specified particulars as prescribed under the Cenvat credit Rules, 2004 iii. the payment of central excise duty which has been shown on the said invoice had not been paid by manufacturer of the inputs.
iv. the inputs on which Cenvat credit has been availed by the appellants had not been used in the manufacture of final products and the said final products have not been cleared on payment of appropriate central Excise duty.
v. the price of the inputs including central excise duty has not been born by the appellants.
Thus it is obvious that the inputs on which Cenvat credit availed by the appellants were received by them in their factory premises, the same was used for manufacture of final products on which appropriate central excise duty was paid by the appellants, appropriate central excise duty was paid on the said inputs and the relevant invoices were containing all the relevant information as prescribed under the Cenvat credit rules, 2004. The payment of the inputs was made through cheques by the appellants to M/s. Harsh & Company, 292, Chandpol Bazar, Jaipur.
11. The Rule 9(5) of the Cenvat credit Rules, 2004 read as that The manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value, duty paid, CENVAT credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit. I observe that in the present case it is nowhere alleged that the appellants have not maintained proper records of the said inputs as mentioned above and further also I observe that the appellants have received the goods on the invoices of the M/s. Harsh & Company, 292, Chandpol Bazar, Jaipur, they have received the quantity mentioned in the invoice in their unit and have made payments through cheques thereafter. On the contrary department have not disputed that the goods were not received by the Appellants and it was only a paper transaction. Thus it is clear that this mode of transactions was bona fide on part of appellants, in this circumstances it has been accepted that buyer can take only those steps which are in their control. He is not expected to verify records of supplier to check whether in fact the supplier has paid duty on goods supplied by him. He cannot verify whether their supplier is in fact registered with excise. He has to rely on statements made by supplier and documents supplied by him. The only reasonable steps he can take are to ensure that the supplier seems to be trustworthy, inputs are in fact received and documents prima facie appear to be genuine. Making payment by cheque to seller will prove his bona fide. Moreover in the present case it can not be presumed that the appellants were verify the genuineness of the first stage dealer when they very much aware about their second stage dealer i.e. M/s. Harsh & Company, 292, Chandpol Bazar, Jaipur from whom they had received the said inputs. From the above, I am of the considered view that the appellants have discharged their burden as prescribed under Rule 9(5) of the Cenvat Credit Rules, 2004.
12. Further, I observe that there is no dispute that the appellants have taken the Cenvat Credit on the basis of the invoices issued by the M/s. Harsh & Company, 292, Chandpol Bazar, Jaipur, who was registered with the department as second stage dealer as defined under Rule 2 (s) of the Cenvat credit Rules, 2004. As the invoice issued by second stage dealer is a prescribed document under the Rule 9 (1) (a) (iv) Cenvat credit Rules, 2004, therefore, it is clear that the appellants took the Cenvat credit on the basis of the proper documents as prescribed under the law.
6. He also took note of various decisions of the Tribunal laying down that inasmuch as assessees have taken all reasonable steps to ensure that the inputs received by them are duty paid and have known their immediate supplier, the modvat credit cannot be denied on the ground that the person supplying the goods to the dealer-supplier was either not in existence or has not paid duty on the final product. The Tribunal in the case of M/s. R.S Industries Vs. CCE, New Delhi 2003 (153) ELT 114 (CEGAT) has held that the buyer is not responsible for misconduct of supplier and he has entitled to Cenvat credit on basis of a valid duty pauing document. The said judgment was upheld by the Honble High Court of Delhi reported as CCE, Vs. R.S. Industries 2008 (228) ELT 347 (Del.). Similarly, Commissioner (Appeals) has referred to and relied upon identical decisions of the Tribunal. As such, I find no infirmity in the impugned order of Commissioner (Appeals). Revenues appeals are accordingly rejected.
(Pronounced in the open court)
(Archana Wadhwa) Member(Judicial)
Jyoti*
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