Custom, Excise & Service Tax Tribunal
M/S. Bhuwalka Steel Industries Ltd vs Cce, Bangalore-I on 5 July, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Court I(DB) Date of Hearing:05/07/2013 Date of decision:05/07/2013 Appeal No.E/148-150/2002 (Arising out of Order-in-original No.21/2001 dt. 24/10/2001 passed by CCE, Bangalore-I) M/s. Bhuwalka Steel Industries Ltd. M/s. Bhuwalka Castings & Forgings Pvt. Ltd. M/s. Bhuwalka Alloys Pvt. Ltd. ..Appellant(s) Vs. CCE, Bangalore-I ..Respondent(s)
Appearance Mr. G. Shivadass, Advocate for the appellant.
.. for the respondent.
Coram:
Honble Mr. B.S.V. Murthy, Member(Technical) Honble Mr. Ashok Jindal, Member(Judicial) FINAL ORDER No._______________________ [Order per: B.S.V. Murthy] All the three appeals have been filed by three different units of the same company but against same Order-in-Original and the issue involved is the same and therefore all the appeals are taken together and a common order is passed.
2. The learned counsel for the appellants submitted a synopsis which, in our opinion, would represent the facts briefly with relevant details. Accordingly, the same is reproduced as under:-
Appeal No. E/148/2002 E/149/2002 E/150/2002 Location of the unit Hoskote Kolar Whitefield Period involved April 2000 April 2000 April 2000 Date of SCN 03/04/2001 03/04/2001 31/03/2001 OIO No.&date No.21/2001-CE dt. 24/10/2001 Credit availed Rs.1,00,67,019/-
Rs.31,63,241/-
Rs.64,73,056/-
Credit allowed Rs.71,11,292/-
Rs.15,21,163/-
Rs.19,17,750/-
Credit disallowed Rs.29,55,727/-
Rs.16,42,078/-
Rs.45,55,306/-
Penalty imposed
-do-
-do-
-do-
The appellants are engaged in the manufacture of steel rolled products and are operating three steel rolling mills in the state of Karnataka which are registered with the Central Excise Department. The final products manufactured by the appellants were eligible for availment of Modvat credit under the erstwhile Central Excise Rules upto 01/08/1997. After the introduction of Section 3A under the Central Excise Act vide Notification No.23/1997C.E.(N.T.) dt. 25/07/1997, w.e.f. 01/09/1997, the final products of the appellants were subjected to excise duty on the basis of production capacity and the benefit of Modvat credit was withdrawn. The provision of Section 3A were withdrawn w.e.f. 01/04/2000. Consequently, appellants became eligible for availment of CENVAT credit w.e.f. 01/04/2000 under Rule 57AB of the Central Excise Rules.
A circular bearing No.522/2000 (vide F.No.B.4/5/2000-TRU) dt. 31/03/2000 was issued by the CBEC which provided that CENVAT credit on the inputs/raw materials lying in stock with the re-rolling mills and induction furnace units, as on 01/04/2000 can be availed if the same was supported by duty paying documents. The contents of the said circular was communicated to the trade under the Bangalore-I Commissionerate Trade Notice bearing No.28/2000 C.E.(N.T.) dt. 31/03/2000. In respect of the inputs procured from units which were paying duty under Section 3A and lying in stock as on 01/04/2000, it was provided for availment of deemed credit by issue of Notification No.29/2000 CE(N.T.) dt. 31/03/2000. As per the said Notification, credit was allowed to be availed in respect of inputs received from the units which were covered under Section 3A upto 01/04/2000, at the rate of 12% of invoice value, provided the said inputs were directly received from the manufacturers and the payment for the same was made directly to the manufacturers of such units. The circular cited supra and trade notice provided for filing of declaration of the stock of the inputs/raw materials and the finished goods lying with the re-rolling mills and induction furnace units (which were under Section 3A) as on 31/03/2000.
The appellants filed stock declaration of the inputs lying with them as on 31/03/2000 with the jurisdictional Range Superintendent of Central Excise, vide letter dt. 31/03/2000 and the same was physically verified by the department with the stock in the Form-IV register and found the same to be correct with the declaration so filed. Thereafter, the appellants availed the CENVAT credit on the said inputs lying in stock, on the basis of the duty paid documents.
The officers attached to the Preventive Unit of respondent visited the Whitefield, Kolar and Hoskote Units of the appellants on 12 & 13/02/2001 and verified certain records relating to the availment of CENVAT credit. During the course of verification, certain documents were seized and statements of some of the officers of the company were recorded. Statements were recorded in which it was, inter alia, stated that the stock of raw materials received from traders were stored separately, were consumed immediately on receipt.
3. The learned counsel for the appellants submitted that denial of the CENVAT credit is on the ground if first in first out principle is followed in respect of materials received by the appellants during the period prior to 01/04/2000, which was done based on the Sales Tax/VAT returns filed by the appellants, the appellants do not become entitled to the entire credit and the quantity attributable to the quantity of raw materials received from the manufacturers directly as required under the Notification would be equal to the credit allowed by the Revenue. He points out that on 01/04/2000, the appellants had filed declaration of the stock lying with them and had also indicated the quantum of credit admissible and appellants had duty paying documents for the entire quantity. The only case of the Department is that a portion of the quantity on which credit was taken was purchased from the traders. While even during investigation when the statements were recorded, the representatives of all the three units stated that the appellant units were following the practice of storing raw materials purchased from traders and manufacturers separately and the appellants were following this practice, according to the learned counsel, to ensure that the quantity received from traders was used immediately because the appellants could not return such goods whereas in the case of manufacturers the same can be returned. There is no absolute evidence other than arithmetical calculations for coming to the conclusion that the appellants are not eligible for the credit.
4. The learned AR endeavoured to submit that it was the duty of the appellants to show that the entire quantity available with them was the one received from the manufacturers only and in the absence of separate accounts being maintained, the first in and first out principle followed was correct. However, he also submits that the Departmental officers had not verified as to whether the quantity received was from the manufacturers or not at the time of visit.
5. We have considered the submissions made by both sides. We find that the officers had visited and verified the stock for the purpose of availment of CENVAT credit. During such visit if they could not and did not verify whether there was any stock received from other than manufacturers and result was availment of CENVAT credit on the quantity declared, demand for CENVAT credit availed attributing a portion of the same to the traders cannot be sustained unless backed by investigation and evidence. Unfortunately in this case, the investigation conducted has strengthened the case of the appellants since in the statements the concerned representatives have stated that the appellants were following the practice of storing goods received from manufacturers and traders separately and using them separately and at the time when verification was conducted only raw materials received from manufacturers was taken into account. In the absence of any contrary evidence unearthed during investigation other than arithmetical calculations, the impugned order cannot be sustained. In the result, all the appeals are allowed with consequential relief if any for the appellant.
(Operative part of this order pronounced in court
On conclusion of the hearing)
( ASHOK JINDAL ) (B.S.V. MURTHY)
MEMBER(JUDICIAL) MEMBER(TECHNICAL)
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