Custom, Excise & Service Tax Tribunal
Cce, Chandigarh vs M/S. Nu-Line Polymers (P) Ltd on 12 May, 2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No. 2, R.K. Puram, NEW DELHI COURT No. I CENTRAL EXCISE APPEAL NO. 1919 OF 2005 [Arising out of Order-in-Original No. 53/CE/2004 dated 25.05.2004 passed by the Commissioner, Central Excise, Chandigarh] Dated of hearing/decision: 12th May, 2010 For approval and signature: Honble Shri Justice R.M.S. Khandeparkar, President; 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 Departmental authorities? CCE, Chandigarh Appellant Vs. M/s. Nu-Line Polymers (P) Ltd., Respondents Appearance: Shri Sunil Kumar, Authorised Representative (SDR) for the Revenue; None for the respondents Coram: Honble Shri Justice R.M.S. Khandeparkar, President; Honble Shri Rakesh Kumar, Member (Technical) ORAL ORDER NO._________________ dated __________
Per JUSTICE R.M.S. KHANDEPARKAR:
Heard learned D.R. for the appellant. None is present for the respondents.
2. This appeal arises from order dated 25.5.2004 passed by the Commissioner, Central Excise, Chandigarh. By the impugned order the demand sought to be raised against the respondents M/s. Nuline Polymers Pvt. Ltd. amounting to Rs. 85,84,952/- under Section 11A of the Central Excise Act has been dropped. The proceedings were sought to be initiated against the respondents by issuing show cause notice dated 9th July, 2003.
3. The respondents are engaged in the manufacture of PVC and HDPE Pipes etc. classifiable under Chapter 39 of the First Schedule to the Central Excise Tariff Act, 1985. They are registered with the Central Excise department having registration No. 5/CH-39/P-1/98-99.
4. It is the case of the appellant that pursuant to the intelligence report that the respondent and other companies were availing Modvat credit facility by obtaining or arranging Modvatable inoives without actually receiving the raw material described in such invoices, the officers of the department conducted investigation and consequently it was revealed that during the period from 1998 to 2001 M/s. Karan & Company, Parwanoo had issued invoices in relation to various raw materials in favour of the respondents herein without actually supplying such materials as described in those invoices to the respondents and on the basis of such invoices the respondents had sought to avail Modvat credit. A show cause notice in that regard came to be issued on 9th July, 2003 which contested by the respondents and ultimately the impugned order came to be passed.
5. While assailing the impugned order the learned D.R. submitted that the Commissioner failed to appreciate the materials placed on record by the department in support of the departments case against the respondents in proper perspective. Certain statutory documents which were placed on record clearly disclose that the goods as described in the invoices in question were never received by the respondents as no vehicle carrying such goods had ever entered the entry point in the area by name Parwanoo. He further submitted that every supplier bringing the goods within Parwanoo was required to submit ST-XXVI-A form at the entry point for due compliance of the sales tax liability under the local Sales Tax act in force in the area. Such form required discloser of details about the goods transported in the vehicle which enter Parwanoo and those records was transcribed in the register maintained by the statutory authorities under Sales Tax Act which was called ST XXVI-B register. The investigation disclosed and established that no vehicle had ever crossed the entry point in Parwanoo carrying any goods accompanied by the invoices in question as no information in that regard in form ST XXVI-A was ever furnished at the entry point at Parwanoo nor any record in this regard was found in ST XXVI-B register. Besides, this fact was also confirmed by E.T.O. at Parwanoo. Drawing out attention to a letter dated 18th May, 2005 addressed by Sr. Intelligence Officer to the Excise Taxation Officer, Sales Tax barrier, Parwanoo and the reply thereto dated 19.5.2005 the learned D.R. submitted that though the respondents tried to contend that such forms were submitted from time to time and they were about 32 in number, the details of those forms which were furnished to the department do not tally with the statutory records inasmuch as though Kanarn & Co. claimed to have submitted such forms with specific number, records disclose that the form with those numbers were never made available to the respondents and the forms which were made available to the respondents carry totally of different numbers. He further submitted that even the physical verification of the stock of the raw materials and the finished products vis-`-vis statutory records in that regard including the RG Register did not disclose receipt of all the materials as per description in the invoices in question and the statutory records of stock do not tally with the goods found physically verified in stock and there was discrepancy of 326 M.T. covered by 28 consignments. There was no explanation furnished by the respondents in respect of the said discrepancy. Drawing our attention to the decision of the Tribunal in the case of V.K. Enterprises vs. CCE, Panchkula, reported in 2010 (249) ELT 462 (Tri.-Del.) learned D.R. submitted that it is always the obligation of the manufacturer and the registered dealers to account for the goods on which credit has been taken and such obligation does not cease to exist even after credit is availed and utilized. The same should be established with reference to the statutory records. The respondents failed to discharge this obligation. Taking into consideration all these aspects, according to the D.R., the department have clearly established the case of fake invoices and hence, the authorities below should not have dismissed the case.
6. Perusal of the impugned order and other materials on record, indeed, disclose that ETO, Sales Tax department, Parwanoo have clearly confirmed that no vehicle of the description disclosed in the invoices and or in so called ST XXVI-A form allegedly furnished by the dealers ever crossed the barrier on the dates specified in those documents. It cannot be disputed that once the statutory provision requires the dealer to furnish the information at the entry point in a particular form, it is to be presumed that record maintained in that regard is true and correct till the presumption in that regard is rebutted. Once the statutory provision cast an obligation on the dealer to submit the information in form ST XXVI-A at the entry point regarding the goods brought within the area for supply to the manufacturer and information so furnished is to be recorded in register maintained in the form of ST XXVI-B, in the absence of any entry being disclosed in such register about vehicle having crossed barrier inside the area with description of the goods carried by such vehicle, it would lead to presume that no such vehicle had ever crossed the barrier, unless the presumption in that regard is rebutted by producing cogent evidence. Undisputedly records clearly disclose that on the dates on which the respondents claimed to have received the goods under the invoices issued by M/s. Karan & Co. and which are sought to have been entered ST XXVI-A did not find recorded in the ST XXVI-B. The presumption arises in favour of the department and against the assessee that no such goods had ever crossed the barrier on the relevant dates in the concerned vehicles. At the same time, material on record do not disclose any rebuttal of evidence produced by the department in this regard.
7. The above materials got further corroborated from the correspondence between the Excise & Taxation Officer (ETO), Sales Tax Barrier, Parwanoo and the Revenue department. Undisputedly, the respondent had stated that there were 32 ST XXVI-A forms with specific numbers submitted by the dealer at the barrier point, Parwanoo and each form related to specific number of invoice with corresponding number of vehicle by which the goods were allegedly transported. When this information was compared with the register available at the barrier point it was not only revealed that at no point of time any such vehicle had crossed the barrier on the relevant dates but even the number of ST XXVI-A form did not tally with the forms which were made available to the dealer for the entire year of 1998-98 except in case of 6 forms. This further disclose conduct of the respondents in furnishing incorrect information. The authorities had confirmed under letter dated 29.3.2005 the numbers of ST XXVI-A form which were made available to the dealer during the year 1998-99 but the same were totally different from the numbers disclosed in the information furnished by the respondents except in case of 6 forms.
8. Above material on records undoubtedly establish that the respondents had failed to rebut the presumption which arises from the above material regarding fake invoices based on which the respondents sought to avail Cenvat credit as stated by the department. Perusal of the impugned order disclose that the authorities failed to take into consideration the above aspect of the matter in proper perspective and wrongly held that the department had failed to establish the case against the respondents. Inferences which are sought to be drawn in the impugned order are indeed mere assumption not supported by any material record. Even assuming that the vehicle could have cross the barrier on the dates subsequent to the dates disclosed in such forms it was necessary for the respondents to establish the same with necessary details about the goods and the fact that the goods as described in the invoices were actually received in the factory.
9. It can certainly be argued that maintenance of register ST XXVI-B entirely depends upon dealer concerned and the assessee have no authority or power to ensure correct recording in those registers. Even assuming so, that will not result in onus being discharged regarding actual receipt of goods by the assessee accompanied by the invoices. There is allegation of fake invoices and attempt to avail credit on the basis of such fake invoices. In this regard the manufacturer could have certainly sought for the summon to the dealer to produce the necessary evidence. The burden in that regard was squarely upon the manufacturer. For the reasons stated above, we find that the impugned order cannot be sustained and is liable to set aside and demand made under the show cause notice dated 9th July, 2003 needs to be confirmed with all consequential relief. Accordingly, the appeal succeeds and the impugned order is set aside. The demand as made under the said show cause notice dated 9th July, 2003 is hereby confirmed with all consequential reliefs.
(JUSTICE R.M.S. KHANDEPARKAR) PRESIDENT (RAKESH KUMAR) MEMBER (TECHNICAL) RK ??
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