Custom, Excise & Service Tax Tribunal
Santram Metal &Amp Alloys Pvt Ltd vs Ahmedabad-Iii on 20 June, 2022
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Excise Appeal No. 478 of 2011
(Arising out of OIA NO.36-2011-AHD-III-KCG/COMMR-A-/AHD dated 28/02/2011 passed by
Commissioner of Central Excise-AHMEDABAD-III)
Santram Metals & Alloys Pvt Ltd .........Appellant
Hariom Industrial Estate, S.no. 144/1, Pij Road,
Village-tundel, Nadiad, Gujarat
VERSUS
C.C.E & S.T.,-Ahmedabad-iii .........Respondent
Custom house, 2nd floor, Opp. Old Gujarat High Court, Navrangpura, Ahmedabad, Gujarat-380009 WITH Excise Appeal No. 10549 of 2013 (Arising out of OIA NO.AHM-CEX-003-COM-31TO32-2012 dated 28/12/2012 passed by Commissioner of Central Excise-AHMEDABAD-III) Santram Metals & Alloys Pvt Ltd .........Appellant 3, Hariom Industrial Estate, S.no. 144/1, Near N.h.no. 8, Pij Road, Vill & Post -Tundel, Kheda, Gujarat VERSUS C.C.E & S.T.,-Ahmedabad-iii .........Respondent Custom house, 2nd floor, Opp. Old Gujarat High Court, Navrangpura, Ahmedabad, Gujarat-380009 AND Excise Appeal No. 10654 of 2013 (Arising out of OIA NO.AHM-CEX-003-COM-31TO32-2012 dated 26/12/2012 passed by Commissioner of Central Excise-AHMEDABAD-III) Navratanlal Sharma .........Appellant Proprietor, M/s Singhal Road Carries, Plot No. 1, Motikhan, Opp. Desu, DELHI VERSUS C.C.E & S.T.,-Ahmedabad-iii .........Respondent Custom house, 2nd floor, Opp. Old Gujarat High Court, Navrangpura, Ahmedabad, Gujarat-380009 APPEARANCE:
Shri P.V. Sheth, Advocate for the Appellant Shri. Vinod Lukose, Superintendent (Authorized Representative) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No. A/ 10706-10708 /2022 DATE OF HEARING: 11.04.2022 DATE OF DECISION:20.06.2022
2|Page E/478/2011, E/10549,10654/2013-DB RAMESH NAIR The brief facts of the case are that M/s Santram Metal Alloys Pvt. Ltd. are engaged in the manufacture of Copper Wire Bars, Copper Ingots and wire rods etc. They were availing of the benefit of Cenvat credit facility. The intelligence was gathered by DGCEI officers and necessary investigation has been initiated against the appellant. As per the allegation of the Revenue, investigation revealed that apart from imported consignment of copper, appellant had also shown the purchase of copper ingot from the units based at Jammu and availed Cenvat credit on the strength of invoices issued by supplier. The investigation is of the belief that the copper ingots shown as purchased from the units located at Jammu were actually not received in the factory and not used in or in relation to manufacture of final products. Searches were carried out by the Officers at the factory premises as well as business premises of the appellant and certain documents were withdrawn for further investigation. The investigation was carried out with respect to the vehicles mentioned in the input invoices used for transporting the goods from transporters/ check posts/ RTO. The documents recovered from M/s Singhal Road Carriers were scrutinized and it was found that said transporter were transporting goods other than copper form New Delhi to Ahmedabad and such other goods were entered in their delivery registers recovered from their Ahmedabad branch office. On the same date and for the same truck, M/s Singhal Road Carriers issued another LR for transportation of copper ingots/ wire bars to the manufacturers of articles of copper of Gujrat, Daman or Silvassa. The vehicles actually transported other goods and hence the stamps of the checkpost of Commercial Tax department were affixed on the transport documents. The investigations were also carried out with the RTO Check posts and the information furnished by the Joint Director of Transport, Gujrat state was examined vis-à-vis the details of the transportation appearing in the LRs of the transporters from Delhi to Nadiad. Such scrutiny revealed that in some cases only vehicles were found to have entered Gujrat. The statements of transporters and their staff were recorded. The statements of concerned persons of M/s Singhal Road Carriers brought out the facts that they issued only LRs and did not transport copper. Statement of Shivkumar, Director of Appellant was also recorded wherein he has not disputed that the goods under the relevant input invoices were received in the factory. On the basis of these facts and evidence gathered, it was alleged that the appellant had availed the credit fraudulently without receipt of inputs. Accordingly, the SCN was issued which was culminated in the adjudication order whereby the demand of Cenvat
3|Page E/478/2011, E/10549,10654/2013-DB credit along with interest and penalty was confirmed and a penalty under Rule 26 of Central Excise Rules, 2002 was also imposed on the Co-Noticees. Hence, appellants filed these appeals before the Tribunal.
2. In respect of Appeal No. E/478/2011-DB the brief facts of the case are that during the investigation officers of DGCEI directed the appellant to debit the amount of Rs. 24,00,000/- in Cenvat account which was debited by the Appellant on 06.01.2007. Thereafter, Appellant was served with the show cause notice proposing recovery of Cenvat Credit for the period 11.09.2004 to 17.11.2006. The said show cause notice was adjudicated by the Commissioner under his Order-In-Original No. 69/Commissioner /2008 which was appealed before the Tribunal. During the hearing of stay application the attention was drawn to the facts that the company has come in to existence somewhere in the year 2006 only and has obtained the registration only in the month of September 2006 and therefore the recovery proposed for the period prior to such date legally not correct. The Tribunal considering the said facts granted stay simply on the ground that the company itself had come into existence only on 31.07.2006 and demand for the period prior to such date was not legal. Realizing, the mistake the department issued another show cause notice in the name of Omkar Metal & Alloys for the period upto 30.08.2006. In the said matter also the Tribunal after considering the submission remanded the matter with direction to decide the noticee against whom the said demand is to be confirmed. There after the Appellant filed the refund claim. The show cause notice was issued proposing the rejection of refund claim on the ground that the said claim is not entertain able being pre mature. The Ld. Adjudicating authority vide Order-In-Original dated 30.12.2020 rejected the refund claim on the ground that remanded matter are under process and the cases are not yet finalized by the Commissioner, Central Excise, Ahmedabad. Being aggrieved, Appellant filed the present appeal before us.
3. Shri. P. V. Sheth, Learned Counsel appearing on behalf of the appellant submits that the vehicle referred are capable of transporting the consignment and the said vehicle has passed through Shamlaji Check Post. As regard the allegation of the department that the consignments are not recorded in the registers maintained by the said transporter at his Ahmedabad office, the concerned person, maintaining the register has admitted during the course of Cross Examination that they were not making entry of the goods which were to be delivered directly to the customer. In other words the Lorry receipts which were marked as 'Door Delivery" were not being entered in the register maintained by them.
4|Page E/478/2011,
E/10549,10654/2013-DB
3.1 He also submits that merely because the transport company has not properly maintained their records, the Cenvat Credit cannot be denied. As regard the details of transport department of Gujarat rely upon by the department he submits that due to over weighment the transporter avoid the check post and to avoid check post they take little longer route and delivers the consignment. This is the choice of the transporter and because they found it economical, to avoid the RTO check post, then to pay the penalty they transport the consignment in the manner they deemed fit. Therefore, the investigation conducted by the department on the basis of such document only, no credit can be denied and the proceeding cannot be sustained. It is also well settled proposition of law that clandestine removal cannot be proved merely on the basis of the documents of transporter and without any independent corroborative evidence.
3.2 He also submits that the allegation contained are not liable to be sustained, in as much as, the department has not properly appreciated the relevant documents and the facts that none of supplier's statement was recorded nor the appellant has ever denied the receipt of the material. The appellant received goods in valid duty paid documents and made payment through account payee cheques. Quantities of inputs were properly recorded in raw material Register. The finished goods were cleared on payment of Central Excise duty;
3.3. He placed reliance on the following decisions:-
Grace Castings Ltd. Vs. Commr. Of C.Ex & S.T. Ahmedabad -II- 2019(369)ELT 751(Tri. Ahd) Asian Tire Factory Ltd. Vs. Commr. Of C.Ex. & ST- 2019(27)GSTL 219 Malerkotla Steel Alloys Pvt. Ltd. Vs. Commissioner of Central Excise - 2008(229)ELT 607(Tri. Del) Hiren Aluminium Ltd. Vs. Commissioner of Central Excise - 2009(245)ELT 386 (Tri. Ahd) Manaksia Ltd. Vs. Commissioner of Central Excise, Rajkot - 2008(232)ELT 497 (Tri. Ahd) Commissioner of Central Excise Vs. Neepaz Steel Ltd.-2008(230)ELT 218(P&H) Motabhai Iron & Steel Industries- 2015-316-ELT-374 (Guj. HC) Prayagraj Dying & Printing Mills Ltd. - 2013-290-ELT-061 Nisaan Copper Pvt. Ltd. - 2014-313-ELT -449 (Trib. Ahd)
5|Page E/478/2011, E/10549,10654/2013-DB Siddhartha Broze Prodcuts Pvt. Ltd. - 2015-328-ELT-429
4. On the other hand, Shri. Vinod Lukose, Learned Superintendent (AR) reiterated the findings of the impugned order and he submits that the adjudicating authority based on the investigation done by DGCEI arrived at a conclusion that there was no movement of copper ingots; that only invoices were received on which the appellant had availed the Cenvat Credit without having received the goods further not unitizing the said cenvatable inputs towards manufacture of dutiable finished goods. The catena of judgments held that clandestine removal cases need not be proved in mathematical precision. He placed reliance on the following judgments:-
Mangakam Alloys Ltd. [2018 (363) ELT 24 (Guj)] Gyscoal Alloys Ltd. [2014 (35) STR 199 (Guj.)] Shah Guman Mal [1983 (13) ELT 1631 (SC)] D Bhoormull [1983(13) ELT 1546 (SC)] Aafloat Textiles [2009 (235)ELT 587(SC)] Systems and Components Pvt. Ltd. [2004(165)ELT 136(SC)] Karori Engineering [2004(166)ELT 373 Tri] JK Processors [2016 (339)ELT 416 International Cylinders [2010 (255) ELT 68 ]
5. Heard the both the sides and considered submissions.
6. On careful considerations of the arguments advanced by both the sides and perusal of the case records, the issue involved in the present appeals is whether appellant M/s. Santram Metals & Alloys Pvt. Ltd. are eligible to Cenvat credit on the basis of documents which are claimed to have been received along with inputs invoices issued by the units located at Jammu. We find that officers visited the appellant's factory on the basis of information that the appellant availed the Cenvat credit on invoices, without actual receipt of the goods. However revenue did not find any shortage/excess of inputs or finished goods in factory of Appellant. Officers also seized records/ documents related to the receipt of the goods and availment of cenvat credit. The Revenue could not bring any evidence from the Appellant's factory by which it can be shown that the goods covered under the invoices were not received by them. We find that in the entire investigation the evidences which were relied upon are related to transporters/ RTO check post. On the basis of such third party evidences revenue alleged that goods were not received by the appellant in their factory. Contrary to these evidences the fact that the appellant have
6|Page E/478/2011, E/10549,10654/2013-DB recorded the receipt of the goods in their cenvat account, the purchase of the goods under the invoices in question were booked in books of account and raw material receipt account, the said purchased goods also shown for use in manufacturing of dutiable finished goods. The payment against the said invoices were made through cheque, even the payment of transportation was also made by cheque. When the statutory records maintained by them do not disclose absence of receipt of inputs in the factory and there is no cogent evidence of disposal elsewhere the credit cannot be denied. It is also not the case of the department that the appellant have procured some unaccounted inputs to cover up the quantity of input shown in the invoices. There is no allegation by the department regarding the financial flow back that against the invoices for which the payments were made through cheque, any cash payment was received by the appellant. No investigation was conducted at the end of the manufacturers/suppliers of the goods to ascertain the fact that whether they have supplied any goods to Appellant or not?. With all these undisputed facts, merely on the basis of the transporter records and RTO check-post reports, it cannot be concluded that the inputs were not received by the appellant. In the absence of any evidence to the contrary, we find that the denial of Cenvat credit on the basis of the investigations conducted at the third party end cannot be adopted as the sole basis for denial of credit.
6.1 We also find that in Cenvat Credit Rules 2004 some minimum precaution was prescribed to ascertain the bona fide on the part of consignor of input i.e. under Rule 4 and Rule 9 of Cenvat Credit Rules 2004. We note from the above rules, that credit can be taken on the basis of invoices after the inputs covered by such invoice is received. It is important that goods covered by the invoices are received by the manufacturer in their factory. In the facts of the present case we find that the appellant have received the goods on duty paying documents and recorded the receipt of the goods in their raw material account and cenvat account i.e. RG-23A-Pt. I and Pt. II and the said disputed inputs used in manufacture of dutiable goods. The appellant also recorded the receipts and consumption of said goods in the factory. The purchases of the goods under the invoices in question were booked in books of account. The payment against the said invoices were made through cheque. On the above statutory compliance, the Appellant correctly availed the cenvat credit. Further, the department nowhere raised any dispute on the said records. The revenue nowhere produced any evidence either from the factory of supplier or appellant's factory that by which it can be proved that alleged goods not received by the Appellant. Thus the contention of the department that
7|Page E/478/2011, E/10549,10654/2013-DB appellant have availed cenvat credit without receipt of goods (raw material) is not tenable. Further, as the Appellant have discharged the Central Excise duty on the final product manufactured out of the alleged raw material, if the department is of the opinion that the alleged goods was not received by the appellant then it is the onus on the department to prove that any other alternative raw material was used in the final products, Department has failed to do so.
6.2 We also observe that Tribunal in case of M/s. Lloyds Metal Engg. Co. v. CCE, Mumbai, 2004 (175) E.L.T. 132 (Tri.-Mumbai) has held that 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. Similarly in the matter of Commissioner Vs. Motabhai Iron and Steel Industries 2015(316) ELT 374 (Guj.) the Hon'ble Gujarat high court held as under
"19. From the findings recorded by the Tribunal, it is apparent that payment to M/s. Vasmin Corporation in respect of purchases was made through banking channels. Under the circumstances, the Tribunal has lightly held that the demand cannot be confirmed against the assessee. The Tribunal has further found that it is an undisputed fact that all the purchases were duly recorded in the statutory books of the assessee and the goods were also found to be entered in its statutory records. That the Department had not made any investigation at the unit of the assessee, which could have supported the findings of the adjudicating authority. None of the consignors of the goods have denied the clearance of goods to the assessee. There was no evidence on record to show that the records maintained by the assessee were not correct. The Tribunal, was accordingly, of the view that on the basis of statements of some transporters which were not corroborated by any material on record, a huge credit could not be disallowed. It is under these circumstances that the Tribunal has set aside the demands and the penalties imposed upon the assessee and the co-noticees.
20. In light of the findings of fact recorded by the Tribunal upon a detailed appreciation of the evidence on record, as discussed hereinabove, it is not possible to state that the conclusion arrived at by the Tribunal is in any manner perverse to the record of the case. On behalf of the appellant, nothing has been pointed out to indicate that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. The learned Counsel for the appellant is not in a position to point out any material to the contrary so as to dislodge the finding of facts recorded by the Tribunal. Under the circumstances, in absence of any perversity in the findings recorded by the Tribunal, the impugned order does not give rise to any question of law, much less, a substantial question of law so as to warrant interference. Moreover, as rightly pointed out by the learned advocate for the respondent, even if on the same material it was possible to take a different view, the same would not give rise to a substantial question of law.
21. In the result, the appeals fail and are accordingly dismissed".
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E/10549,10654/2013-DB
7. Accordingly, we hold that the allegation of the Revenue that the appellant have not received the inputs made against the appellant are not sustainable and thus, the impugned orders are liable to be set aside. Accordingly, we set aside the impugned orders and allow all the appeals filed by the appellants with consequential reliefs, in accordance with law.
(Pronounced in the open court on 20.06.2022) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Prachi