Custom, Excise & Service Tax Tribunal
Rachna Metal Ind P Ltd vs Ghaziabad on 19 November, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD
E/MISC/70407/2017
E/3788/2012-EX[DB], E/3789/2012-EX[DB]
(Arising out of Order-in-Appeal No.143 to 145-CE/GZB/12 dated 31.07.2012
passed by Commissioner(Appeals), Customs, Central Excise & Service Tax,
Ghaziabad.)
M/s. Rachna Metal Ind. P.Ltd.
Shri Rajender Ahuja, Authorised Signatory
...APPELLANT(S)
VERSUS
Commissioner of Central Excise & Service Tax, Ghaziabad
RESPONDENT (S)
APPEARANCE Shri R.P.Jindal (Advocate) for the Appellant (s) Shri Sandeep Kr. Singh, (D.C.) (A.R.) for the Revenue CORAM:
MRS. ARCHANA WADHWA, HON'BLE MEMBER(JUDICIAL) SHRI ANIL G. SHAKKARWAR, HON'BLE MEMBER(TECHNICAL) DATE OF HEARING : 24.09.2018 DATE OF DECISION : 19.11.2018 FINAL ORDER NO.72628-72629/2018 Per Mrs.Archana Wadhwa :
As per facts on record, the appellant is engaged in the manufacture of copper sheet, copper bus bar, copper circle and copper strips etc., which are classifiable under chapter 74 of the Central Excise Tariff Act, 1985. The appellant was procuring the raw material i.e. copper ingots from one M/s.V.K.Metals, Jammu on the basis of the invoices issued by them and was availing the benefit of Cenvat credit of duty paid on the same. 2
2. It is seen that the premises of M/s.V.K.Metals, Jammu was searched by the officers of DGCEI, New Delhi on 29.11.2006 and various investigations were made. Inasmuch as M/s.V.K.Metals was availing the Area Based Exemptoin Notification No.56/2002-CE dated 14.11.2002, the duty of excise paid by them was being refunded to them in terms of the said Notification. However, the duty paid by them was available as Cenvat credit to the purchaser of the said goods, who were further using the same in the manufacture of their final product, cleared on payment of duty.
The result of investigation conducted at the end of M/s.V.K.Metals led the Revenue to believe that they were mis-utilizing the exemption available to them in terms of Notification No.56/2002. It was believed that the said M/s.V.K.Metals was not actually manufacturing the copper ingots and was only creating fraudulent documents showing production and removal of the same on paper and as such to facilitate their buyers to avail the Cenvat credit. The DGCEI informed appellant's jurisdictional Central Excise authorities about such fraudulent action of M/s.V.K.Metals and advised them to investigate the taking of Cenvat credit on the basis of such fraudulent documents issued by M/s.V.K.Metals. As a consequence investigations were conducted at the end of the appellant. During such investigations statements of their authorized signatory Shri Rajender Ahuja were recorded wherein he deposed that they had received copper ingots from M/s.V.K.Metals under the cover of invoices issued by them and have availed the Cenvat credit.
Apart from above, the visiting officers also resumed some print outs from the two CPUs from the premises of the appellant company during search operations, under the cover of Panchnama dated 01.04.2010. Scrutiny of page No.1-4 taken as print out from the said CPU led the officers to believe tha the same contained some undisclosed information which relates to the 3 clandestine activities of the assessee. The statement of Shri Rajender Ahuja was to the effect that he has no knowledge about the information contained in the said pages and the remaining pages are in relation to job work challan, journal register, sales register and cash book of the company etc. which can be explained by Shri Vinod Goel, who headed the accounts branch of the company. He also explained the figures in respect of finished goods, raw materials and job-work done by them and established that the same were tallying with the figures shown against these items in the statutory books. Statement of Shri Vinod Goel, Manager Accounts was also recorded wherein he deposed that page NO.1-4 were related to the tentative estimate wherein actual expenses as well as estimate had been shown in respect of the raw materials and manufactured products of the firm and all the other pages relate to the challan and accounts etc.
3. On the above basis a show cause notice was issued to the appellant on 29.04.2011. The notice proposed to deny the Cenvat credit of Rs.17,53,026/-, availed by the appellant on the basis of the invoices issued by M/s.V.K.Metals, Jammu on the allegations that no manufacturing activity was being undertaken by M/s.V.K.Metals and the invoices issued by them are fraudulent invoices. The notice further proposed to confirm the duty of around Rs.19.88 Lakhs on the allegations of clandestine removal, which in turn were based upon the computer print outs.
The said show cause notice culminated into an order passed by the original adjudicating authority denying the Cenvat credit of Rs.17,53,026/- and confirmed the duty of excise to the extent of Rs.19,88,803/- on the findings of clandestine removal, along with confirmation of interest and imposition of penalties. Penalty of Rs.10,000/- was imposed on Shri Rajender Ahuja and Shri Vinod Goel under Rule 26 of Central Excise Rules. The said 4 order of the original adjudicating authority stands upheld by Commissioner(Appeals). Hence the present two appeals by the manufacturing unit as also by Shri Rajender Ahuja.
4. We have heard Shri R.P.Jindal (Advocate) for the appellant and Shri Sandeep Kr. Singh, D.C.(A.R.) for the Revenue.
5. As regards the denial of Cenvat credit to the extent of Rs.17,53,026/- availed by the appellant on the basis of the invoices issued by M/s.V.K.Metals, Jammu, we note that proceedings were also initiated against M/s.V.K.Metals for denial of benefit of Notification No.56/2002-CE on the allegations that no manufacturing process was being undertaken by them and the clearance of copper ingots were under the bogus invoices. The proceedings initiated against them resulted in passing of orders by the lower authorities, upholding the allegations. However, on appeal Tribunal vide its Final Order No.51982- 51997/2018 dated 23.05.2018, after appreciating the entire evidence against M/s.V.K.Metals dropped the allegations and findings against them and held that M/s.V.K.Metals did not contravene the provisions of Notification No.56/2002-CE and the benefit of the same has been correctly availed by them. It was further held that question of recovery of duty from M/s.V.K.Metals does not arise and the duty demand against them cannot be upheld.
Inasmuch as in the present case the entire case of the Revenue is based upon the investigations conducted by DGCEI at the end of M/s.V.K.Metals, leading to denial of benefit of Notification to them and consequent confirmation against them, the setting aside of demand of 5 duty against M/s.V.K.Metals by the Tribunal would have direct effect on the present case. Inasmuch as M/s.V.K.Metals have been held to be a manufacturing unit located in Jammu and correctly availing the benefit of Notification No.56/2002, the entire ground of the Revenue for denial of the credit to the present appellant, falls to ground. As such we hold that the appellant has correctly availed the Cenvat credit of Rs.17,53,026/- on the basis of the invoices issued to M/s.V.K.Metals. Accordingly the said demand of duty along with interest and imposition of penalty is set aside.
6. Further, duty of Rs.19,88,803/- stands confirmed against the appellant on the basis of page NO.1-4 of the computer print outs. The appellants have strongly contended that such computers were kept at the reception of the appellant's factory and the documents in question were not prepared by any responsible person in the factory, during the normal course of their business. As such they have contended that the conditions of section 36B of the Central Excise Act, 1944 are not satisfied so as to uphold the evidentiary value of such print outs. Otherwise also it stands contended that the appellant's representative have explained that the entries in question do not belong to their manufacturing and clearing activities. The computer in question was repaired on 12.02.2010 by M/s.K.G. Software & Services, who conducted extensive repairs on the same including formatting and re- loading of software. By referring to various decisions of the Tribunal it stands contended before us that in the absence of any other evidence 6 corroborating the allegation the clandestine removal allegations cannot be upheld on the basis of only the computer print outs.
7. After appreciating the submissions and after going through the impugned orders we find that the entire case of the Revenue is based upon the said four pages purportedly retrieved from the computer. The appellant had taken a categorical stand that such computer was installed at their reception and has got nothing to do with the manufacturing activities. Otherwise also we note that the evidentiary value of such computer print outs is to be appreciated in terms of sub- section 2 of section 36B, which provides that the computer should be used regularly to store or process information and during the period in question there was regularly supply to the computer in the ordinary course of the said activities. The evidentiary value of the computer print outs has been the subject matter of various decisions of the Tribunal like - M/s.Harsinghar Gutka Pvt.Ltd. v. CC, Lucknow [2008 (221) ELT 77 (Tri.)], M/s.Premier Instrument and Controls Ltd. [2005 (180) ELT 65 (Tri.)] and Sree Chakra Cement Ltd. [2008 (231) ELT 67 (Tri.)].
8. Apart from the computer print outs we find that there is no other evidence produced by the Revenue on record. It is well established law and does not require the support of any precedent decision to observe that the allegations of clandestine removal are serious allegations and are required to be confirmed on the basis of positive and affirmative evidences. Even in the above-referred case of M/s.V.K.Metals and Others, the clandestine removal findings stands set aside by the Tribunal by observing that there has to be shown the receipt of raw 7 material, utilization of the same, actual manufacture of the finished goods, the evidence of transportation and identity of the buyers etc.. Inasmuch as nothing has been shown in the present case by the Revenue, we find no reasons to confirm the demand. Accordingly the demand of Rs. 19,88,803/- along with interest and imposition of penalty is set aside.
9. Inasmuch as the confirmation of demand against M/s.Rachna Metals stands set aside along with setting aside of penalty, we set aside the penalty imposed against Shri Rajender Ahuja also.
In a nutshell both the appeals are allowed with consequential relief to the appellants. Misc. also disposed of.
(Pronounced in the open Court on 19.11.2018.)
SD/ SD/
(ANIL G. SHAKKARWAR) (ARCHANA WADHWA)
MEMBER(TECHNICAL) MEMBER (JUDICIAL)
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