Custom, Excise & Service Tax Tribunal
Universal Strips vs Commissioner Of Central Excise, ... on 4 March, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. APPEAL No. E/1193/10-Mum (Arising out of Order-in-Appeal No. SB/32/M-IV/10 dated 29.3.2010 passed by Commissioner of Central Excise (Appeals), Mumbai-I) For approval and signature: Honble Mr. S.S. Garg, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Universal Strips Appellant Vs. Commissioner of Central Excise, Mumbai-I Respondent Appearance: Shri S.P. Tavkar, Consultant, for appellant Shri Sanjay Hasija, Superintendent (AR), for respondent CORAM: Honble Mr. S.S. Garg, Member (Judicial) Date of Hearing: 6.11.2015 Date of Decision: 4.3.2016 ORDER NO
This appeal is directed against the order-in-appeal dated 29.3.2010 passed by the Commissioner (Appeals), wherein he upheld the order of the adjudicating authority.
2. Briefly the facts of the case are that the appellant is engaged in the manufacture of copper strips, copper bus bars, copper rods, copper wire and copper wire bars classifiable under Chapter 74 of the Central Excise Tariff Act, 1985 and is availing cenvat credit. The appellant procured their inputs copper wire bars from M/s. Annapurna Impex Pvt. Ltd., Ludhiana, vide four invoices and availed cenvat credit amounting to Rs.7,31,301/-. The details of the four invoices are given herein below:-
Invoice No. & date Assessable value Amount of total credit availed (Rs) Credit availed at RG23A entry No. & date 666/5.2.2004 14,13,042/-
2,26,087/-
36/9.2.2004 808/17.3.2004 9,64,720/-
1,54,355/-
37/25.3.2004 73/22.6.2004 1,17,120/-
1,78,739/-
40/26.6.2004 313/25.3.2005 10,54,656/-
1,72,120/-
49/28.3.2005 The appellant has disclosed the cenvat credit availed and duty paid on the finished goods in their ER-1 returns filed for the month of February 2004, March 2004, June 2004 and March 2005. It is further alleged that a search was carried out by DGCEI at the factory of the said supplier M/s. Annapurna Impex Pvt. Ltd. and a panchnama dated 18.5.2005 and statement dated 18.5.2005 of one Shri Purshottam Lal, attendant of M/s. Annapurna Impex Pvt. Ltd., was recorded under Section 14 of the Central Excise Act, 1944 during the search of the premises of M/s. Annapurna Impex Pvt. Ltd. Thereafter the records of the appellant were audited by EA-2000 Special Audit Group and during the audit, it was pointed out to the appellant that they have availed the cenvat credit of Rs.7,31,301/- wrongly against four fake/invalid invoices as stated above and directed the appellant to reverse the same along with interest of Rs.1,42,764/-. The Revenue took into possession certain records vide panchnama dated 2.3.2006 and recorded statement dated 2.3.2006 of Shri Dinesh P. Jain, partner of the appellant, under Section 14 of the Central Excise Act, wherein he has stated that the appellant received copper wire bars under the above invoices and availed the cenvat credit. He has also given the length, weight and thickness of the copper wire bars in his statement and subsequently the appellant debited the cenvat credit of Rs.7,31,301/- in RG23A part II under protest and informed the Superintendent vide letter dated 4.3.2006 stating that they have reversed the cenvat credit in order to co-operate with the department with a right to claim the refund after verification of the said documents from the department. Thereafter the appellant filed a refund application vide their letter dated 28.2.2007 with the jurisdictional Assistant Commissioner, seeking refund of Rs.7,31,301/- under Section 11B of the Central Excise Act, but the Assistant Commissioner vide his letter dated 15.5.2007 returned the refund application as premature on the ground that investigation in the matter was still under progress. Thereafter a show cause notice dated 1.10.2007 was issued by the Additional Commissioner to the appellant mainly on the ground that the cenvat credit availed by the appellant on inputs received from M/s. Annapurna Impex Pvt. Ltd. without verifying the facts that such inputs could not have been manufactured by them as M/s. Annapurna Impex Pvt. Ltd. did not have the facility to manufacture copper ingots/copper wire rods in their Ludhiana factory and the appellant has fraudulently availed the cenvat credit. Thereafter the Joint Commissioner (Adj.) vide order dated 30.3.2009 confirmed the demand along with interest and penalty and appropriated the amount deposited by the appellant. Aggrieved by the same, the appellant filed appeal before the Commissioner (Appeals) who upheld the order of the adjudicating authority. Now the appellant has filed the present appeal.
3. The learned counsel for the appellant submitted that the impugned order is bad in law and is against the principles of natural justice as the respondent has failed to give due consideration to the various contentions raised by the appellant and has also ignored the documentary evidence submitted by the appellant and, therefore, the impugned order is liable to be set aside. He further submitted that the learned Commissioner (Appeals) has ignored the fact that M/s. Annapurna Impex Pvt. Ltd. had supplied the inputs prior to the date of panchnama dated 18.5.2005 and were having machinery installed in their factory for inputs supplied to the appellant. The panchnama was drawn and the statement of Shri Purshottam Lal was recorded on 18.5.2005 whereas the inputs were dispatched much prior to that date vide invoices No.666/5.2.2004, 808/17.3.2004, 73/22.6.2004 and 313/25.3.2005. He further submitted that the proceedings of panchnama and the statement dated 18.5.2005 could have only prospective effect and could not be made applicable with retrospective effect. He further submitted that the entire case of the department is based only on the panchnama and statement dated 18.5.2005 of the attendant of the manufacturer, but the respondent has conveniently overlooked the affidavit dated 2.3.2006 of none other than the Director of M/s. Annapurna Impex Pvt. Ltd. solemnly affirming that the machinery was installed in the factory. The Director had appealed to the department to send a team of officers at any time to verify the factual position but the department never bothered to verify the same and in the absence of the verification, there is no material with the respondent to come to the conclusion that M/s. Annapurna Impex Pvt. Ltd. did not have the facility to manufacturer copper bars/copper rods. The learned counsel also submitted that the onus to prove this allegation was squarely on the department which the department failed to discharge and, therefore, the entire investigation in this case was faulty. He cited Section 101 of the Indian Evidence Act to support his contention that the onus to prove the allegation was on the department which the department failed to discharge.
3.1 The learned counsel further submitted that the respondent has ignored the verification report of the Inter-State Excise and Taxation Department submitted by the appellant, which contained the name of the supplier M/s. Annapurna Impex Pvt. Ltd. in their factory address and invoice numbers of M/s. Annapurna Impex Pvt. Ltd. and the name of the transporter with relevant details of the consignment and the value of the goods, which is matching with the invoices of M/s. Annapurna Impex Pvt. Ltd. Besides these, lorry receipts and cheques under which the payments were made to M/s. Annapurna Impex Pvt. Ltd. for supplier of the impugned material were also supplied to the department as a corroborative evidence, but the department conveniently ignored the same.
3.2 He further submitted that it is a sound principle of jurisprudence that the onus of proof can be shifted only when one party effectively discharges its own burden. In the instant case, had the department discharged its burden of proof by verifying the fact of non-availability of machinery to manufacture copper rods in the factory of M/s. Annapurna Impex Pvt. Ltd., the burden would have definitely shifted upon the appellant to prove that such machinery existed.
3.3 The learned counsel also submitted that it is strange that the respondent chooses to call the panchnama and the statement of the attendant as documentary evidence while ignoring the sworn affidavit of the Director of M/s. Annapurna Impex Pvt. Ltd. asking the department to physically verify the existence of availability of the machinery to manufacture copper rods, which was bypassed by the respondent.
3.4 He further submitted that the appellant was even denied cross-examination of the witnesses by the adjudicating authority.
3.5 He also submitted that as per the CBEC Circular dated 28.5.1986, the appellant had taken sufficient precautions envisaged in Rule 7(4) of the Cenvat Credit Rules, 2002 / Rule 9(5) of the Cenvat Credit Rules, 2004 which among other things includes filing of the monthly statement of details of the impugned credit availed in the month of February 2004, March 2004, June 2004 and March 2005. These statements provided all the particulars and the name of the supplier of inputs, description of inputs supplied, its tariff hearing, quantity, value, duty involved, suppliers central excise registration number etc. He also submitted that when the appellant had already declared to the department all the particulars of availment of cenvat credit, then in that case it was expected from the department to carry out necessary verification as per the instructions contained in the above cited circular. Moreover, the appellant has also maintained registers/records as per para 3.10 of Chapter 5 of CBECs Central Excise Manual, thereby complied with the provisions of Rule 9(5) of the Cenvat Credit Rules, 2004.
3.6 The learned counsel also submitted that the entire demand is time barred as there is no attempt whatsoever on the part of the appellant not to disclose the correct information. All the information relating to the impugned credit was placed before the department at the time of filing the relevant ER-1 returns. When the details of the invoices on the basis of which the impugned credit availed were provided to the department from time to time, it cannot be said that there was any wilful attempt on the part of the appellant to suppress or misdeclare any information from the department. Similarly, he has challenged imposition of penalty under Section 11AC on the ground that there is no fraud, collusion or any wilful misstatement or suppression of facts with intent to evade payment of duty and, therefore, the respondent cannot invoke Section 11AC and moreover, the respondent has nowhere observed that the wrong availment and utilization of credit was on account of fraud or collusion etc. with intent to evade duty.
4. On the other hand, the learned AR has submitted that the onus to prove that the appellant has rightly availed the cenvat credit against the four invoices involved in this case is on the appellant, which they failed to discharge. He further submitted that M/s. Annapurna Impex Pvt. Ltd. was engaged in the business of issuing fake invoices and a case was registered against M/s. Annapurna Impex Pvt. Ltd. by DGCEI and the same was adjudicated by the department and he placed the copy of the said decision of the adjudicating authority on record. He also relied upon the following decisions:-
(i) Annapurna Impex Pvt. Ltd. vs. CCE, Ludhiana reported in 2014 (311) ELT 291 (Tri.-Del.);
(ii) Shree Labdhi Prints vs. CCE, Surat reported in 2014 (308) ELT 178 (Tri.-Ahmd.);
(iii) Akik Dyechem Pvt. Ltd. vs. CCE, Ahmedabad reported in 2013 (290) ELT 273 (Tri.-Ahmd.);
(iv) CCE vs. Shri Ram Aluminium Pvt. Ltd. reported in 2009 (242) ELT 202 (Bom.);
(v) Chivas International vs. CCE, New Delhi reported in 2006 (197) ELT 270 (Tri.-Del.);
(vi) Shri Ram Aluminium Pvt. Ltd. vs. CCE, Daman reported in 2006 (199) ELT 331 (Tri.-Mumbai).
Therefore, the learned AR reiterated the findings of the Commissioner (Appeals).
5. I have heard the learned counsel for both sides and perused the materials on record.
6. The only point involved in this case is that whether the four invoices in question on the basis of which the appellant has availed the cenvat credit are genuine invoices or fake invoices. According to the department, these are fake invoices whereas according to the appellant, these are valid invoices containing all the particulars viz. name of the supplier of inputs, description of inputs supplied, its tariff heading, quantity, value, the duty involved, suppliers central excise registration number etc. and thereafter the partner of the appellant made in the statement under Section 14 specifically stating that they have received the material against these invoices and the appellant has also produced the verification report from the State Excise Department, which shows the movement of the goods from Punjab to Maharashtra and has also placed on record the lorry receipts which also contained the relevant particulars regarding the identity of the goods.
6.1 Further I find that in this case the investigation by the department is totally faulty and defective. The department did not bother to verify the particulars contained in the invoices submitted by the appellant by visiting the premises of M/s. Annapurna Impex Pvt. Ltd. The department has conveniently recorded the statement of one office attendant Shri Purshottam Lal, to make the basis of the entire case and further, the statement of Shri Purshottam Lal was recorded on 18.5.2005 whereas the invoices involved in this case pertain to much earlier period. It is also pertinent to note that the payment to M/s. Annapurna Impex Pvt. Ltd. was also made by cheques by the appellant. As per the Evidence Act, the onus to prove that the invoices on which the appellant has taken cenvat credit are fake and invalid, was on the department and the department failed to prove the same by bringing on record any credible and convincing evidence. So much so, the appellant was not even allowed to cross-examine the office attendant whose statement was the only basis for framing the appellant. Though the respondent has placed on record copy of the decision against M/s. Annapurna Impex Pvt. Ltd., but in the said decision, nothing has come against the present appellant. Therefore, in my considered opinion, the respondent has failed to establish the charge against the appellant. Besides this, I am of the considered opinion that the entire demand in this case is also time barred. The impugned show cause notice was issued on 17.10.2007 pertaining to the invoices dated 5.2.2004, 17.3.2004, 22.6.2004 and 25.3.2005, which is beyond the normal period of one year. Further, when the appellant has been filing the relevant ER-1 returns regularly and disclosing the details of these invoices on the basis of which the credit was availed, then it cannot be said that the appellant has wilfully suppressed the material fact from the department so as to invoke the extended period of limitation. Therefore, in my view, the entire demand is time barred. Further, the question of penalty does not arise when the demand is time barred.
7. Keeping in view the facts and circumstances, I hold that the impugned order is not sustainable in law and the same is set aside by allowing the appeal with consequential relief, if any.
(Pronounced in Court on 4.3.2011) (S.S. Garg) Member (Judicial) tvu 1 12 E/1193/10