Custom, Excise & Service Tax Tribunal
Agro Pack vs Surat-Ii on 5 August, 2019
Customs, Excise & Service Tax Appellate Tribunal,
West Zonal Bench : Ahmedabad
REGIONAL BENCH - COURT NO. 3
Excise Appeal No. 11302 of 2014
[Arising out of Order-in-Original No OIO-SUR-EXCUS-002-COM-047-13-14 dated
26.12.2013 passed by Commissioner (Appeal) of Central Excise & ST, Surat]
M/s. Agro Pack Limited (Unit-II) .... Appellant
Plot No. B/155,
GIDC, ANKLESHWAR,
GUJARAT .
VERSUS
Commissioner of Central Excise & ST, Surat .... Respondent
NEW C.Ex BUILDING. OPP. GANDHI BAUG, CHOWK BAZAR, SURAT, GUJARAT - 395001 WITH
(i) Excise Appeal No. 11334 of 2014 (Shri RL Shetty) (ii) Excise Appeal No. 11335 of 2014 (Syngenta Corp. Protection Pvt. Limited) (iii) Excise Appeal No. 11336 of 2014 (Syngenta India Limited) (iv) Excise Appeal No. 11337 of 2014 (Shri Tushar Patel) (v) Excise Appeal No. 11338 of 2014 (Shri Bipin Patel) (vi) Excise Appeal No. 11339 of 2014 (Shri Harish M. Patel) APPEARANCE :
Shri V. Sridharan, Sr. Advocate with Shri Anand Nainawati, Advocate for the Appellants Shri T.G. Rathod, Joint Commissioner for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) FINAL ORDER NO. A/11463-11469 / 2019 DATE OF HEARING : 09.04.2019 DATE OF DECISION: 05.08.2019 RAJU These appeals have been filed by the following appellants against the duty or penalty imposed against them:- 2
Excise Appeal No. 11302 of 2014 & Ors.
S. Appeal No. Appellant Duty (in Rs.) Penalty (in Rs.) No.
1. E/11302/2014 Agro Pack Limited 34,58,84,344/- 34,58,84,344/-
(Unit-II)
2. E/11334/2014 Shri. R.L. Shetty - 5,00,000/-
(Employee of
Syngenta
India Limited.)
3. E/11335/2014 Syngenta Crop - 1,00,00,000/-
Protection Pvt.
Limited
4. E/11336/2014 Syngenta India - 1,00,00,000/-
Limited.
5. E/11337/2014 Shri Tushar Patel - 5,00,000/-
(Employee of Agro
Pack Limited
(UNIT-II)
6. E/11338/2014 Shri Bipin Patel - 25,00,000/-
(Authorised
Signatory - Agro
Pack Limited)
7. E/11339/2014 Shri Harish M. - 25,00,000/-
Patel (Prop. Agro
Pack Limited)
2. Ld. Counsel for appeal pointed out that M/s. Agro Pack Limited (hereinafter referred to as APL for short) is engaged in the manufacture of pesticides on job work basis for various principal manufacturers like BASF, M/s. Syngenta India Limited ((hereinafter referred to as SIL for short) and M/s. Syngenta Crop Protection Pvt. Limited (hereinafter referred to as SCPPL for short). The Appellant APL started manufacturing in their factory at Plot No. B-1, 227/1, GIDC Estate, Panoli (this unit is referred to as Unit-I by the Appellants in their normal course of business). In the said Unit-I, the Appellants were manufacturing goods on job work basis for BASF, SIL and SCPPL etc. The Appellants were receiving raw materials from the respective principal manufacturers under cover of invoices/bills of entry which were billed to them and shipped to address of the Appellants. The Appellants were availing credit of excise duty/CVD paid on such inputs and were utilising the same for payment of duty on finished goods cleared to respective principal 3 Excise Appeal No. 11302 of 2014 & Ors.
manufacturers. For this purpose, the Appellants were maintaining all statutory registers such as Cenvat Register, PLA Register, RG-1 etc., partywise. Later on, the appellants started manufacturing finished goods for SIL and SCPPL in their factory at Plot No. B/155, GIDC (this unit is referred to as Unit-IT). The present appeal is in respect of transactions carried out by the Appellants in their Unit II for SIL and SCPPL. As per the agreement between the parties, both SIL and SCPPL were to supply active ingredient as well as other raw materials and packaging material for manufacture of pesticides/insecticides for the appellants. He submits that both SIL and SCPPL had granted authorisation to the appellants in terms of Notification No. 27/92-CE (NT) dated 09.10.1992 as amended by Notification No.36/2001-CE (NT) Dated 26.06.2001 to manufacture products on behalf of the company and comply with all the procedures under Central Excise Act, 1944 read with Rules made there under including payment of excise duty on final products manufactured and cleared to the company.
3. He claimed that appellants are maintaining all the statutory records party wise i.e. to say separate Cenvat Register of Principals SIL, SCPPL and maintaining separate RG-1 register and PLA Account etc. The appellants receive inputs which are procured locally or are being imported by SIL and SCPL. In respect of the goods procured locally, SIL, Royal Insurance Building, 14, J. Tata Road and SCPL, Royal Insurance Building, 14, J. Tata Road were shown as buyers of the goods in the sale invoices. However, goods are consigned to the appellants. Some invoices under which inputs are consigned by input supplier to the Appellants showing buyer/consignee were also produced. He claimed that there is no dispute that aforesaid inputs were received by the Appellants and were used by them in the manufacture of insecticides/pesticides cleared to SIL or SCPPL. He submits 4 Excise Appeal No. 11302 of 2014 & Ors.
that SIL and SCPPL were also importing certain major raw materials which are consigned to the appellants. Bills of Entry for Home Consumption are filed by SIL or SCCPL and the name of the appellants is declared on such bills of entry (address of Unit-I continued to be referred by CHA in some cases) and goods are delivered from port to Unit-II of the Appellants. Though procedure of endorsement of bills of entry was discontinued, SIL/SCCPL were filing declaration with Commissioner of Customs wherein it was categorically declared that good are taken for use in manufacture at premise of Agropack i.e. Unit-IT and address of jurisdictional range office was also indicated. He pointed out that when inputs either locally procured or imported are received in the factory, the details are first entered in Gate Inward Register. Gate Inward register indicates the date of receipt of goods in the factory, Name of the Transporter who has delivered the goods, Lorry receipt or Challan Number under cover of which inputs have been consigned to the Appellants, the details of bill of entry or the sale invoices as the case may be. He pointed out that credit of excise duty/CVD paid on inputs pertaining to SIL or SCPPL is availed by the appellants in Cenvat register maintained by them for SIL or SCPPL. Each page of such register shows name of "Syngenta India Limited" on top and ECC No. of the appellants is indicated on each page. Separate registers are maintained only for the purpose of easy accounting and determining the duty liability to be paid from PLA for respective principal manufacturer as same is required to be paid by them on their behalf to the government. Therefore, registers are maintained „On A/c‟ for respective principal manufacturers.
4. During examination of rebate claims filed by APL, copies of Cenvat Register enclosed with rebate claim showed on the top the name of Company as SIL and SCPPL. The claims were returned and direction was 5 Excise Appeal No. 11302 of 2014 & Ors.
given to submit fresh claim with copy of Cenvat register of the appellants. The appellants under the bonafide impression over written the stamp of name of SIL and SCPPL with whitener and present again with their rebate claims. He pointed out that on the basis of scrutiny of these overwritten Cenvat Register, investigation was carried out against the Appellants on 25.11.2008 and by show cause notice dated 17.03.2012, following demands were proposed which has been confirmed by the impugned order:-
S. Amount of Reasons for demand No. demand confirmed 1 Rs.25,39,18,209/- Demand is confirmed as per Annexure-A to the show cause notice on finished goods cleared during the period February 2008 to October 2008, on the ground that duty has been paid by utilizing Cenvat Credit which do not belong to the Appellants.
2 Rs.7,60,14,689/- Credit is denied as per Annexure-B to the show cause notice on inputs received under Bills of Entry on the ground that same are in the name of SIL/SCPPL and therefore not a valid document.
3 Rs.1,18,55,284/- Credit is denied as per Annexure-C to the show cause notice on inputs procured locally on the ground that goods are not owned by Appellants but belongs to SIL and SCPPL.
4 Rs.36,20,302/- Denial of credit as per Annexure-D to the show cause notice on inputs procured from 100% EOU on the ground that same is availed in excess.
5 Rs.4,75,860/- Cenvat Credit has been availed twice.
5. He pointed out that Cenvat credit is mainly denied to the appellants by alleging as under:-
(a) Invoices on which Cenvat Credit has been availed, mentions the consignee as:
(i) M/s Syngenta India Limited, C/o Agro Pack, Plot No. B/155, GIDC, Ankleshwar;6
Excise Appeal No. 11302 of 2014 & Ors.
(ii) M/s Syngenta Crop Protection Pvt. Limited, C/o Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
(iii) M/s Syngenta India Limited., At Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
(iv) M/s Syngenta Crop Protection Pvt. Ltd., At Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
(v) M/s Agro Pack, 227/1, GIDC, Panoli;
(vi) M/s Syngenta India Limited, A/c Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
(b) Cenvat Account register as well as RG-23A Part-II shows that Cenvat Accounts are maintained in the name of SIL and SCPPL who are not registered assessee at the said premises.
(c) Raw materials / inputs on which CENVAT Credit had been availed were the property of SIL OR SCPPL and have not passed on to the Appellants and that the Appellants were not entitled for CENVAT Credit of the duty paid on invoices received by them.
(d) Appellants were fully aware that they were not entitled for the Cenvat Credit for raw materials covered under these invoices. Accordingly, they have maintained Cenvat account in the name of the Principal Manufacturers i.e. SIL and SCPPL but later on, at the time of claiming of rebate, the records were tampered with and name of the Principal Manufacturers was erased by whitener and the name of the Appellants was stamped on the documents so as to show that duty has been discharged by the Appellants from its Cenvat account. 7
Excise Appeal No. 11302 of 2014 & Ors.
Credit of Rs.36,20,302/- has been denied on the ground that same is claimed in excess of formula prescribed under Rule 3(7) of Cenvat Credit Rules, 2004.
6. He argued that as per the definition of Inputs, all goods, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the-final product or not, are inputs. In the present case, raw materials which were locally procured or imported by SIL and SCPPL were received by the Appellants in their Unit-II and used by the appellants in the manufacture of finished goods for SIL and SCPPL. He submits that the definition of inputs does not contain any requirement that the inputs must be owned by the assessee. The only requirement is regarding use of the inputs in the manufacture of the final product. He argued that from the entries in Gate Inward Register and Stores Register, inputs have been received in the factory and used in the manufacture of pesticides/insecticides. In fact, all invoices and challans show appellants or their factory address as consignee. Therefore, he argued that goods are received in the factory and used in the manufacture of pesticides/insecticides on which duty had been paid. He argued that Rule 9 of the Cenvat Credit Rules, 2004 makes it clear that what is essentially required for a document to be eligible for availing credit is that such document should evidence payment of duty. The proviso to the rule also makes it clear that the Cenvat credit is not to be denied even if some of the information is missing, subject to the condition that the Deputy/Assistant Commissioner is satisfied that the goods have been received and accounted for in the books of accounts of the receiver. He argued that there is no dispute that all the requisite particulars are contained in the invoices issued. He argued that while the said proviso inter alia, requires mentioning of the details regarding the supplier of 8 Excise Appeal No. 11302 of 2014 & Ors.
inputs/provider of input service, issuing the invoice, there is no requirement to mention the name of the consignee. The Rule nowhere states that the name of the person availing Cenvat credit must be mentioned on the invoices. In the present case, SIL and SCPPL were the buyers of these goods and therefore, their names are mentioned in the invoices.
7. He argued that there is no condition in the Cenvat Credit Rules, 2004 that the documents for availing of Cenvat credit must be issued in the name of the person availing the Cenvat credit or the ownership of the goods must vest in the assessee. Only requirement for availing of credit is that the inputs should be received in the factory of the manufacturer and that the said inputs should be used in or in relation to the manufacture of finished goods. Thus, ownership of inputs is not the relevant criteria for determining the eligibility for credit. He relied on the decision of the Tribunal in the case of Mahadev Industries vs. CCE - 2000 (115) ELT 452 (Tri). He argued that bills of entry for home consumption were filed by SIL/SCCPL and the name of Agro Pack was declared on such bills of entry (address of Unit-I continued to be referred by CHA). Though procedure of endorsement of Bills of Entry was discontinued, SIL/SCCPL were filing declaration with Commissioner of Customs wherein it was categorically declared that good are taken for use in manufacture at premise of Agropack i.e. Unit-II and address of jurisdictional range office was also indicated. He argued that credit cannot be denied merely on the ground that document is not in the name of job worker and has been filed by importer if the receipt and use of inputs in manufacture is not in dispute. It has also been held that credit cannot be denied on the ground that bills of entry were not endorsed in the favour of such job worker. He relied on the following case laws:-
9
Excise Appeal No. 11302 of 2014 & Ors.
(a) Standard Grease & Specialties Pvt. Limited. vs. CCE -Final Order No. A/10583-10584/2019-Tribunal (Ahmedabad)
(b) Marmagoa Steel Limited vs. UOI - 2005 (192) ELT 82 (Bom.) Affirmed by Hon'ble Supreme Court - 2008 (229) ELT 481 (SC)
(c) Eupec Welspun Coatings India Limited vs. CCE - 2009 (235) ELT 347 (T) - Affirmed by Hon‟ble Gujarat High Court in 2010 (260) ELT 381 (Guj.) and SLP dismissed as reported at 2010 (260) ELT A83 (S.C).
(d) Advanced Enzyme Technologies Limited vs. CCE - 2014 (3) TMI- 751-CESTAT-MUM
(e) Trichem Lab (Bombay) Pvt. Limited vs. CCE - 2016 (337) ELT 596 (Tri.)
8. He argued that credit cannot be denied on the ground that invoices are not in the name of appellants but are issued to SIL or SCPPL and the Appellants name is shown „On A/c or AT or C/O‟. He also relied on the following decisions:-
(a) Malwa Cotton SPG. Mills Limited vs. CCE - 2002 (144) ELT 645 (Tri. Del.)
(b) Larsen & Toubro Limited vs. CCE - 1994 (72) ELT 948 (Tri.)
(c) CCE, Bhopal vs. Proctor & Gamble - 2010 (258) E.L.T. 268 (Tri)
(d) Swill Limited vs. CCE - 2008 (232) ELT 802 He also relied on the Board Circular No. 766/82/2003-CX dated 15.12.2003 wherein the following has been prescribed :-
"On the issue availment of credit by the user-manufacturer, it is clarified that action against the consignee to reverse/recover the CENVAT Credit availed of in such cases need not be resorted to as long as the bonafide nature of the consignee„s transaction is not in dispute."10
Excise Appeal No. 11302 of 2014 & Ors.
He argued that the manner in which the Cenvat Registers are, maintained is not the determinative factor for availment of credit.
9. He argued that the demand of cenvat credit totally Rs. 36,20,302/- has been raised on the ground that in some cases, credit has been taken in excess on the basis of the invoices issued by the 100% EOUs than the actual amount of credit available as per the formula given under Rule 3(7) of the Cenvat Credit Rules, 2004. He argued that they contest the entire demand of Rs. 36,20,302/- on limitation and merits in as much as it has not been mentioned anywhere in the show cause notice that under which formula the appellants was required to avail cenvat credit. Even no formula has been referred in the show cause notice on the basis of which the demand of Rs. 36,20,302/- has been quantified. He also submitted that in terms of the provisions of Rule 3(7) of the Cenvat Credit Rules, 2004, the quantification of demand is not correct and hence required to be re-quantified. He further argued that entire demand is barred by limitation as the period involved in the instant case is February 2008 to October 2008 whereas the show cause notice has been served to the appellants in the month of March 2012. He submitted that job work for manufacture of pesticides and insecticides for SIL and SCPPL was done at Unit-I. At Unit-I the statutory records were maintained as were being maintained by the appellants during the period in question. The procedure followed by the appellants for availment of credit is the same as was followed in Unit-I. Therefore, the appellants were under bonafide belief that credit is available to them and they are rightly utilising the credit or payment of duty on finished goods. In their written submission, they also submitted two affidavits of Shri Sanjay Raut, one in the capacity of Senior Manager Indirect Taxation of Syngenta 11 Excise Appeal No. 11302 of 2014 & Ors.
India Limited and another in the capacity of Senior Manager Indirect Taxation of Syngenta Crop Protection Pvt. Limited.
10. Ld. Counsel also pointed out that there is no case for imposition of penalty on various employees as well on the Company as all the actions were bonafide and there is no contravention of law.
11. Ld. AR relies on the impugned order. He also relied on the following decisions to assert that the onus of establishing the receipt and use of the goods is only on the appellants:-
(a) 2008 (12) STR 82 (Tri. Del.) - CCE, Delhi vs. Usha Engineering Works
(b) 2007 (8) STR 141 (Tri. Del.) - Pharmalab Engineering Limited vs. CCE, Ahmedabad.
12. We have gone through the rival submissions. The entire dispute arose when the Cenvat registers of the appellant were called for scrutiny while their application for sanction of rebate claim was being examined. It was found that the appellant was maintaining two Cenvat registers one for SIL (M/s. Syngenta India Limited) and another for SCPPL (Syngenta Crop Protection Pvt. Limited). When the registers were called, the appellant had erased the names of SIL from the register and placed new rubber stamp bearing the name of appellant on the said register. Similar changes were also made in the register having the name of SCCPL. On the strength of these registers, where the name of SIL and SCPPL were replaced by the name of appellant, it was alleged that the entries made therein and the credit taken in the register does not belong to the appellant but the same belong to SIL and SCPPL. Consequently, the duty paid while clearing goods 12 Excise Appeal No. 11302 of 2014 & Ors.
manufactured by appellant by using credit taken in the said registers was sought to be demanded as duty not paid. It was alleged that the debits made in the said registers do not amount to duty payment as the register did not belong to appellant but the same belong to SIL and SCPPL. It is nowhere disputed that appellants are engaged in the manufacturing of pesticides on job work basis for SIL and SCPPL. The appellants have claimed that they were receiving various raw materials directly or indirectly from SIL and SCPPL.
12.1. It has also been asserted by way of an affidavit of Shri Sanjay Rout, Sr. Manager, Indirect Taxation of both SIL and SCPPL that they ahd authorized appellant in terms of Notification No. 27/92-CE(NT) dated 09.10.1992 to manufacture products on behalf of SIL/SCPPL and comply with all legal provisions. He describes the procedure of accounting in following words:-
"10. I say and submit that accounting process followed by the company is as under:
(a) In books of the company, separate plant codes are created for each Job worker location. All the transactions related to the respective locations are accounted in the respective plant codes. Plant code for Agro Pack Unit-II is 4774.
(b) The company issues purchase order to the supplier of all the raw material, packing material (domestic & Imported) which are required for job work at the Agro pack under the respective plant code in SAP.
Against the said purchase order, the vendor supplies material on bill to ship to ship to basis, wherein material is delivered to the job worker‟s location (Agro pack manufacturing plant) and commercial invoice is 13 Excise Appeal No. 11302 of 2014 & Ors.
raised on SIL, Head Office for payment. However the Excise Invoice is accompanied with the material which is raised on SIL A/c Agro Pack.
(c) Since the invoices are raised on the company by vendors the company is maintaining records of such receipt job worker wise. Credit on inputs are availed by job worker and utilized for payment of duty on finished goods. Any payment of duty on finished goods through PLA is made by direct debit to government account for Agro Pack.
(d) All financial entries are in Books of the company:
Receipt of Goods On receipt of this material at job work location, the goods receipt entry is made in the company books under the plant cod created for Agro pack (SAP system available at job worker location). Based on goods receipt the inventory is posted in Syngenta books of accounts net of Cenvat credit.
Dr. Inventry - RM/PM Cr. Goods Received Invoice Received Clearing a/c (GRIR) Availment of Cenvat credit Cenvat credit is also booked in SIL SAP system, based on which the credit is parked in receivable account Dr. Cenvat Credit/ Excise input credit Agro pack A/c Cr. Cenvat Clearing A/c Invoice Booking (Bill to Syngenta, Received at Agro pack) Against the goods receipt the commercial invoice is booked and the payment for the same is made to vendor by SIL from Head office. Dr. GRIR Clearing A/c 14 Excise Appeal No. 11302 of 2014 & Ors.
Dr. Cenvat Clearing A/c Dr. Input VAT A/c Cr. Vendor A/c Excise duty liability on removal of goods Excise duty liability is created based on the Excise invoice generated by Agro Pack along with Syngenta Stock transfer invoice created from SIL books during the transfer of inventory Dr. Excise duty Payment A/c Cr. Excise duty Liability A/c Excise duty payment Excise duty liability is discharged by Agro Pack net of Cenvat credit. However, Excise duty payment is done by Syngenta directly to Government Portal under the registration of Agro Pack. Dr. Agro Pack PLA A/c Cr. Bank A/c Set off / Utilization of Cenvat credit Set off entry is passed in Financials based on the total excise duty payable net of Cenvat credit:
Dr. Excise duty Payable A/c Cr. Excise duty Agro Pack A/c Cr. Agro Pack PLA A/c 12.2. We find merit in the aforesaid argument. The appellant have clearly stated that the registers in which Cenvat credit was taken were maintained separately for their two clients for whom they were manufacturing various final goods. It has been argued by them that goods were received and the job work was being done by them for these goods, details of which were entered in the said registers. It has also been stated that two registers were 15 Excise Appeal No. 11302 of 2014 & Ors.
maintained in respect of Cenvat credit availed for these two clients. This was done to keep accounts of two clients separate. The Commissioner in his order has not disputed the fact that appellant were doing job work for SIL and SCPPL. It has also not been disputed that SIL and SCPPL were sending material to the appellant‟s premises for the purpose of job work.
Another issue raised is that SIL/SCPPL have never applied for exemption under Notification No. 214/86-CE and were not registered with Central Excise. It is not understood as to why registration and availment of Notification No. 214/86-CE is necessary for all job-workers. This notification can be used by a registered manufacturer if he wishes to avail. If one does not wish to avail this notification there is no bar in sending goods for job work. In fact a lot of entities get their goods manufactured on job work without registration and without availing Notification No. 214/86-Central Excise In this perspective, reliance placed on by impugned order on the decision of Hon'ble Supreme Court in the case of Harichand Shri Gopal - 2010 (260) ELT 3 (SC) is totally out of context. The only ground on which the entire case has been built is that the Cenvat registers contain names of SIL and SCPPL. It has been pointed out by the appellant that each page of register also contains ECC Code of appellant. Appellant have explained that two separate registers maintained by them in respect of inputs received from two different clients and thus there is no error in mentioning the names of their clients in the Cenvat registers. There is no prescribed format for making such registers and there is no law which debars the appellants from maintaining separate registers for two different clients. In these circumstances the allegation in the notice and in the impugned order that the Cenvat credit taken and utilized from the said two registers does not belong to the appellant is misplaced. We find that if the Revenue believed that the said registers did not belong to the appellant and in fact belonged to 16 Excise Appeal No. 11302 of 2014 & Ors.
SIL and SCPPL, then the same could have been essentially verified from the other financial record of the appellant. There is no scrutiny of other financial records done and therefore, the allegation remains unsubstantiated. The demand on this count is set-aside.
12.3. The next issue relates to availment of Cenvat credit of certain invoices in the name of following:-
(i) M/s Syngenta India Limited, C/o Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
(ii) M/s Syngenta Crop Protection Pvt. Limited, C/o Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
(iii) M/s Syngenta India Limited., At Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
(iv) M/s Syngenta Crop Protection Pvt. Ltd., At Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
(v) M/s Agro Pack, 227/1, GIDC, Panoli;
(vi) M/s Syngenta India Limited, A/c Agro Pack, Plot No. B/155, GIDC, Ankleshwar;
The Commissioner has observed as follows:-
"52.1. M/s. Agro Pack, Ankleshwar have also availed Cenvat credit on the Bills of Entry in the name of M/s. Syngenta India Limited, 227/1, GIDC, Panoli and M/s. Syngenta Crop Protection Pvt. Limited, 227/1, GIDC, Panoli to the tune of Rs. 7,60,14,689/-. M/s. Agro Pack Ankleshwar is a distinct separate unit having separate registration and is therefore not eligible to avail credit on the bill of entry of in the name of SIL and SCPPL. There has been no endorsement nor there is any co- relation or records maintained. M/s. Agro Pack has availed the credit by way of suppression of facts with intent to avail inadmissible credit 17 Excise Appeal No. 11302 of 2014 & Ors.
and evade duty. Therefore, the Cenvat credit amounting Rs. 7,60,14,689/- availed and utilized is liable to recovered under rules 14 of Cenvat Credit Rules, 2004."
We find that no investigation or verification of records has been done to ascertain if the goods were received in the factory and utilized for the purpose of manufacture of final product or not. The only requirement under the law to avail credit of duty paid on inputs is that the said goods should have suffered duty liability and should have been used in the production of finished goods which are liable to duty. In the instant case, no investigation whatever has been done to ascertain that the goods were received and utilized in the manufacture of goods. Whatever be the address in the invoice documents on the strength of which the credit has been availed, the credit cannot be denied if the goods are in fact received in the factory and utilized for the manufacture of finished goods. In this context, it is seen that the appellants are claiming that they have maintained relevant records of receipt and utilization of goods. It has also been claimed that in the bills of entry they have filed declaration with the Commissioner of Customs that the said goods are used in the manufacture at the premises of Agro Pack and address of the Jurisdictional Range Officer has also been indicated. It has also been claimed that goods are procured locally, gate pass and records clearly shows delivery of goods at the factory premises. The appellant have claimed to have sufficient evidence in terms of Rule 9 that the goods have been received in the factory and used in the stated purpose. We set-aside the demand and remand the matter to original adjudicating authority. The appellant may produce all the necessary record of receipt and use of goods in the manufacture, in terms of Rule 9 of Cenvat Credit Rules, 2004. The matter may be decided after examining the evidence. 18
Excise Appeal No. 11302 of 2014 & Ors.
12.4 The credit has also sought to be denied on the ground that inputs on which credit is availed are not owned by the appellant. We find that there is no such requirement in the law that only inputs which are owned by the assessee, the credit in relation to such inputs which are owned by the assessee can be availed. The only requirement is that the credit of inputs used in relation of manufacture of finished goods can be availed.
12.5 The next issue relates to credit of Rs. 1,18,55,284/-, it has been alleged that this credit has been availed on the documents of SIL/SCPPL. We find that in this case also the same argument as is in case of Para 12.3 above will apply. Consequently, this demand is also set-aside and the matter is remanded for verification of facts.
12.6 The next issue relates to availment of credit in excess. The show cause notice alleges that credit has been availed in excess by not following the formula. The Commissioner while confirming the said demand has observed as follows:-
"52.3. Further in several cases M/s. Agro Pack has availed excess Cenvat credit amounting to Rs. 34,49,355/-, education cess Rs. 1,13,965/- and SHEC of Rs. 56,982/-. The excess credit has been admitted by the notice. Also in respect of invoice No. 812 dated 11.06.2008 the credit of Rs. 4,62,200/-(BED), Rs. 9,240/- (ED) and Rs. 4,620/- (HSED) has been wrongly availed twice vide entry number 441 dated 14.06.2008 and again by entry No. 1139 dated 25.10.2008. These excess availment is by way of suppression of facts with intend 19 Excise Appeal No. 11302 of 2014 & Ors.
to avail excess credit. The same is liable to be recovered. Shri R.L. Shetty and Shri Bipin Patel during their statements have confirmed excess availment and agreed to pay these sum."
The appellant have contended they are challenging that there no formula has been stated in the show cause notice or in the impugned order. There is no calculation forthcoming as to how these demands have been coming out. Therefore they are challenging these demands. We find that while the show cause notice cites Rule 3(7) of Cenvat Credit Rules, 2004, it does not disclose exact manner as to how this calculation has been made and the impugned has also not dealt with the issue. Thus we find that the order of the Commissioner is not a speaking order consequently, this demand is also set-aside. The Commissioner is directed to disclose the exact manner the demand has been calculated and the details of formula applicable to the facts of the case.
13. It is seen that penalty on SIL, SCPPL and Shri R.L. Shetty, (employee of SIL) has been imposed alleging that they have aided and abetted M/s. Agro Pack Limited to projected themselves as manufacturer at Ankleshwar and took credit in the Cenvat account registers and allowed the same to be utilized illegally by M/s. Agro Pack Limited. We find, the said allegation has not been upheld in the order passed and consequently, penalty on SIL and SCPPL and Shri R.L. Shetty is set-aside. As regards penalties on Shri Tushar Patel, Shri Bipin Patel and Shri Harish M. Patel, employees of M/s. Agro Pack Limited, the matter is remanded for determination of penalty, after examining the facts in respect of wrong availment of credit, if any. 20
Excise Appeal No. 11302 of 2014 & Ors.
14. In view of the above, the appeals are partly allowed in the above terms.
(Pronounced in the open court on 05.08.2019) (Ramesh Nair) Member (Judicial) (Raju) Member (Technical) KL