Custom, Excise & Service Tax Tribunal
J.L.Autoparts vs Cce, Delhi-Iv on 14 January, 2013
CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL,
West Block No. 2, R.K. Puram, NEW DELHI
COURT No. III
Excise Appeal No.3350-3351 & 3435 of 2010
Date of Hearing: 23.11.2012.
[Arising out of Order-In-Appeal No.113-116/CE/Appl/DLH-IV/2010, dated 28.07.10 issued by CCE, Delhi-IV]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
Arvind Enterprises
Avon Steels (India)
J.L.Autoparts Appellants
Versus
CCE, Delhi-IV Respondent
Coram: Honble Ms. Archana Wadhwa, Judicial Member Present for the Appellants Shri N.K.Sharma, Adv. & Shri R.P.Jindal, Adv.
Present for Respondent Shri B.B.Sharma, DR Order No.A-55185-55187-SM(Br.) Per Ms. Archana Wadhwa:
All the three appeals are being disposed of by a common order as they arise out of the same impugned order passed by Commissioner(Appeals). I have heard both the sides.
2. As per facts on record, M/s J.L.Autoparts are engaged in the manufacture of auto parts and were availing the benefit of Cenvat credit of duty paid on the inputs. The said inputs were being received by them from two registered dealers, i.e., M/s Arvind Enterprises and M/s Avon Steels (India) under the cover of Cenvatable invoices being issued by the said two dealers. The said two dealers received the inputs from M/s Haryana Steel & Alloys Ltd. (hereinafter referred to as HSAL).
3. Investigations were conducted at the end of HSAL by the officers of DGCEI and during the course of investigation, it transpired that HSAL were issuing the invoices of carbon steel billets, alloys and MS billets to various manufacturers without actually supplying the goods. Statement of Shri Ramesh Rawat, Executive Director of HSAL was recorded wherein he admitted issuance of invoices without actual supply of the goods. According to Shri Rawat, this was being done to cover up part of their dispatches of stainless steel to Jodhpur Unit and to pass on Cenvat credit to these parties who were obtaining only Cenvatable invoices from them without having received the goods.
4. In a follow up investigation, statement of Shri Arvind Tiwari, authorised signatory of the two dealers was recorded on 17.12.08. On specifically being asked, Shri Tiwari deposed that they have been receiving the material along with the invoices of HSAL. On being shown statement of Shri Rawat, he clarified that they have actually received the material issued by HSAL but they are not in a position to comment whether the said raw material was manufactured by HSAL or not? He clarified that they were receiving the material through Shri Subhash Goel, a broker who used to supply the material directly from HSAL to both the dealers. He cannot comment upon the activities of HSAL. He further deposed that all the details of the goods received by the dealers stands entered in the RG-23D register and the said material received by them from HSAL which stands further supplied by them to various manufacturing units under the cover of Cenvatable invoices.
5. During the further course of investigation, statements of Shri K.K.Sharma, Manager Accounts and authorised signatory of M/s J.L.Autoparts was recorded on 20.12.08. Shri Sharma deposed that they were supplying their final product to M/s Honda Motorcycle & Scooters India P.Ltd and M/s India Yamaha Motors P.Ltd. They have procured the raw material from two dealers under the cover of invoices. On being questioned, he categorically deposed that they have received the material from the said two dealers and the suggestion that no material was received, is actually incorrect. However, he agreed to deposit the Cenvat credit so availed by them.
6. On the above basis, proceedings were initiated against the appellant for confirmation of demand by denying the Cenvat credit on the basis of invoices issued by M/s Arvind Enterprises and M/s Avon Steels (India). Notice also proposed imposition of penalties on the said two dealers.
7. The show cause notice so issued culminated into an order passed by Addl. Commissioner confirming the demand of duty of Rs.8,80,224/- and education cess of Rs.11,806/- against M/s J.L.Autoparts being wrongly availed utilised credit. Penalty of Rs.8,80,244/- was also imposed upon the said appellants under Rule 13 of the Cenvat Credit Rules, 2002/Rule 15 of Cenvat Credit Rules, 2004, read with section 11AC of Central Excise Act, 1944. In addition, penalty of Rs.7,55,461/- and of Rs.1,36,589/- was imposed upon M/s Arvind Enterprises and M/s Avon Steels.
8. The said order was put to challenge by the appellant as also by Revenue for increase of penalty on M/s J.L.Autoparts in as much as the education cess of Rs.11,806/- was not taken into consideration while imposing 100% penalty on the said appellants. Commissioner(Appeals) vide his impugned order, rejected the appeals of all the three appellants but allowed the appeal of Revenue and enhanced the penalty on M/s J.L.Autoparts by Rs.11,806/-.
8. The said order of Commissioner(Appeals) is impugned before Tribunal.
After hearing both the sides and after going through the impugned order, I find that entire case of the Revenue is based upon the statement of Shri Ramesh Rawat, Executive Director, HSAL. It stands deposed in the said statement of Shri Rawat that in respect of certain items, he was only issuing the invoices and was not supplying the goods. The said statement of Shri Rawat does not stand agreed upon by the two dealers, i.e., M/s Arvind Enterprises and M/s Avon Steels. In his statement Shri Arvind Tiwari, authorised signatory of said two dealers have clearly deposed that they were receiving the goods from HSAL along with the invoices. It is not the Revenues case that HSAL was not manufacturing the raw material or were clearing/diverting their final product to other persons. Further the statement of Shri Tiwari stands corroborated by the statement of Shri K.K.Sharma of the manufacturing unit, M/s J.L.Autoparts. It is also seen that all the payments were made to the dealers by cheque and there is no allegation much less any proof of flow back of the money from dealers to the appellant. Revenue has also not made any enquiries from the transporters as regards the transportation of the goods in question. As such the denial of Cenvat credit on the sole statement of manufacturer of the inputs, without taking into consideration the statement of the first stage dealer as also the statement of the manufacturing unit is not justified. It is further seen that manufacturing unit has entered all the inputs in their records which stands shown to have been used in the manufacture of their final product and cleared on payment of duty. If the Revenues case as regards non-receipt of inputs is accepted, a vacuum remains to be answered as to how the final product stands manufactured by M/s J.L.Autoparts. Revenue has not shown any alternate procurement of the raw material, in the absence of which M/s J.L.Autoparts could not have manufactured their final product. At this stage, I may refer to some of the precedent decisions. Tribunal in the case of the PRACHI POLY PRODUCTS LTD. reported as 2005(186)ELT100(Tri.) observed that where the appellants have taken all reasonable steps to ensure that duty has been paid on inputs received by them and on which they took credit - Credit cannot disallowed on account of denial by manufacturer as regards payment of duty. In the case of VARANASI DOMESTIC APPLIANCES (P) LTD. reported as 2007(213)ELT286(Tri.), it was observed that in the absence of any evidence to show that manufacturer were party to fraud or misrepresentation by supplier of inputs, denial of credit not justified.
9. As observed in the precedent paragraphs, Revenues entire case is based upon the sole statement Shri Rawat of HSAL and there is no inculpatory statements of either the first stage dealer or the recipient of the inputs and there is no evidence available on record supporting the Revenues stand, I find no reasons to deny the credit to M/s J.L.Autoparts. Accordingly, confirmation of demand against them along with penalty imposed is set aside.
10. As regards, penalties imposed upon the two dealers, I find that in as much as it stands held that the Revenues has no evidence on record to support the allegation of non-receipt of raw material, I find no reasons to uphold the said penalties, the same are accordingly set aside.
11. In a nutshell, all the three appeals are allowed with consequential relief to the appellants.
(Pronounced in the Open Court on 14.01.2013) (Archana Wadhwa) Judicial Member RK-I ??
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