Custom, Excise & Service Tax Tribunal
M/S. Gontermmann Peipers (India) Ltd vs Commissioner Of Central Excise, ... on 8 November, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal Nos. E/25/2010 & E/26/2010
(Arising out of Order-in-Appeal No.35-37/Kol-VII/2009 dated 30.09.2009 passed by the Commissioner (Appeal-I) of Central Excise, Kolkata)
1. M/s. Gontermmann Peipers (India) Ltd.
2. Shri Lalit Kr. Poddar
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise, Kolkata-VII
Respondent (s)
Appearance:
Shri B.N.Chattopadhyay, Consultant the Appellant (s) Shri A.Roy, Suptd.(AR) for the Respondent (s) CORAM:
Honble Mrs. Archana Wadhwa, Member (Judicial) Date of Hearing/Decision:- 08.11.2017 ORDER NO.F/O-77772-73/2017 Per Mrs. Archana Wadhwa.
1. Both the appeals are being disposed of by a common order as they are arising out of the same impugned order passed by the Commissioner (Appeals).
2. After hearing both sides I find that the appellants are engaged in manufacturing of Steel Rolls and procured the inputs from one M/s. M.K.Steels which is a registered dealer. Such procurement was on the basis of the invoices issued by said dealer wherein the particulars were reflected. On the basis of the same the appellant availed cenvat credit of duty paid on the said inputs, as shown in the invoices.
3. As a result of some circular issued by the Commissioner of Central Excise, Kolkata investigation was conducted at the end of M/s. M.K.Steels. The statement of Shri S.K.Gupta, Proprietor of M/s. M.K.Steels was recorded, wherein he deposed that the invoices issued by him were forged invoices and no material was actually sold or sent by him to his customers and the cheque received by them was encashed by him and amount was returned through broker who was given 1% as commission. As the invoices issued by M/s. M.K.Steels stated the duty payment particulars of M/s. Durgapur Steel Plant, the Revenue approached the said manufacturer. The statement of Manager (Finance) of the said manufacturer recorded by the Officers revealed that the particulars given by M/s. M.K.Steels in their invoices do not match with the invoices of M/s. Durgapur Steel Plant. However, it is seen that no data was provided by the M/s. Durgapur Steel Plant. Revenue also found that the vehicle particulars in some cases as mentioned in the invoices of M/s. M.K.Steels were that of Taxi or Tractor or light goods vehicles incapable of transferring the goods in question.
4. During the course of further investigation, Revenue approached the present appellant, who was buyer of the goods in question. As per the statement of the Director, the inputs were duly received by them and entered in their RG-23A Part-I records and were used in the manufacture of their final product which was cleared on payment of duty.
5. On the above basis the proceeding was initiated against the appellants, resulting in passing of the present impugned order vide which cenvat credit to the extent of Rs.48,71,886/- was disallowed alongwith imposition of penalties on both the appellants. Hence, the present appeals.
6. After hearing both sides I find that the Revenues main case is based upon the statement of Shri S.K.Gupta, Proprietor of M/s. M.K.Steels. Admittedly, the said Shri Gupta was not presented for cross-examination or for examination in chief by the Commissioner. The Tribunal in the case of Commr. Vs. Kuber Tobacco India Ltd. [2016(338) E.L.T. 113 (Trib.Del.) held that Adjudicating Authority is first required to examine the deponent of the statement and there after cross-examination is required. The said decision of the Tribunal stands confirmed by the Honble Punjab & Haryana High Court. I also note that the said High Court in the case of Jindal Drugs Pvt. Ltd. vs. Union of India [2016(340) E.L.T. 67 (P&H) has held that the statement are recorded behind back of the assessee and cannot be relied upon in adjudication proceedings without allowing the assessee an opportunity to test evidence by cross-examining makers of said statement. Such statement cannot be relied straightway by Adjudicating Authority and can be relied only after the procedure prescribed in clause(b) of Section 9D(1) of Central Excise Act is duly followed. In the absence of such cross-examination and examination in chief, the statement on which the Revenue seeks to rely, have to be excluded from evidence.
7. I also find that the appellants have made payment to Shri S.K.Gupta by cheques. Apart from the statement of Shri S.K.Gupta that such cheques were subsequently encashed by him and the amounts were returned to the appellants, there is virtually no evidence to establish the said fact. Revenue has not investigated the matter with the banks and has made no efforts to establish that the cheque payments made to M/s. M.K.Steels as consideration for the bought out inputs were received back by the appellants in cash. I also note that Shri S.K.Gupta apart from making bald statement that the amounts were returned to the assessee through broker, who was given 1% commission has given no further details. There is nothing on record to establish the said transactions. Shri S.K.Gupta has also not disclosed the name of such a broker and Revenue has not bothered to ask him about the name of the broker and to make further investigation.
I further note that the inputs received by the appellants were duly entered in their RG-23A Part-I for the period from 2002, 2004-2005 and such records were subject to scrutiny by their jurisdictional Central Excise Officers and the credits were being availed with the knowledge of the Revenue and by reflecting the inputs in the records. In such a scenario it is a difficult proposition to come to a finding that all the inputs received by the appellants, which have been utilized in the manufacture of their final product, were not actually received by the appellants.
I also note that the appellants Managing Director Shri Lalit Kumar Poddar, in his statement recorded during the investigation had given a categorical deposition that the inputs were received by them against payment of consideration by way of cheques and such inputs were duly utilized by them. The said statement, which is exculpatory statement has not been referred to and relied upon by the authorities below who have preferred to rely upon the uncorroborated and unverified statement of Shri S.K.Gupta. When there are two different statements of two different deponents, the Revenue cannot prefer to rely upon one which is in its favour by ignoring the second statement. Admittedly the statement of Shri Lalit Kumar Poddar was also recorded under Section 14 of the Central Excise Act and carry equal weight as that of Shri S.K.Gupta.
Apart from above, I also note that the appellants have admittedly manufactured their final product by using the said inputs, which final products stands cleared by them on payment of duty. The final product cannot be manufactured out of vacuum and requires inputs. There is no iota of evidence produced by the Revenue to reflect upon the fact as to from where the appellants have procured such a huge quantity of inputs used by them in the manufacture of their final product. As such, fact there is a lacuna in the Revenues investigations to that extent also.
8. At this stage reference may be made to the provisions of Rule 9(3) of the Cenvat Credit Rules which requires an assessee to acquaint himself with the identity of the supplier of inputs. The name and address of M/s. M.K.Steel given in the invoices along with his registration number which admittedly also contains cross reference of the invoices of M/s. Durgapur Steel Plant showing payment of duty. As such the requirement of said Rule 9(3) stands fully complied with in as much as the appellant, by referring to the address and registration number of the inputs supplier, can be said to have fulfilled the factum of knowing his dealer.
9. At this stage I may refer to certain decisions of the Tribunal or Higher Court involving more or less identical facts.
a) The Honble Jharkhand High Court in the case of Commr. Of C.Ex., East Singhbhum vs. Tata Motors Ltd. [2013(294) E.L.T. 394(Jhar.)] has held that non-payment of duty by the inputs supplier is immaterial and unless factually it was established to the contrary, it is presumed that when payments were made on the inputs, buyer is entitled to claim cenvat credit on such inputs. Honble High Court further observed that it is unreasonable to except buyer of such inputs to go and verify the fact that whether such supplies made by the dealer has paid the central excise duty or not.
b) Further, the Tribunal in the case of Commr. Of Cus. & C.Ex., Kanpur vs. Juhi Alloys Ltd. [2013(296) E.L.T. 533 (Tri.-Del.)] has held that a manufacturer is entitled to take the credit on the basis of the invoices issued by the first stage dealer, even when it is established that the manufacturer has issued fake invoices in the name of the dealer. It may be noted here that in the present case also, the suppliers of inputs were made by the same registered dealer M/s. M.K.Steels and the Revenue sought to deny the credit based upon the same investigations and same evidences. The said decision stands upheld by the Honble Allahabad High Court in the case of Commr. Of C.Ex., Cus.& Service Tax vs. Juhi Alloys Ltd. [2014(302) E.L.T. 487(All.)]. On the similar fact the decision of the Tribunal in the case Dhakad Metal Corporation vs. Commr. Of C.Ex, & S.T., Daman[2015(330) E.L.T. 561(Tri.-Ahmd.)]. As also in the case of M/s. Sunil Healthcare Ltd. vs. Commr. C.Ex., Jaipur-I[2017(2)TMI 144-Cestat, New Delhi].
c) Further, the Tribunal decision in the case of Rinox Engg. Vs. Commr. Of C.Ex., Chandigarh-I [2014(304)E.L.T. 436(Tri.-Del.)] is also to the effect that the credit would be available in respect to invoices issued by registered dealer indulging in fraudulent transactions.
d) The Honble Punjab & Haryana High Court in the case of Commr. Of C.Ex., Ludhiana vs. Talson Mills Store [ 2015(315) E.L.T. 415 (P&H)] have also dealt with an identical situation where the Revenue alleged that the first stage dealer did not receive inputs but only supplied invoices including the assessee in that case and Tribunal held that Revenue did not conduct any further enquiry to verify whether the goods were not received by the assessee and also observed that Revenue was required to hold independent enquiry.
e) Further, the Tribunal in the case of Commr. Of C.Ex, Ludhiana vs. Parmatma Singh Jatinder Singh Alloys Pvt. Ltd. [2011(266) E.L.T. 67 (Tri.-Del.)] observed that fake number of the vehicles on which inputs were transported to the assessees cannot be held to be sufficient evidence to deny the credit when the payments were made through cheques.
f) Further, the Tribunal in the case of HBR Steel Corporation vs. Commr. Of C.Ex., Ludhiana [2008(225) E.L.T. 102(Tri.-Del.)] also held that wrong vehicle numbers mentioned in the invoices cannot be admitted as an evidence for denial of the credit when payments were made by cheques.
g) Further, the Tribunal in a recent decision in the case of ANJ Metal Recycling Pvt. Ltd. vs. Commr. Of C.Ex., Chandigarh [2016(337) E.L.T. 453 (Tri.-Chan.)] has extended the benefit of cenvat credit to the appellant therein by observing that as per Rule 9(3) of the Cenvat Credit Rules, 2004, the assessee is required to ensure that the inputs supplied by the dealer were accompanied with the documents and on production of such invoice, the requirements of Rule-9(3) get satisfied and it is for the Revenue to produce sufficient material evidence on record to show that the dealer who had issued the invoices were non-existence and were non-registered with the department during the relevant period.
10. Though I find that all the above decisions are fully applicable to the facts of the present case but a special reference can be made to the Tribunals latest decision in the case of Commr. Of C.Ex., Lucknow vs. M/s. Premier Alloys Ltd. [2015(7) TMI 1173-CESTAT, New Delhi] where in the Tribunal dealt with the supplies made by the same dealer M/s. M.K.Steels. The Revenue in that case refused to deny the credit to the assessee, based upon the result of the same investigations conducted at the end of M/s. M.K.Steels and on the basis of the same evidence relied upon by them in the present case. After taking into consideration the entire facts and circumstances, the Tribunal came to a finding that the assessee in fact had received the goods covered under the disputed invoices in as much as Revenue has not brought any tangible evidence to prove non-receipt of the goods by the respondent.
The Tribunal further observed that the same investigation at the end of M/s. M.K.Steels were the subject matter of the Tribunal decision in the case of Juhi Alloys Ltd. which stands upheld by the Allahabad High Court by observing so that the appeal filed by the Revenue in that case was rejected.
11. The facts of the above decision in the case of Juhi Alloys Ltd. and M/s. Premier Alloys Ltd. are fully applicable in the present case in as much as the same set of investigation conducted at the end of registered dealer M/s. M.K.Steels are the subject matter of both the decision.
12. As regards the Final Order No.FO/77298/2017 dt. 29.08.2017 relied by the Revenue, I find that the consultant appearing in that case admitted that the invoices issued by M/s. M.K.Steels, on the basis of which they have availed the credit were not valid documents for availing the credit. As such it seems that the said order was passed in the light of concession made by the appellant and has no relevance in the present case, especially when the same supplies made by the same M/s. M.K.Steels stand held as cenvatable by the Honble Allahabad High Court.
13. As such by following the above decision, which in turn is based upon the Allahabad High Court decision in the case of Juhi Alloys Ltd. , I set aside the impugned order and allow both the appeals with consequential relief to the appellants.
(Dictated and Pronounced in the open court.) S/d.
(ARCHANA WADHWA) MEMBER (JUDICIAL) ss 8 Appeal No.E/25/2010