Custom, Excise & Service Tax Tribunal
M/S. Lakshmi Industries vs Commissioner Of Central Excise on 15 May, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 1068 of 2011-EX [SM]
[Arising out of Order-In-Appeal No. 52/CE/D-II/2011 dated 28.01.2011 passed by Commissioner of Central Excise (Appeals), New Delhi]
For approval and signature:
Honble Ms. Archana Wadhwa, Member (Judicial)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Lakshmi Industries. Appellants
Vs.
Commissioner of Central Excise Respondent
Delhi Appearance:
Shri Naveen Mullick, Advocate for the Appellants Shri M S Negi, DR for the Respondent Date of Hearing: 11.03.2014 Date of Hearing: 15.05.2014 ORDER NO. FO/ 52246 /2014- (SM) Per Archana Wadhwa:
The appellants are engaged in the manufacture of Brass Sheets/Brass Strips/Circles Copper Sheets/Strips etc. They availed the credit of Rs. 3,02,310/- in respect of copper ingots received from registered dealer M/s. SLE Enterprises. The said credit was availed in the month of June 2004 on the basis of cenvatable invoices issued by said dealer. The dealer in turn had availed the credit on the basis of two invoices being invoice no. 56-57 dated 03.06.04 issued by manufacturing unit M/s. Annapurna Impex (P) Industrial Area.
2. Certain investigation were conducted at the end of manufacturing unit and it was found that they were not fully equipped to manufacture the copper ingots. It was also found that M/s. Annapurna Impex (p) Industrial Area had availed credit to the tune Rs. 5.98 crores during the period August 2004 to July 2006 and had shown the clearance of the copper ingots on payment of Central Excise duty whereas they have not filed any quarterly return with their jurisdictional Central Excise department. The electricity consumed by them was found to be in sufficient for the manufacture of final product.
3. Based upon the above, the Revenue entertained a view that M/s. Annapurna Impex has availed fraudulent credit to the tune of Rs.28.2 crores and accordingly proceedings were initiated against them. Revenue also entertained a view that based upon the invoices issued by M/s. Annapurna Impex, the registered dealer have availed the Cenvat credit and have further passed on the same to various persons.
4. In the above backdrop, investigations were also conducted at the appellant end. Statement of Shri Surinder Vasudev, partner of appellant company was recorded on 31.10.08 wherein he deposed that they have procured the material on invoices issued by registered dealer in the month of June 2004 and have received the copper ingots in their factory which have been duly accounted for in their RG-23 A register; that payment of the said material was made by them by way of account payee cheque; that they have duly accounted receipt of raw material, which have been used in the manufacture of final product which stand cleared on payment of duty; that payment of the goods in question as also the duty on their final product stands reflected in their financial accounts.
5. Based upon the above, the proceedings were initiated against the appellant for denial of credit as also for imposition of penalty. The same resulted in confirmation of demand along with imposition of identical amount of penalty under Section 11AC of the Act. On appeal against the above, Commissioner (Appeals) upheld the order.
6. Though the appellants had raised number of pleas before the appellate authority, he has passed the impugned order in a cryptic manner by observing as under:
5. I find that whole case is based on the fraud committed by M/s. Annapurna Impex Pvt. Ltd., Ludhiana, which was detected by the credible Govt. agency DGCEI, New Delhi. DGCEI, New Delhi detection was based on the details obtained from Punjab State Electricity Board, Information Collection Centers data of the Excise and Taxation department, Punjab and data obtained from the Transporters, which has been bridfed at para 2.2 above. M/s. Shree Lakshmi Enterprised, Jagadhari, a registered dealer who passed on the Cenvat credit to the appellant on input supposed to be manufactured by the M/s. APIL is absconding and is untraceable, this fact further strengthens the detection of DGCEI.
As regards the grounds of appeals submitted by the appellant I find that the appellant has not been able to prove conclusively that the impugned goods were received by the appellant and further used in manufacturer of final product grounds, which is the primary requirement to avail Cenvat credit, maintaining of records of same is secondary thing. In the instant case primary requirement of goods, chain of events with document is under question which casts the cloud on genuineness of secondary requirement. Moreover, the issue in dispute has been discussed in length by the adjudicating authority and findings of adjudicating authority seems to be just and proper.
7. As is seen from above, the appellate authority has mainly relied upon the evidence which is against M/s. Annapurna Impex without discussing the detailed submissions made by the appellant. There is no dispute about the fact that registered dealer M/s. Shree Lakshmi Enterprises had issued the cenvatable invoices to the appellant on the basis of which, they had availed the credit. The payment of the invoice was also made by cheque and the genuineness of the same has not been disputed. There is virtually no evidence indicating any allegation that the appellants have not received the inputs in question. Whether M/s. Annapurna Impex. has actually paid the duty or has availed wrong credit, is a question to be decided in the case of M/s. Annapurna Impex and the Revenues remedy, if any, lies at the end of M/s. Annapurna Impex. .
8. The Tribunal in number of cases has observed that whether in such a situation, Cenvat credit can be denied to the manufactures, who has availed the same on the basis of proper invoices issued by registered dealer. One such reference can be made to the Tribunals decision in the case of M/s. Shakti Steel Rolling Mills. (Final Order No. A 50253 /2014-Ex(SM)) wherein the Tribunal after considering the entire case law on the subject held as under:
6. The Tribunal in the case of CCE, Chandigarh vs. Neepaz Steel India [2007 (213) ELT 100] has held that payment of the raw material through cheque and demand draft establishes the appellants case as regards the receipt of inputs in the absence of any alternative source of procurement of raw materials. In the case of M/s. Shyam Forgings Pvt. Ltd. vs. CCE, Kolkata-II [2005 (192) ELT 255 (Tri-Kol)], it was held that if the dealer from whom the inputs were purchased had been found as not having any godown, the credit taken on the inputs cannot be denied. The Honble Karnataka High Court in the case of CCE, Bangalore vs. Bhuwalka Alloys Pvt. Ltd. [ 2012 (281) ELT 213 (Kar)] that even where the dealer was not found on the address mentioned in the invoices and no business activity was found therein, the Cenvat credit cannot be denied which stand availed on the basis of genuine invoice issued by said dealers. I also find that Tribunals decision in the case of Luxmi Metal Industries vs. CCE, Delhi II [2013 (287) ELT 487 (Tri-Del)] as also in the case of Commissioner of Cus & Central Excise, Kanpur vs. R H L Profiles Pvt. Ltd. [2013 (292) ELT 313 (Tri-Del)] has held that that denial of Cenvat credit availed on the basis of proper officer issued by the registered dealer is not justified inasmuch as buyer cannot be expected to go beyond so as to verify and to find out as to whether the registered dealer has purchased the said invoices legally or not. The Tribunals decision in the case of Shakti Roll Cold Strips Pvt. Ltd. stand confirmed by Punjab and Haryana High Court in the decision reported as [2008 (229) ELT 661 (P&H) ] and further buy the Honble Supreme Court in the case as reported in [2009 (241) ELT A 83(SC)]. Reference can also be made to another decision in the case of Rajan Engineering Works vs. CCE, Delhi IV, Faridabad [ 2012 (279) ELT 306 (Tri-Del)] as also in the case of Commissioner of Central Excise, Mumbai Vs. Prakash Industrial Corporation [ 2009 (248) ELT 536 (Tri-Mum)]. It stands held in the said decision that in the absence of complete investigation conducted by the Revenue as regards the actual vehicle number used in the transportation of goods and in the absence of corroborating evidence. Denial of credit cannot be upheld on mere facts of input supplier.
9. By applying the ratio of the above decision to the facts of the case, I find no justification for denial of credit to the appellants.
10. Apart from holding in their favour on merits, I also find the demand to be barred by limitation. The credit was availed by duly reflecting the same in the Central Excise records, in the month of June 2004, whereas the show cause notice stand issued on 15.05.2009. The assessee who availed credit on the basis of proper invoice issued by registered dealer, & cannot go beyond the registered dealer to find out as to whether the credit availed by them is proper or not. As per law, he is required to recognize his immediate supplier of the goods. In such a scenario, no suppression or mis-statement can be attributed to the appellants. Accordingly, I hold the demand to be barred by limitation also.
11. In view of the above, the impugned order is set aside and appeal is allowed with consequential relief to the appellants.
(Pronounced in the open Court on 15.05.2014 )
( Archana Wadhwa ) Member(Judicial)
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