Customs, Excise and Gold Tribunal - Delhi
Garima Enterprises (P) Ltd. vs Commissioner Of Central Excise on 24 August, 2004
Equivalent citations: 2005(101)ECC45, 2005(182)ELT106(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In these two appeals, filed by M/s. Garima Enterprises Pvt. Ltd. and Shri Sunil Kumar Agarwal, the issue involved relates to disallowance of MODVAT Credit of duty paid on inputs.
2. Shri Bipin Garg, learned Advocate, mentioned that the Appellants manufacture copper wire and super enamel copper wire and avail of MODVAT Credit of the duty paid on inputs, mainly copper rod/copper wire; that they used to send the copper rod to their job worker, M/s. SMI Electrowire (P) Ltd. in the same vehicle in which copper rods were received from the supplier without unloading in their factory under the job work challans; that the Central Excise Officers visited the premises of M/s. R.K. Enterprises, a registered dealer of copper rods and seized certain incriminating documents including invoices, Kach-cha slips, numbering machines, rubber stamps of different parties and government agencies and G.R. books of different transporters; that Shri R.K. Gupta, Proprietor of M/s. R.K. Enterprises, in his statement dated 16-01-2001, admitted that his firm had no godown and no storage facility to store the goods and he used to dispatch the material directly to the customers from their suppliers' godown and that G.R. books are bogus and used by him to cover generally bogus transactions; that the Officers also searched the factory premises of the Appellants on 8-2-2001; that the Department has disallowed the MODVAT/CENVAT Credit on the ground that M/s. R.K. Enterprises and M/s. Hindustan Metal had no place to keep the goods, the transactions were fictitious and the Appellants had not taken reasonable steps as they had not verified the identity of their dealers.
3. The learned Advocate submitted that the Appellants had taken MODVAT/CENVAT Credit correctly on the basis of invoices issued by dealers as prescribed; that the inputs were received directly from the manufacturer under invoices issued by them as well as invoices issued by the dealer which contained all the details; that the entire case is based upon the statement of Shri R.K. Gupta which is of general nature and nothing wrong has been stated about the inputs received by the Appellants from R.K. Enterprises; that R.K. Gupta has nowhere stated that no goods had been sent to the Appellants; that moreover Shri R.K. Gupta, had retracted his statement from Tihar Jail. The learned Advocate further mentioned that Shri Gupta, in his statement has deposed that whenever the quantity delivered is more than 6 tons, in an invoice, the transaction is bogus; that the Appellants had purchased quantity less than 6 tons which is evident from the invoices and as such the allegation of the Department does not survive; that invoices issued by R.K. Enterprises were authenticated by the Central Excise Officers as required under the law and therefore no charge of not taking reasonable care by the Appellants to verify the identity of dealer can be levelled against the Appellants; that there is no evidence on record that no inputs has been received in their factory; that the Department had not investigated the matter fully as no enquiry had been made from the transporters; that the inputs were sent to their job worker who had sent back the same after carrying out the processes; that all the payments were made by the Appellants through Account Payee cheques and there is no evidence that the payments thus made were returned in cash to the Appellants.
4. Countering the arguments, Shri D.N. Chaudhary, learned SDR, submitted that the residential premises of Shri R.K. Gupta was used for his firm and the ground floor of the said premises was used by M/s. Hindustan Metal of which his brother Deepak Gupta was the proprietor; that R.K, Gupta has admitted in his statement that G.R. Books were printed by him and those transport companies did not exist anywhere and the addresses mentioned on G.Rs were fictitious and were used to cover generally bogus transactions; that he had also admitted to have returned the cash to the purchasers; that R.K, Gupta has also deposed in his statement that where the tempo number in the purchase invoices and sale invoices differ, the sales of copper rod were bogus; that Annexure I to show cause notice contains details of invoices where description of goods is different vis-a-vis purchase invoices and details of invoices where dates are different vis-a-vis purchase invoices; that all this goes to establish that the credit had been taken by the Appellants without receipt of the goods.
5. We have considered the submissions of both the sides. The facts which are not in dispute are that both the dealers M/s. R.K. Enterprises and Hindustan Metals are registered with the Central Excise Department as dealers and they had issued invoices to the Appellants for sale of copper rods. The question involved is whether the goods in question were actually sold or only invoices were provided to the Appellants for the purpose of availing the MODVAT credit. The entire case of the Department is mainly based on the statement of Shri R.K. Gupta, Proprietor of M/s. R.K. Enterprises, as no statement of Shri Deepak Kumar Gupta, Proprietor of M/s. Hindustan Metal, seems to have been recorded. In his statement, Shri R.K. Gupta has deposed that he trades in non-ferrous metals having a staff of four persons. He has given the names of firms whom he purchases the metals from as well as the name of his customers whom the metals are sold to by him. He has also mentioned that both payments are made and received by him through cheques. He has admitted that G.R. books were got printed by him and the transport companies did not exist and he was issuing bogus modvatable invoices about 50 % of all invoices issued by him. He has also stated in his statement that where the quantity delivered on an invoice through a tempo is more than 6 tons, the transaction is bogus and that he used to receive back cash from his suppliers and in turn he used to give the said cash to his customers. The statement of Shri R.K. Gupta reveals that besides issuing bogus modvatable invoices, he was also issuing genuine invoices where the goods were actually supplied to the customers. The learned Advocate has rightly contended that the said statement is very general and nowhere specifically mentions that the invoices issued in the name of the Appellants were bogus. The Revenue has also not rebutted the submissions made by the Appellants that they had never received any invoice for more than 6 tons and as such even as per the statement of Shri R.K. Gupta, the supply to the Appellants were not bogus. The Revenue has also not controverted the contention of the Appellants that they were sending the copper rods to their job workers for conversion and paying the conversion charges to the job worker. The Revenue has thus not succeeded in establishing that the Appellants did not receive the raw materials and received only modvatable invoices. Accordingly, we set aside the impugned Order and allow both the appeals.