Custom, Excise & Service Tax Tribunal
Dutt Multimetals Pvt. Ltd vs C.C.E., Chandigarh-I on 30 August, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 COURT NO. I APPEAL NO. E/1759/2012 [Arising out of Order-in-Appeal No. 71/CE/CHD/2012 dated 22.03.2012 passed by the Commissioner of Central Excise (Appeals), Chandigarh] Date of hearing/decision: 30.08.2016 For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would 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 Department Authorities? Yes Dutt Multimetals Pvt. Ltd. : Appellant VS C.C.E., Chandigarh-I : Respondent
Appearance On merit for the Appellant Shri G. M. Sharma, A.R. for the Respondent CORAM: Honble Mr. Ashok Jindal, Member (Judicial) FINAL ORDER NO. 61245/2016 Per : Ashok Jindal After hearing the Ld. DR appearing for the respondent, I find that the appellant is engaged in the manufacture of alloys and non-alloys steel ingots. They procured their raw material from maunucturer M/s Aggarwal Steel Rolling Mills and Metal Industries. (hereinafter referred to as M/s ASRM). The raw material so purchased by the appellant was defective CTD rounds /bars which acted as a waste material for the appellant, to be melted in their furnace. The goods were duly covered with the invoices issued by the manufacturer M/s ASRM was duly covered by the invoice. There is no dispute about the said facts.
2. However, Revenue conducted certain verifications at the end of M/s ASRM and found that they have shown the high percentage of clearance of defective and rejected bars/ rounds/ waste / scrap. In the ER 1 return, they were reflecting 98% of their production as prime quality CTD bars and rounds whereas in the commercial sale invoice, the said goods were being cleared as defective.
3. Revenue entertained a belief that the transaction between M/s ASRM and the registered dealer and further dealers and the appellant were covered only by the cenvatable invoices, without actually supply of the goods and M/s ASRM had diverted best goods in the open market and also has procured the raw material from an alternative source. Accordingly proceedings were initiated against the present appellant for denial of Cenvat Credit of Rs. 58,615/- availed by them, by way of issuance of show cause notice. The said proceedings resulted in passing of an order by the original adjudicating authority and upheld by Commissioner (Appeals).
4. Appellant contention is that entire case of the Revenue is based upon assumptions and presumptions. They have admittedly purchased the goods from registered dealer, who in turn procured the same from the manufacturer. If the manufacturer is showing the higher percentage of the rejected goods, the problem lies at his end and the appellant cannot be denied the credit. He also assails demand on the point of time bar.
5. Ld. DR appearing for the Revenue draws my attention to reasoning adopted by the lower authorities to hold against the appellant. He submits that particular price which the CTD bars stand sold by M/s ASRM as rejected material is at par with the value of prime quality CTD bars. Further, no reasonable prudent man would use high valued goods for the purpose of melting in his furnace.
6. However, on being questioned as to whether there is any evidence showing clearance of prime quality CTD bars of M/s ASRM to any other buyer or as to whether Revenue has shown any other alternative source of procurement of raw material by the present appellant, Ld. DR fairly agreed that there is no such evidence on record.
7. After appreciating the submissions made by both the sides, and after going through the impugned order, I find that entire case of the Revenue is based upon the financial calculation of profit and loss of the manufacturing unit. In fact, Commissioner (Appeals) has observed that circumstantial evidence produced on record leads to inevitable fact that M/s ASRM was only selling cenvatable invoices without supply of goods. Inasmuch as no retailer can survive if more than 80% of its final product were held to be defective/rejected/scrap.
8. Apart from the fact that above findings of the authorities are admittedly based upon some circumstantial evidence and the financial calculations. I find that the Revenue has alleged M/s ASRM was selling its final product to other buyers in the domestic market. But there is virtually no evidence to that effect. Further, no proceedings stand initiated against M/s ASRM.
As regards the present appellant, they have shown receipt and utilization of raw material in their factory and have taken the benefit of Cenvat credit based upon the cenvatable invoices issued by registed dealer. Statements of authorised representative of the appellant as also of the dealer are to the effect that inputs stand supplied to them under the cover of proper cenvatable invoices. Statements of representative of the M/s ASRM is to the effect that during the relevant period lot of their product came out to be defective and rejected and as such, same was sold after discharging the central excise duty leviable thereon. Admittedly, the appellant need the raw material for the production of their final product and if, as per the Revenue, such material has not been received by them from M/s ASRM, they were not in a position to manufacture the final product. Revenue has not shown any alternative source of such procurement of raw material.
9. I find no reason to uphold the impugned order and same is set aside. Appeal is allowed with consequential relief to the appellant.
(Dictated and Pronounced in the open court) (Ashok Jindal) Member (Judicial) RAS 5 1