Custom, Excise & Service Tax Tribunal
M/S Kamdhenu Ispat Limited vs Cce, Jaipur on 27 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. II Excise Appeal No. 1187 of 2010 (SM) [Arising out of the Order-in-Appeal No. 131 (DK)-CE/JPR-I/2010 dated 05/03/2010 passed by The Commissioner of Central Excise (Appeals), Jaipur.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Kamdhenu Ispat Limited Appellant Versus CCE, Jaipur Respondent
Appearance Shri R. Santhanam, Advocate for the appellant.
Shri P.K. Sharma, Authorized Representative (DR) - for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 27/09/2013.
Final Order No. 57949/2013 Dated : 27/09/2013 Per. Rakesh Kumar :-
The appellant are manufacturers of MS Ingots and MS Bars chargeable to Central Excise duty. One of the raw material required for manufacture of MS Ingots is Ferro Silicon Lumps/Ferro Manganese. The appellants factory was visited by the Jurisdictional Central Excise officers on 12/12/07 when the stock of various Cenvat credit availed inputs as well as final products was taken. Among other irregularities, one irregularity noticed was that while as per the appellants record, the stock of Ferro Silicon Lumps/Ferro Manganese was supposed to be 113.89 M.T., on physical verification only the stock of 8.88 M.T. of Ferro Silicon Lumps/Ferro Manganese was found and as such there was shortage of 105.01 M.T. of this material. This stock taking had been done in presence of Shri Mahesh Kumar Sharma, Authorised Signatory of the appellant and on inquiry being made with him, he in his statement recorded on that day, while admitting the shortage of 105.01 M.T. of Ferro Silicon Lumps/Ferro Manganese, stated that the said goods are covered by four invoices dated 30th August, 2007, 13th September 2007, 22nd October 2007 and 25th October 2007 issued by M/s Krishna Trading Company, Bhiwadi, M/s Maithan Smelters Ltd., Meghalaya, M/s Shree Salasar Steel & Traders, Bhiwadi and M/s Monnet Ispat & Energy Ltd., Raipur respectively, that the goods covered under these invoices have not been received and only invoices had been received and that it is their mistake that they had taken credit on the basis of these invoices under which no goods had been received. He in his statement agreed to pay the Cenvat credit of Rs. 7,56,470/- involved on the cenvated inputs found short and a cheque for this amount was given on the same day. Subsequently, after issue of show cause notice, the Jurisdictional Joint Commissioner vide order-in-original dated 3rd March 2009 confirmed the above-mentioned Cenvat credit demand alongwith interest and imposed penalty of equal amount on the appellant under Rule 15 (2) of Cenvat Credit Rules readwith Section 11AC of the Central Excise Act, 1944, and beside this, also imposed penalty of Rs. 1,00,000/- under Rule 15 (1) of Cenvat Credit Rules and penalty of Rs. 2,00,000/- under Rule 25 (1) of the Central Excise Rules, 2002. On appeal being filed to Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order-in-appeal dated 09/3/10 upheld the Cenvat credit demand of Rs. 7,56,470/- alongwith interest and imposition of penalty of equal amount under Rule 15 (2) of Cenvat Credit Rules and penalty of Rs. 2,00,000/- under Rule 25 (1) of Central Excise Rules, 2002. Against this order of the Commissioner (Appeals), this appeal has been filed.
2. Heard both the sides.
3. Shri R. Santhanam, Advocate, the learned Counsel for the appellant, pleaded that though at the time of stock taking, as against the stock of 113.890 M.T. of Ferro Silicon Lumps/Ferro Manganese, only 8.88 M.T. of this material had been found, the appellant subsequently vide their letter dated 28/12/07 addressed to the Department had stated that the missing material was available in the factory and, as such, there was no shortage, that Shri Mahesh Kumar Sharma, Authorised Signatory in whose presence the stock had been checked, was not looking after the procurement and storage of the raw material on regular basis and the person who was doing this on regular basis, was on leave, that as soon as the appellant were able to locate the missing stock, they intimated the department, that the statement of Shri Mahesh Kumar Sharma that the quantity of Ferro Silicon Lumps/Ferro Manganese found short was covered by four invoices, and the same had not been received, is incorrect, that Shri Mahesh Kumar Sharma has retracted his statements dated 12/12/07, that in view of this, no credibility can be attached to the statement of Shri Sharma, that the department had conducted inquiry with the suppliers regarding the four invoices, on the basis of which Cenvat credit, in question, had been taken and all these four suppliers have confirmed having supplied the material, that payments to those suppliers had been made by cheque, that there is no basis for imposition of penalty under Rule 25 (1) for clearance of goods without payment of duty, as duty had been paid through Cenvat credit and there was sufficient balance in the Cenvat credit account at the time of clearances, and that in view of this, the impugned order upholding the Cenvat credit demand and imposition of penalty is not correct.
4. Shri P.K. Sharma, the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that at the time of stock taking, Shri Mahesh Kumar Sharma, the authorised signatory, who was working in this factory since 2001 was present and he had clearly accepted the shortage, that not only this, in his statement recorded on the same day he has stated that Cenvat credit in respect of the goods found short had been taken on the basis of invoices issued by four suppliers and in respect of those invoices there was no supply of any goods and it was the appellants mistake that they have taken this Cenvat credit on the basis of invoices under which no goods had been received, that if the missing Ferro Silicon Lumps/Ferro Manganese was available in the factory, the appellant should not have taken 16 days to locate the same, that in this background, the retraction of statement by Shri Mahesh Kumar Sharma has no meaning, and that this is a clear case of availing Cenvat credit under bogus invoices without actually receiving any material. He also pleaded that Shri Mahesh Kumar Sharma has not retracted his statement. He accordingly pleaded that there is no infirmity in the impugned order upholding the Cenvat credit demand and imposition of penalty.
5. Shri Santhanam, learned Counsel, further pleaded that the cross examination of Shri Mahesh Kumar Sharma in whose presence stock taking had been conducted was requested but the same was not allowed and hence there is violation of natural justice. In this regard, he cited the judgment of R.K. Soap & Oil Traders vs. CC, New Delhi reported in 2013 (294) E.L.T. 463.
6. Shri P.K. Sharma, learned DR, pleaded that no cross examination of Shri Mahesh Kumar Sharma or of the Superintendent was required in the facts and circumstances of the case. With regard to penalty of Rs. 2,00,000/- he pleaded that the Commissioner (Appeals) has correctly upheld the same, and that this penalty had been imposed for the reason that they had cleared the goods by payment of duty through Cenvat credit without having sufficient Cenvat credit balance.
7. I have considered the submissions from both the sides and perused the records.
8. The main point of dispute in this case is as to whether the confirmation of Cenvat credit demand of Rs. 7,56,470/- on shortage of 105.010 M.T. of Ferro Silicon Lumps/Ferro Manganese is correct or not. This shortage had been detected on 12/12/07 when the Central Excise officers conducted the stock checking in presence of Mahesh Kumar Sharma, the Authorized Signatory of the appellant. Shri Sharma was working in this factory since 2001 and was looking after Central Excise matters. It is not disputed that at that time, Shri Sharma signed the stock verification report and not only this, he in his statement recorded under Section 14 of Central Excise Act admitted the shortage and also stated that the goods found short are covered by invoices issued by four suppliers and that the Cenvat credit, in question, had been taken on the basis of those invoices of four suppliers but no good had been received under these invoices while Cenvat credit had been taken. He also agreed to pay back the Cenvat credit wrongly taken. On the same day, he paid an amount of Rs. 7,56,470/- by cheque which is the Cenvat credit involved on the goods found short. It is only after gap of about 16 days that a letter was sent by the appellant to the Central Excise authorities that the missing goods were lying in the factory, that there was no shortage and that the person incharge of stores was on leave and Shri Mahesh Kumar Sharma was not aware about the stock position. On going through the records of this case, I am of the view that the appellants plea there was no shortage of the goods as the same were available in the factory at the time of stock checking, is difficult to accept, in the background of fact that they have paid the duty involved on the goods found short. If the goods actually were available in the factory, any normal businessman would have pointed this out the very next day and he would not have waited for more than 2 weeks. Therefore, I hold that the appellants stand under their letter dated 28/12/07 that there was no shortage of the goods is only a afterthought and that this is a case where the Cenvat credit had been taken without actually receiving the goods, as has been clearly stated by Shri Mahesh Kumar Sharma in his statement. Moreover, if the shortage was due to inability of Shri Mahesh Kumar Sharma to locate the goods, he would not have given such a categorical statement that no goods had been received. This statement of Shri Sharma had not been retracted by him. Just because the suppliers who had issued the invoices have claimed to have supplied the goods and have claimed to have received the payment, it does not nullify the fact that at the time of stock taking on 12/12/07, the goods covered under these invoices were not available and even for more than 2 weeks after the detection of the shortage, the appellant were not able to produce the goods supposed to have been received under these invoices. In view of this, I hold that there is no infirmity in the impugned order upholding the Cenvat credit demand of Rs. 7,56,470/- alongwith interest and imposition of penalty of equal amount.
9. As regards the penalty of Rs. 2,00,000/- under Rule 25 (1) (a) readwith Rule 25 (1) (d), during the period when this fraudulent Cenvat credit of Rs. 7,56,470/- had been taken to which the appellant were not entitled, the excisable goods had been cleared by payment of duty through Cenvat credit while there was no sufficient Cenvat credit balance and, as such, those clearances would have to be treated clearances having been made without payment of duty. Hence, looking to the nature of contravention, the penalty of Rs. 2,00,000/- has been correctly imposed.
10. In view of the above discussion, I do not find any infirmity in the impugned order. The appeal is dismissed.
(Pronounced in the open court.) (Rakesh Kumar) Member (Technical) PK ??
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