Custom, Excise & Service Tax Tribunal
M/S.Bhanu Iron & Steel Co.Ltd vs Cce, Indore on 9 May, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER BENCH
Court No.3
Excise Appeal No.E/541-543,971-974/2006
(Arising out of OIO No.94/Commr./CEX/IND/2005 dated 28.11.2005 passed by the CCE, Indore)
Date of Hearing: 03.10.2013
Date of Decision:09.5.2014
For approval and signature:
Honble Mrs.Archana Wadhwa, Member (Judicial)
Honble Mr.Manmohan Singh, 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 should 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?
M/s.Bhanu Iron & Steel Co.Ltd. Appellant
Shri Y.S.Bisht, Deputy GM
Sh.Anoop Bishnoi, MD
M/s.Belvedere Engineering Ltd.
M/s.Bharat Indl.Structural Constructions Ltd.
M/s.United Alloys Ltd.
M/s.Bhanu Iron & Steel Co.Ltd.
Vs
.
CCE, Indore Respondent
Present for the Appellant: Shri L.P.Asthana, Advocate
Present for the Respondent: Shri S.K.Panda,
Coram: Honble Mrs.Archana Wadhwa, Member (Judicial)
Honble Mr.Manmohan Singh, Member (Technical)
FINAL ORDER NO.52044-52050/2014
PER:MANMOHAN SINGH
Appellants have come in appeal against Order-in-Original No. 94/Comm/Cex/Jud/2005 dated 28.11.2005. Facts of the case are given below to appreciate the issue.
2. M/s. Bhanu and Steel Co. Ltd. are manufacturers of M.S. Plates and M.S. Coils falling under chapter 72 of the Central Excise Tariff. They were buying M.S. Slab from various parties and converting into M.S. Plates and M.S. Coils. They were also taking Cenvat credit of the duty paid on the slabs.
3. The appellants were buying M.S. Slab through their associate company at Hissar as well as other suppliers in Raipur, Bhilai, Guwahati and Hissar.
4. On the basis of specific information that the noticee No.1 M/s. Bhanu & Steel Co. Ltd. Fraudulently availed modvat credit of duty paid on inputs and capital goods on the strength of duty paying documents procured by them without actual receipt of inputs/capital goods. Accordingly the Central Excise authorities on 26.08.1995 searched the premises of the appellants and resumed a number of documents not only from the factory premises but also the business premises connected with the appellants. On verification of the stock of input and output, the Central Excise authorities made out a case that there was a shortage of 2620.800 MT of slabs. On further verification on 28.8.1995 and 29.8.1995, stock of 76.62 of M.S. Plates (final product) valued at a Rs.11,89,650/- was found to be in excess of the stock shown in the statutory record. The excess M.S. Plates were seized.
5. Shri Yashwant Singh Bisht, DGM and Shri B.R. Bishnoi, Excise Officer of the Noticee No.1 in their respective statements accepted the shortage of 2620.800 MT Slabs and were satisfied with the manner of stock taking and they further deposed that this difference is due to actual non-receipt of slabs in the factory. They have received only duty paying documents. Physical verification of finished goods was also undertaken on 27.8.95, 28.8.95, and 29.8.95, during which a stock of 76.628 MT of plates (Final product) were found in excess and were seized by the officers.
6. Between 31.1.1996 and 2.2.1996 physical verification of the detained waste/scrap was conducted. 86.120 MT of waste/scrap was found in excess of the recorded stock in RG-1. This was seized by the Central Excise authorities.
7. Since the appellants could not furnish complete details with regard to the stock position, they debited Rs.20 lakhs on 2.9.1995. Further, they paid Rs.23 lakhs on 11.9.1995 and subsequently they paid Rs.25 lakhs. Thus, a total amount of Rs.68 lakhs was paid by the appellants.
8. On scrutiny of documents resumed from Noticees factory and office premises, revealed that they had taken credit on the strength of documents of various manufacturers/dealers based in Hissar, Guwahati, Raipur and Bhilai.
9. Three registers maintained by the security department of noticees unit were resumed with the entries Security, BISCO handling/taking notes and Material In/Out Register. The verification of the various entries made in these registers and also of statement of Security Supervisor confirmed the fact that no goods has actually been received from the dealers/distributors based in Hissar, Gowahati and Raipur. Investigation at the end of these dealers/distributors reconfirmed the fact that no goods were sent to the Noticee No.1 which had only procured duty paying documents for availing fraudulent credit. The entries regarding Registration numbers of vehicles available on such fake documents were also verified with the Regional Transport Authorities and it was found that the registration numbers available on the documents were either of two wheelers namely TVS Champ, Luna, Bajaj Scooters, Motor Cycles or either vehicles like Buses, Cars, Tractors, Tankers and LCVs which cannot be used for transportation of goods like MS slabs, plates and capital goods.
10. Revenue also undertaken similar investigations in respect of inputs manufacturers/suppliers and Transporters at Hissar, Gowahati, Raipur and Bhilai, which corroborated the facts that the unit was availing fraudulent credit on the basis of fake documents and no goods as shown in these documents actually had been received by them. This position was confirmed by the concerned manufacturers who were shown to have supplied the goods as per fake invoices and such manufacturers were in fact found with no manufacturing facilities to produce the inputs in question. The vehicles which were mentioned in the documents were found to have been transporting tea on the particular dates and issuance of fake documents were admitted by all the concerned Noticees. Moreover, Shri Anup Bishnoi, Managing Director of M/s. BISCO in his statement dt.2.7.96 admitted the irregularities and also express his willingness to pay the duty evaded.
11. The matter was taken by the adjudicating authority, Indore vide adjudication order No.94/Commr./CEX/IND/2005 dated 28.11.2005. After analysing all the facts, statements of various suppliers and statement of Shri Bishnoi and statements of various transporters, he came to the conclusion that the goods i.e. MS Plates weighing 76.628 MT valued at Rs.11,89,650/- and 88,120/- MT of MS waste & scrap valued at Rs.7,04,960/- seized at the factory premises of the Noticee No.1 M/s. Bhanu Iron and Steel Co. Ltd., Plot No.801,Sector-III, Pithampur were confiscated. However, I give an option to the Noticee No.1 to redeem the same on payment of Rs.8 lakhs which shall be exercised within 30 days of the receipt of this order was given. A penalty of Rs. 5 lakhs (Rupees five lakhs only) was also imposed on the noticee No.1 under Rule 173Q of erstwhile Central Excise Rules, 1944.
12. Further wrongly availed modvat credit amounting to Rs.3,67,52,507/- (Rupees three crore sixty seven lakhs fifty two thousand five hundred seven only) was confirmed for recovery from the Noticee No.1 M/s. Bhanu Iron & Steel Co. Ltd. in terms of Rule 57(2) of erstwhile Central Excise Rules, 1944 and equivalent amount of penalty was also imposed on the company. Interest under Rule 57-I(5) and 57-U(8) of erstwhile Central Excise Rules, 1944 was also demanded. In addition of above, adjudicating authority also confiscated land, building, plant and machinery of noticee No.1 but gave an option to redeem the same on payment of redemption fine of Rs.25 lakhs. Penalty of Rs.25 lakhs was also imposed on Shri Anoop Bishnoi, Managing Director of Noticee No.1 M/s. Bhanu Iron & Steel Co. Ltd.. In addition of above, a penalty of Rs.1 lakh (Rupees one lakh only) was imposed on Shri Y.R. Bisht, Deputy General Manager, M/s. Belveder Engineering Ltd, M/s. Bharat industrial Strutural Construction Ltd., M/s. Bhanu Iron & Steel Co. Ltd., M/s. United Alloys Ltd., M/s. Brahamputra Steels Pvt. Ltd. and M/s. Brahamputra Tubes Pvt. Ltd. respectively under Rule 209A of the erstwhile Central Excise Rules, 1944.
13. Further penalties were also imposed on various co-notice under para 96(2) of the order. Since these co-noticees are not in these appeals before us, no analysis of those penalties is undertaken in this order.
14. The appellants have come up in appeal alleging that they were not given un-relied upon documents for defending them in the proceedings initiated by the Commissioner. They also contended that statutory records maintained by the appellants regarding receipt of capital goods as duly verified by the department before taking modvat credit should suffice to convince that the Commissioner has not properly considered the records maintained by the appellants. They also alleged that that no proper verification was got conducted in this regard. They also contested that invocation of extended period of limitation and contended that the demand should have been restricted within the normal period of six months. They also took the point that the demand should have been considered after taking into account modvat credit on inputs used in their manufacture.
15. Heard both sides and also perused the records.
16. Considered the point raised by the appellants as well as ld. JCDR, Shri S.K. Panda, Appellants have raised in issue of non-supply of non-relied upon documents. I have examined the matrix of facts. It is seen that show cause notice was issued in 1997. Matter was adjudicated on 30.7.99 vide Order-in-Original No. 35/Comm/CE IND/99 on the ground of non-supply of non-relied upon documents, Honble CESTAT vide their Order No. A/289-300/200-NB dated 29.3.2000 remanded the case back to adjudicating authority for denovo adjudication for passing appropriate order as denial of principles of natural justice was observed as certain documents were not returned to the appellants and defence could not be prepared effectively.
17. In pursuance to Tribunals order as above, there has been lot of exchange of letters between the appellants and the department and several dates were fixed for providing non-relied upon documents.
18. Commissioner has specified in para 24 to para 29 of his order that all out efforts were made to contact the noticee to take photocopies and inspect the records and also discussion about release of non-relied upon documents. In para 28 of the order, a reference has been made to the effect that out of 8 files, 5 were provided and remaining could not be traced. Computer floppies were offered but appellants refused to take possession on the pretext or the other. Accordingly department was forced to draw panchnama of the proceedings.
19. However appellants continued to raise the plea without any force about requirement of these files and any substantiation to show material relevant to present proceedings having repercussion on the findings. We have seen the exchange of correspondence and find that a sincere effort has been made by the department to return all non-relied documents and computer floppies. It is also observed that on are pretext or other, efforts has been made to delay the proceedings. It is fact on record that case was booked in 1995 and after 18 years, they are still trying to drag on the matter. We are conscious that this matter cannot be kept open for infinity when serious fraudulent irregularities causing subterfuge to the Revenue have been alleged and there are admittance of fraud by the appellants. In view of above, judgements quoted by the appellants do not come to their rescue.
20. On the other hand, learned CDR reiterated the findings recorded by the adjudicating authority. He contended that this is clear case of fraudulent availment of modvat credit on papers transaction and these invoices were not accompanied by any goods. Further, no transportation of the goods took place, which has been conclusively proved by investigation conducted with the regional transport authority wherein it was confirmed that type of vehicle used in transporting the goods are not commercial vehicles but two wheelers, bus, tractors, rig, auto rickshaw and cars, on which such heavy goods like M.S. Plates cannot be transported at any cost. From the facts as stated above, after going through the adjudication order, and statements made by the appellants, it is evident that the appellants have availed modvat credit on M.S. Slabs without receipt of the goods and under fake invoices. These allegations stood proved when the visit made to the premises of the notice No.1 and on verification of stock, huge shortage of 2620.200 MT of M.S. Slabs was detected. On different dates of verification, shortage of 2620.800 MT of M.S. Slabs was admitted by Shri Yashwant Singh Bisht, DGM and Shri B.R. Bishnoi, Excise officer of the appellant No.1. During subsequent verification on 27.8.95, 28.8.95 and 29.8.95 a stock of 776.628 MT of MS plates (final product) was found in excess which was seized. During a visit on 31.1.96 and 2.2.96, quantity of 88.120 MT of waste/scrap was found in excess of the stock recorded in RG-1 which was also put under seizure. From Investigations conducted from M/s.UAL, M/s.Belvedre Engineering Ltd., M/s.Bharat Industrial Structural Construction Ltd., it was found that these units were not having infrastructure to produce M.S.Slabs and they have merely issued invoices. The statement of Director confirmed that he was directed by UAL at he behest of Shri Bishnoi, Managing Director of BISCO to show the transactions only on papers.
21. Shri P.J.S.Bedi, Director of the unit, in his statement dt.27.6.96, recorded under section 14 of Central Excise Act, 1944 deposed that he was associated with M/s.BISCO as Executive Assistant to the Managing Director Shri Anoop Bishnoi. He had been directed to sign as Director of M/s.United Alloys Co.Ltd. at times, some papers signed by him were also blank papers/letter heads, He also stated that Shri Bishnoi on whose directions papers were signed, was not officially linked with M/s.UAL. Shri Bedi confirmed that he was not aware about any production having taken place in the unit and believed that transaction of UAL were only books entries. He had never seen books and accounts of UAL. In his subsequent statement dt.1.7.96 Shri Bedi deposed that he had no knowledge of sale of M.S.Slabs by M/s.UAL to M/s.BISCO, pithampur. The invoices issued about sale of M.S.Slabs were only book entries as the unit had never did any manufacturing activity/trading activity.
22. Investigation also brought out that the goods shown to have manufactured by UAL were shown to received at Pithampur against invoices issued by M/s Bhanu Iron & Steel Co., Hissar registered as dealer. On the other hand, Bhanu Iron & Steel Co., Hissar was found located on unoccupied barren land with no shed or any handling equipments. Enquiry was made with Shri Bedi brought out the fact that Sri Bishnoi was not officially linked with UAL, Hissar and that was the reason that employees like him and Shri Y.S.Bisht have been taken on record as directors. It came to light that Y.S.Bisht has been working as Deputy General Manager at BUSCO, pithampur plant. Shri Bedi also confirmed that unit/company like M/s.Bhanu Steel Pvt. Ltd., M/s.Bhanu Industries Pvt. Ltd., M/s.Bhanu Metal Pvt. Ltd., M/s. Belvederes Engineering Ltd., M/s. Bharat Industrial Structural Constructions Ltd. and M/s.Associated Distilleries Ltd. at Hissar, M./s.Brahamputra Steels Pvt.Ltd., M/s.Brahamputa Tubes Pvt.Ltd., Guwahati and M/s.Bhanu Iron and Steel Co. Pvt. Ltd., Pithampur, all belonged to Shri Anoop Bishnoi. He further confirmed that UAL was not working at present and as far as he knew, the unit had never worked in past also.
23. Investigation also revealed that premises of M/s.Bhanu Iron and Steel Co.Pvt.Ltd, Hissar were shown on unoccupied barren land with no shed or any handling equipments. Shri Rajveer Singh on behalf of BISCO, Hissar admitted in his statement that they did not have any handling machine facilities in their premises. Similarly M/s.Belveder Engineering Ltd., Hissar was also visited on 19.6.96 which revealed that unit was not having machines and infrastructure facilities to manufacture heavy machinery which were said to have been received as capital goods on the strength of invoices issued by M/s. Belveder Engineering Ltd., Hissar. The Central excise officers also found that the said unit was not having proper electricity connection for manufacture of such heavy machineries said to have been manufactured and supplied by them. Shri Lalit Singhla in his statement dt.19.6.96 deposed that their unit was registered with DIC and the unit had no account in banks.
24. Shri Ranjan Stephen, Director of M/s. Belveder Engineering Ltd., in his statement dt.26.6.96 recorded under section 14 of the Act deposed that he was working as Dy.General Manager (Commerical) with BISCO, Delhi. He was director of M/s. Belveder Engineering Ltd. only on paper and was not involved in any activity of Belveder Engineering Ltd. He has not invested any money in the unit. Shri Stephen in his further statement dated 1.7.96 deposed that the unit did not have any facility to manufacture the goods in question. The goods from the Hissar units said to have been dispatched under the cover of documents issued by transporters namely M/s.Vishal Transport Co., Hissar. However, M/s.Mahavir Transport Co., Hissar and M/s.A.G.Transprot Co., Hissar. However, on investigation, the documents were either not found not issued or found fake.
25. Similar investigation in respect of inputs shown to have been received from Guwahati as well as Raipur/Bhilai, was conducted and the facts revealed were of really startling nature. The inputs were shown as transported from M/s.Brahamputra Steels and M/s.Brahamputra Tubes, located at Gowahati, through transporter M/s.Kamal Roadways to the noticee No.1 at Pithampur, but on verification at the address given in documents, it was noticed that no such transport company existed in the name & style of Kamal Transport at given address.
26. Interestingly investigation revealed that the vehicles said to have been used for transportation of goods from Brahmaputra Steels/Brahmaputra Tubes Co. Ltd., Guwahati on the relevant dates were in fact used for transporting of tea. Even one of the registration numbers provided on document MPO9D-1885 on verification was found to be an Auto Rickshaw. The fact of non transportation also emerged on the basis of statement of Shri Beid whose revealed that M/s.Brahamputra Steel and M/s.Brahamputra Tubes, Gowahati were actually units of BISCO group only.
27. Enquiry relating to transportation of goods that various transporter given in para 40 and 41 of the adjudication order brings out that these transporters have not transported any goods to BISCO, Pithampur. Vehicles on verification with regional transport authority fall in the category of two wheelers namely TVS Champ, Luna, Bajaj Scooters, Motor Cycles or either vehicles like Buses, Cars, Tractors, Tankers and LCVs which cannot be used for transportation of goods like MS slabs, plates and capital goods at any cost. Interestingly all the transporters of all the categories admitted that the documents in question were fictitious and registration numbers were mentioned as per their convenience by the official who prepared documents. For ready reference para 53 of Commissioners order is reproduced for reference:
53. Further the RTO at various places have specifically reported that the Registtrion Nos. Of the vehicles said to have been used are as under:-
S.No. Vehicle No. Type of Vehicle name Name and address of person in whose name vehicle in registered.
1.
MP-24 0449 LUNA Govardhan Lal Sahu S/o Raja Ram Sahu Shankar Nagar, durg.
2. MP-24 0751 Trailor HGV Jain road Lines, G.E. road, Bhilai
3. MP-24 0892 LUNA Prushottam Mahobia S/o Chotelal Mahobia, VIII. Khairapara, Distt. Rajnandgaon.
4. MP-24 1072 Bajaj Super Vinita Chobey W/o A.K. Chobey, 10D Street 39, Sector-7 Bhilai
5. MP-24 0966 HGV TDV Harjeet Singh S/o A.S. Tansikka, Sunder Nagar, Near Gurudware, Bhilai
6. MP-24 A1545 TVS Champ Durga Nand Sahu S/o N.R. Sahu, Thana Bhilai Bhatti, Sector-3, Bhilai
7. MP-24 A1575 LUNA D.S. Vishwakarma S/o M. Vishwakarma, VIII Katro, P.O. Khapti, Dist. Durg
8. MP-24 A3683 LUNA Mr. Sushil Ray S/o Lakw RMD Ray, Nehru Nagar, East Bhila.
9. MP-24 A6575 HMV Open goods Shri Laxmi Carrier Corporation, 145,146 Akash Ganga complex supela Bhila
10. MP-24 A7811 Delivery Van (Bajaj) M/s Poddar agencies, Dail, Rajhara Dist. Durg.
11. MP-24 A8003 Articuhted Trailor HMV B.V. Shah S/o A.V. Shah Fancy Bazar, Guwahati.
12. MP-24 C0797 HGV TDCV Open Hans Raj Aharwal S/o Lake Dosraj Agarwal, Shastr Nagar, Supela, Bhilai
13. MP-243 CO144 HGV TDV Open Kamal Swaroop S/o Om Prakash C/o Shyam Sunder, Ahiwara dist.Durg.
14. MP-24 D2239 Bajaj Super T.R. Madharia S/o Gej Ram Madheria, 36/4-G, Risali Bhilai.
15MP-24 D9886 Bajaj Cub G.S. Rajput S/o B.S. Rajput, 6m Avenue A/Sec-6, Bjilai.
16MP-24 C0449 TDV Open Gurdarshan Singh S/o Sardar Jogindar Singh Lamba, 18, Deepak Nagar, Durg.
17. MP-24 C0561 TDV Open Sardar Harbaja Singh S/o Vaisaka Singh Aurdi Ward St. 16 H.No.15 Durg.
18. MP-24 C0644 TDV Open Shyam Sundar S/o Niranjan Das VIII, Ahiwara Durg.
19. MP-24 C6045 TDV Open Sardar Ajit Singh S/o Hira Singh Shop No.45, Sector-5 Bhilai.
20. MP-24 C748 TDV Open Sardar Gurdeep Singh S/o Puran Singh Near Radha Swajay Kisana Store Kailash Nagar, Bhilai.
21. MP-24 Co963 TDV Open Shri Laxmi Carier Corporation 145, 146 Akash Guna Complex Super, Bhilai.
22. MP-24 C0979 TDV Tanker Kedia distillerieg 4/D Light Industrial Area, Bilai.
28. Based on investigation conducted and referred above in the preceding paragraph, it clearly comes out that M/s.BISCO has manipulated and created fictitious unit so that invoices could be procured without movement of the goods. Further investigation have also proved that no transportation of iron and steel products have been undertaken which is evident from para 53 recorded by the Commissioner where different vehicles like two wheelers namely TVS Champ, Luna, Bajaj Scooters, Motor Cycles or either vehicles like Buses, Cars, Tractors, Tankers and LCVs have been used for transportation of iron and steel goods. Shri Anoop Bishnoi of BISCO in his statement dated 02.7.1996 clearly admitted that modus operandi adopted by the noticee company to secure ineligible credit. He admitted irregularity in respect of inputs and offered to pay duty to the department. In token of his acceptance, he also deposited Rs.68 lakhs.
29. It is also on record that owner of the vehicle in respect M/s.Brahamputra Steels Pvt.Ltd. and M/s.Brahmaputra Tubes Pvt.Ltd. have admitted that their trucks have never been used for transportation from Guwahati to Pithampur. Owner of vehicle MP No.MP09-K-7091, stated that the vehicles were not even available during relevant point of time.
30. The Commissioner in para 61 of his order has relied upon the Tribunals judgement in the case of Viraj Alloys Ltd. vs. CCE, Thane-II-2004 (177) ELT 892 (Tri.-Mum.). The para 11 of the said decision reads as under:-
11. In the? present case the show cause notice is issued by ADG of DGCEI. He is competent to issue such a notice. The ld. Advocates contention that if the authorities allege that the inputs were not received in the factory it is also obligatory on them to establish as to what happened to the duty paid inputs purchased and how the appellant could have produced the final products without the inputs is not tenable. In our opinion the above issues are extraneous and therefore the department is not required to deal with them. It is enough if the fact of non-receipt is established to deny Modvat credit under Rule 57G. The ld. Advocate relied on the case of Indian Polypipes & Ors. v. CCE, Kol.I [2003 (157) E.L.T. 652 (T) = 2003 (89) ECC 249 (Tri.)]. We have perused this decision the facts in that case are completely different from the present one. We do not consider that the ratio of the decision applies in the present case. Similarly the decision in the case of Swastik Tin Works v. CCE, Kanpur [1986 (25) E.L.T. 798 (T)] also does not lay down any ratio which supports the appellants case. We observe that the department raised a presumption against the appellants by establishing that the inputs could not have been received in the factory in vehicles mentioned in the invoices. This allegation itself is based on the reports by RTOs, who certified that the registration numbers belonged to vehicles other than goods transport vehicles with 10 tons capacity. It is for the appellants thereupon establish that indeed such vehicles as mentioned in the invoice did bring the input to their factory. They have failed to do so. Their gate register was burnt in some fire accident and the bills/vouchers indicating payment of cash to the drivers/owners of the trucks were also, destroyed in fire. One could understand that bills/vouchers, getting destroyed in fire or lost. But one cannot understand as to what has happened to the ledgers and registers to which the transactions done in cash are ultimately transferred. It is not the appellants case that even such ledger and registers were destroyed in the fire. The fact that the inputs in the form of ship-breaking scrap was entered in RG 23A, Part-I does not establish that the goods were received in the factory. At least two truck owners have categorically denied having transported any goods to the appellant. The plea that the truck owners indulged in mal-practices and run them with false numbers is farfetched. In the appellants case 99 vehicles were such that they could not have carried the goods from the supplier to the buyer, some of the numbers belonged to auto-rickshaws, motorcycles and some numbers did not exist. The fact that out of the list of vehicles which were shown to be tankers, according to RTOs Office, two vehicles turned out to be regular carriers of goods does not establish that the case of other vehicles also it was true. An exception cannot make a rule. Once it is established that the input has not been transported in the vehicle mentioned in the invoice it is but reasonable to say that the inputs were not received in the factory as required under Rule 57G. The Commissioner as well as the ld. SDR relied on the case of A.N. Guha & Co. cited supra wherein the Tribunal held that it is not necessary for the department to establish a fact with mathematical precision once a presumption as to the existence of a fact is raised against an assessee. This test is satisfied in the present case.
31. In the case of Ranjeev Alloys Limited vs. CCE, Chandigarh-2009 (236) ELT 124 (Tri.-Del.), the Tribunal has held as under:-
9.?At the outset we may observe that the question as to whether there can be transport of large quantities of iron steel items by light motor vehicles, like scooter, moped, jeep, car, tractor, tanker etc. can hardly be said to be an issue. There cannot be any dispute that for claiming Modvat/Cenvat credit there must be actual receipt of the goods and where the goods are alleged or shown to have been transported by vehicles which turn out to be really scooter, moped, car etc., the inference would be irresistible that there was no actual transportation or receipt of the goods and, therefore, Modvat/Cenvat credit will not be available to the party. The question as to whether Modvat/Cenvat credit can be claimed with respect to fictitious transportation or receipt of goods can hardly be called an issue to warrant any adjudication or decision. If any issue is involved, it is an issue of fact - whether the vehicles in question are indeed light motor vehicles like scooter, moped, car etc. or they are transport vehicles like truck. Depending on the determination of this issue the Modvat/Cenvat credit can be allowed to the party subject to fulfilment and compliance of other requirements of law. In this view of the matter, one option available to us was to send the case back to the Single Member Bench for final disposal. But being prima facie of the view that the decisions of the Single Member Benches - referred to in the reference order - that credit cannot be denied merely on the ground that the vehicles mentioned in the concerned invoices are fictitious, was not correct - bordering on perversity, we decided to hear the appeal finally drawing support from the decision of the Division Bench in M/s. Viraj Alloys Limited (supra).
10.?We are conscious of the fact that some of the decisions of the Single Member Benches referred to above were challenged by the Revenue in the Punjab and Haryana High Court by way of appeal under Section 35F of the Central Excise Act which were dismissed vide 2008 (230) E.L.T. 218 (P&H) = 2008 (87) RLT 465 (P&H) (CCE, Chandigarh v. Neepaz Steels Limited & Ors). Following the said order, the appeals in the cases of Nirmal Kumar Agarwal and M/s. Adhunik Steels Limited (CEA Nos. 14-19 of 2008 dated 4-7-2008) were also dismissed on 7-7-2008. However, on a bare reading of the High Courts order in M/s. Neepaz Steels (India), it is evident that the High Court declined to interfere in the matter on the ground that the Tribunal had recorded the finding of fact that the inputs were duly received by the manufacturers and used in the manufacture of the goods which were cleared on payment of duty, and that there was no question of law involved. After setting out the facts of the case and the arguments advanced, the High Court observed -
Thus, there is no merit in these appeals as no question of law, much less substantial, arises from the order of the Tribunal wherein pure findings of fact have been recorded in favour of the respondents.
11.?It goes without saying that in any series of transactions some may be genuine for which the benefits available in law may be allowed to the party, for other transactions in the same series, similar benefit may not be allowed -depending on the attending facts in particular cases. In other words, Cenvat/Modvat credit can be allowed where there is actual transportation and receipt of goods by the manufacturer entitling them to take Cenvat credit, but where there is no such proof of actual transportation and receipt, credit cannot be allowed. Surely, it would be too wide to suggest that all transactions made by M/s. Adhunik Steels Limited involving M/s. Neepaz Steels (India) and others were fictitious. Each of such transaction has to be considered as separate and independent. The appellant therefore cannot contend that in view of the judgment of the Punjab and Haryana High Court - which was rendered between the same parties in the context of seemingly similar transactions, taking Modvat/Cenvat credit by the appellant in the present case too was legal and they cannot be asked to reverse the same and demand cannot be made against them. As a matter of fact, for this reason alone, the issue involved in the appeal being an issue of fact - resulting in inevitable consequence of allowing or disallowing Cenvat credit - depending on the outcome of the issue, we proceed to consider on the merit of the case as an independent case notwithstanding favourable decisions in so called similar cases by Single Member Benches. As observed above, at the cost of repetition, if the vehicles in question were really light motor vehicles - incapable of carrying large quantities of steel and iron items, conclusion would be inevitable that there was no actual transportation or receipt of the goods and, therefore, the appellant could not have taken Cenvat credit on them - as held by the Division Bench in Viraj Alloys Limited (supra).
12.?The vehicles in question by which the goods were allegedly transported on sale by M/s. Adhunik Steels Limited as consignment agent of TISCO, Mandigobindgarh are PB 23 6412 and PUV 1796. While the former was a tractor, the latter was a scooter. The appellant cannot contend to the contrary as the finding is based on the report of the concerned Regional Transport Officer after due verification.
13.?Learned Counsel for the appellant however submitted that the invoices in question are documents of transactions between M/s. Adhunik Steels Limited on behalf of TISCO, Mandigobindgarh on the one hand and M/s. Neepaz Steels (India) on the other hand and the appellant is in no way connected. In other words, according to the Counsel, there is no linkage or connection between transport of goods by M/s. Adhunik Steels Limited at the first instance and onward transportation by M/s. Neepaz Steels (India) to the appellant. Learned Counsel also submitted that the allegations about the vehicles being either tractor or scooter are being made for the first time in the Tribunal and the appellant has had no opportunity to reply to them.
14.?Learned Joint CDR produced enclosure to the show cause notice, marked Annexure-I, which has not been included in the paper book as being part of the show cause notice, though the show cause notice is on record as part of the appeal paper book. Learned Jt. CDR submitted that the statement with the relevant details was duly communicated to the appellant as part of show cause notice - as referred to in para 12 of the Notice. We find substance in the submission of the Joint CDR that if annexure-I was in fact not sent to the appellant along with show cause notice - as stated in para 12 of the notice, the appellant should have made a grievance of it in their reply and asked for a copy of the annexure. We are thus satisfied that the appellant was in know of the relevant facts regarding particulars of the two vehicles referred to above which are subject matter of proceeding so far as the appellant is concerned.
15.?Learned Joint CDR drew out attention to page 83 of the appeal paper book which is the photocopy of the invoice issued by TISCO, Mandigobindgarh in favour of M/s. Neepaz Steels (India) being excise invoice No. 500 dated 9-8-2000 for 23.880 MTs quantity of Scrap/Indul. Scrap Tandish Jam (2) showing vehicle number as PB 23 6412 in the column Mode of Transport/Veh./wagon No.. Learned Joint CDR then invited our attention to the invoice issued by M/s. Neepaz Steels (India) at page 81 of the appeal paper book being invoice No. 67 dated 10-8-2000 in favour of M/s. Ranjeev Alloys Limited i.e. the appellant in respect of 23.880 MTs of same goods i.e. Indl. Scrap (Tandish Jam-2). The only difference being that whereas the total value of the goods in the invoice of TISCO was mentioned as Rs. 222852.94, in the invoice of M/s. Neepaz Steels (India) the value was mentioned as Rs. 220890/- a rather insignificant discrepancy. What is significant is that it refers to Invoice No. 500 dated 9-8-2000 i.e. the same invoice used by TISCO, Mandigobindgarh, in the column meant for the particulars of the supplier. It also mentions the name of the manufacturer as TISCO, Jamshedpur.
16.?Learned Joint CDR made similar comparison between the invoices issued by TISCO, Mandigobindgarh in favour of M/s. Neepaz Steels (India) and by M/s. Neepaz Steels (India) in favour of the appellant M/s. Ranjeev Alloys Limited in respect of the other transaction which is subject matter of the proceeding against the appellant. The invoice of M/s. Neepaz Steels (India) in favour of M/s. Ranjeev Alloys Limited refers to receipt of goods by M/s. Neepaz Steels (India) from TISCO, Mandigobindgarh under invoice Nos. 501 and 502 dated 9-8-2000. Invoice No. 501 refers to transport of goods by vehicle No. PUV 1796 in the relevant column.
17. As the relevant particular in the two sets of invoices tally in all respects, it is established that what was sold and allegedly transported from the stock-yard of TISCO, Mandigobindgarh under Excise Invoice Nos. 500 and 501 dated 9-8-2000 to M/s. Neepaz Steels (India), was in turn allegedly sold and transported to appellant M/s. Ranjeev Alloys Limited respectively under Invoice Nos. 67 and 66 dated 10-8-2000. If the alleged transport by vehicle no. PB 23 6412 which was a tractor or vehicle no. PUV 1796 which was a scooter, was fictitious, there could not be another sale and transport of the goods by M/s. Neepaz Steels (India) to the appellant and therefore, it would follow, the credit taken by the appellant on the basis of fictitious transportation of goods was fraudulent. There can be no two opinions that there must be actual receipt of the goods to entitle the manufacturer to take Modvat/Cenvat credit.
18.?Learned Counsel for the appellant at one stage tried to convince us that in the invoice of M/s. Neepaz Steels (India) the vehicle was described as truck and the number was mentioned as PAT 8124 and PB-10F 9755 respectively. The submission is totally misplaced. From a bare glance it is evident that the words Truck No are printed portion of the column in the invoice against which PAT 8124 or PB-10F/9755 was typed. And so far as the vehicle numbers are concerned, the transport from M/s. Neepaz Steels (India) to M/s. Ranjeev Alloys Limited was shown to be by another set of vehicles, but if the transport of goods in question from TISCO, Mandigobindgarh to M/s. Neepaz Steels (India) was not possible and the same was fictitious, as found above, it is clear that there could not be further transport of goods to appellant M/s. Ranjeev Alloys Limited. At the cost of repetition it may be said that unless there is actual receipt of the inputs/raw material, the manufacturer cannot take Modvat/Cenvat credit.
19.?It was submitted on behalf of the appellant that wrong description of particulars of the vehicle per se cannot be at ground to deny Modvat/Cenvat credit. It was also submitted that the mis-description could be result of clerical error. It was also submitted that the onus lay on the Department to prove that the goods were not actually received by the appellant. It was submitted that there is no evidence to suggest that the goods were diverted to any other destination and used elsewhere. These submissions do not cut any ice. We are of the view that onus initially lies on the Department but having established that the vehicles in question were incapable of transporting large quantities of iron and steel items - as admitted by all concerned, the movement of goods from Mandigobindgarh stock-yard of TISCO being fake and fictitious, - an allegation duly made known to appellant by the show cause notice read with Annexure-I thereto, the onus shifted onto the appellant to prove that the goods were duly received by them and used in the manufacture of iron and steel items. We are satisfied that the appellant utterly failed to discharge the onus. It is not in dispute that they took Cenvat credit of Rs. 55062/- on the basis of the alleged receipt of two consignments carrying contained duty liability of the said amount. Having failed to establish that they actually received the goods, they were clearly not entitled to take any Cenvat credit and therefore the impugned order directing them to reverse credit and confirming demand of Rs. 55062/- does not suffer from any illegality to warrant any interference. We are fortified by decision of the Division Bench in Viraj Alloys Limited (supra) and the following observations therefrom may be usefully quoted.
We observe that the department raised a presumption against the appellants by establishing that the inputs could not have been received in the factory in vehicles mentioned in the invoices. This allegation itself is based on the reports by RTOs, who certified that the registration numbers belonged to vehicles other than goods transport vehicles with 10 tons capacity. It is for the appellants thereupon establish that indeed such vehicles as mentioned in the invoice did bring the input to their factory. They have failed to do so. Their gate register was burnt in some fire accident and the bills/vouchers indicating payment of cash to the drivers/owners of the trucks were also, destroyed in fire. One could understand that bills/vouchers, getting destroyed in fire or lost. But one cannot understand as to what has happened to the ledgers and registers to which the transactions done in cash are ultimately transferred. It is not the appellants case that even such ledger and registers were destroyed in the fire. The fact that the inputs in the form of ship-breaking scrap was entered in RG 23A, Part-I does not establish that the goods were received in the factory. At least two truck owners have categorically denied having transported any goods to the appellant. The plea that the truck owners indulged in mal-practices and run them with false numbers is farfetched. In the appellants case 99 vehicles were such that they could not have carried the goods from the supplier to the buyer, some of the numbers belonged to auto-rickshaws, motorcycles and some numbers did not exist. The fact that out of the list of vehicles which were shown to be tankers, according to RTOs Office, two vehicles turned out to be regular carriers of goods does not establish that the case of other vehicles also it was true. An exception cannot make a rule. Once it is established that the input has not been transported in the vehicle mentioned in the invoice it is but reasonable to say that the inputs were not received in the factory as required under Rule 57G.
20.?Learned Counsel for the appellant also took the plea that the extended period of limitation was not applicable. He submitted that the appellant was a bona fide buyer and should not suffer for the mistake of others. We find no merit in this submission either. The entire transaction was vitiated by fraud coupled with misstatement and suppression of facts with intent to evade payment of duty and, therefore, extended period was rightly applied. The act being fraudulent, imposition of penalty also does not suffer from any illegality, particularly, in view of the systematic manner in which the fraud was committed; however, taking a lenient view, the penalty is reduced to Rs. 10,000/-.
21.?In the result, subject to the modification in penalty, as mentioned above, the appeal is dismissed.
32. This decision of the tribunal in the case of Ranjeev Alloys Ltd. Vs. CCE, Chandigarh was maintained by Honble High Court of Punjab & Haryana reported at 2009 (247) ELT 27 (P&H).
33. We have further examined the matter. From in depth and extensive investigation it has clearly emerged that:
(a) Shri Anoop Bidshnoi, M.D. responsible for creating many Companies with the sole motive to avail illegal cenvat credit on the strength of paper transactions
(b) On the basis of various verifications as referred in previous paragraphs, huge shortage 2620 MT of M.S. Slab was detected clearly indicating only paper transactions. Otherwise huge quantity of M./S. Slabs would not have been found short.
(c) Investigations relating to M/s UAL, M/s Belveder Engg. Ltd, M/s Bharat Industrial Structural constructions Ltd revealed that these unit did not have any infrastructure to produce the goods thus indicating only paper transactions with the sole motive to pass on illegal cenvat credit.
(d) Statement of Shri P.S. Bedi director of M/s UAL that UAL was working on the directions of Shri Bishnoi even Shri Bishnoi was not officially on Board of the Company. He has no knowledge of sale of M.S. Slabs by M/s UAL to M/s BISCO, Pithamput and invoices issued about sale were only book entries. Mr. Bedi admitted that even sometime, he used to sign blank papers on the directions of Shri Bishnoi.
(e) Visit on 19.6.1996 to the unit namely M/s BISCO Hissar revealed that unit did not have infrastructure. Amazingly, these was no electricity connection. Even this unit did not have Bank Account.
(f) Shri Ranjan Stephen Director of M/s Belvedere Engineering Ltd, Hissar deposed in his statement that unit did not have any facility to manufacture the goods in question.
(g) Goods purported to have been sent from M/s Belveder Engineering Ltd, Hissar on invoices, were found not issued or found fake.
(h) Detailed investigations conducted in respect of transportation of goods/materials have clearly indicated that such transportation were fake. All truck owners denied having undertaken any transportation.
(i) Further investigations relating to transportations revealed a intriguing result as indicated in para 53 of the adjudication order that so called vehicles were LUNA, Trailer HGV, Bajaj Super, HGV TPV, TVS Champ, delivery Van (Bajaj), Bajaj Cub, TDV open, TDV Tanker were actually ficitious number as no such transportation actually took place.
(j) M/s Anoop Bishnoi of Bisco in his statement dated 2.7.1996 clearly admitted the modus operands adopted by the company to secure ineligibile credit.
34. From the above investigations it clearly comes out that M/s BISCO has manipulated and created fictitious units so that invoices could be procured without movement of goods and subsequently credit is availed.
35. It is also observed that confessional statements by not one but by almost everyone including M.D., Directors, DGM clearly proved non-production, issue of fake invoices and subsequent non-transportation confirming scam of paper transactions. This proves clear intent to defraud revenue.
36. Learned Counsels pleas are not based on any principles which can come to the rescue as clear fraud is committed. Appellant have acted with malafide and attempted to defraud the revenue. All actions have been committed with pre-meditated design. Overwhelming evidence with confessional statements and fraudulent creation of units with the sole purpose to commit thievery of Revenue demolish any argument of the counsel. Actually fabrication of documents clearly point toward their attempt to enrich themselves at the cost of Revenue.
37. From the findings of Divisional Bench of Honble Tribunal Mumbai in the case of Viraj Alloys Ltd Vs. CCE Thane-II reported in 2004 (177) ELT 892 (Tri.- Mumbai) in para 11 and Divisional Bench of Honble Tribunal in the case of Ranjeev Alloys Limited Vs. CCE Chandigarh 2009 (236) ELT 124 (Tri.-Delhi_) at para 9 to para 26 as extracted in previous paragraphs it has ome out that entire transactions get vitiated by fraud coupled with confessional statements, mis-statements, fabrication or records, paper transactions with intent to pass on illegal cenvat credit.
38. It is observed that Honble High Court of Madras in the case of M/s Alagappa Cement (P) Ltd Vs. CCE Chennai 2010 (260) ELT 511 (Madras) and Honble High Court of Himachal Pradesh in the case of CCE Vs. International Cylinders Pvt. Ltd 2010 (255) ELT 68 (H.P.) has come up with the findings that there could be no unjust enrichment at the cost of revenue.
39. From the above, a clear fraud with intention to fabricate documents with the sole motive to illegally avail and pass on the Cenvat credit get manifested and get proved with detailed investigations by the revenue.
40. In view of above we find no infirmity in the findings recorded by adjudicating authority. Accordingly we uphold the findings in respect of appellants. Appeals are dismissed.
(Pronounced in the open court on 09.5.2014)
(MAMMOHAN SINGH) (ARCHANA WADHWA)
MEMBER (TECHNICAL) (MEMBER (JUDICIAL)
K. Gupta