Custom, Excise & Service Tax Tribunal
M/S. Vipras Castings Ltd vs Commissioner Of Central Excise, Raigad on 19 February, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/382, 383/09 [Arising out of Order-in- Original No. 42/SLM(42) COMMR/RGD/08-09 dtd. 5/1/2009 passed by the Commissioner of Central Excise & Customs, Raigad] For approval and signature: Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, 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?
=======================================================
M/s. Vipras Castings Ltd.
Shri. Ashish Goradia
:
Appellants
VS
Commissioner of Central Excise, Raigad
Respondent
Appearance
Shri. Prashant Patankar, Advocate for the Appellants
Shri. V.K. Agarwal, Addl. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. P.K. Jain, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 19/2/2015
Date of decision /2015
ORDER NO.
Per : Ramesh Nair
These two appeals are directed against order-in-original No. 42/SLM/(42) COMMR/RGD/08-09 dated 05/1/2009 passed by Commissioner of Central Excise, Raigad, wherein Commissioner has passed following order;
1. I disallow the Cenvat Credit amounting to Rs. 1,29,51,948/-(Rupees One Crore twenty nine lakhs fifty one thousand nine hundred forty eight only)(the details of which are mentioned in Annexure-I, II& III and summarized in AnnexureB) and order its recovery from M/s. Vipras Castings Ltd under Rule 12 of the Cenvat Credit Rules, 2002 read with proviso to Section 11A(1) of the Central Excise Act, 1944.
2. I order that of the total quantity of 3826.790 MT, details of which are given as per the Annexure I, II & III attached to the notice, are liable for confiscation, since the Cenvat credit in respect of the said goods have been taken without taking reasonable steps to ensure that appropriate Central Excise duty on the said inputs has been paid, as indicated in the documents viz. Central Excise invoices accompanying the inputs. Accordingly, I impose a penalty of Rs. 1,29,51,948/- (Rupees One Crore twenty nine lakhs fifty one thousand nine hundred forty eight only) on M/s. Vipras Castings Ltd. Under Rule 13(1) of the Cenvat Credit Rules, 2002.
3. I order charging of interest at the appropriate rate on the Cenvat Credit amount of Rs. 1,29,51,948/-(Rupees One Crore twenty nine lakhs fifty one thousand nine hundred forty eight only) fraudulently availed by M/s. Vipras Casting Ltd. Under Section 11AB of the Central Excise Act, 1944.
4. I impose a penalty of Rs. 1,29,51,948/-(Rupees One Crore twenty nine lakhs fifty one thousand nine hundred forty eight only) on the M/s. Vipras Castings Ltd. Under Section 11AC of the Central Excise Act, 1944 read with Rule 13(2) of the Cenvat credit Rules, 2002.
5. I also impose a penalty of Rs. 10,00,000/-(Rs. Ten Lakhs Only) on Shri. Ashish H. Goradia, Director, M/s. Vipras Castings Ltd. (the Noticee referred to at Sr. NO. 2 of the show cause notice) under Rule 173Q read with Rule 57 I of the Central Excise Rules, 1944 Rule 13 of the Cenvat Credit Rules, 2002.
6. I impose a penalty of Rs. 1,29,51,948/-(Rupees One Crore twenty nine lakhs fifty one thousand nine hundred forty eight only) on M/s. Simandhar Steel Movers India Pvt. Ltd. Mumbai(the Noticee referred to at Sr. NO. 3 of the show cause notice) under Rule 26 of the Central Excise (NO. 2) Rules, 2001.
7. I impose penalty of Rs. 10,00,000/- (Rs. Ten Lakhs only) ON Shri. Hitesh Shah, Director of M/s. Simandhar Steel Movers India Pvt. Ltd. Mumbai(The Noticee referred to at Sr. NOs. 4 of the show cause notice) under Rule 26 of the Central Excise(No.2). Rules, 2001.
2. The fact of the case is that appellant M/s. Vipras Casting Ltd.(M/s. VCL) engaged in the manufacture of Alloy Steel and Mild Steel(M.S) products falling under Chapter heading No. 7206.00 and Runner and Riser falling under Chapter heading 7204.00. M/s. VCL manufacturing said finished goods from the scrap route, which they purportedly procure from various scrap dealers or from manufacturers generating such scrap and availing Cenvat facility under Cenvat Credit Rules, 2004. Intelligence was received by Headquarters (Preventive) wing of the Raigad Commissionarate that M/s. VCL are indulging in availment of fraudulent Cenvat credit on invoices issued by certain registered Central Excise dealers/manufacturers without actually receiving the material covered therein. In this connection team of the preventive officer visited factory of M/s. VCL on 31/1/2004 and caused verification in the matter. Documents relevant for the inquiry were submitted by M/s. VCL under letter dated 31/1/2004 in pursuance of summons issued to them. Inquiry at the factory premises and scrutiny of documents revealed that the appellant, inter alia have availed Cenvat Credit on iron and steel ship break scrap, purportedly procured by them, from a Central Excise registered dealer namely, M/s. Simandhar Steel Movers(India) Pvt. Ltd. Mulund, Mumbai falling under the jurisdiction of the Central Excise, Mumbai-III, Commissionarate. The modus operandi in brief is that various ship breakers of Bhavnagar and Alang, Gujarat issued manufacturers Central Excise invoices to M/s. SSMIPL in respect of ship breaking scrap and inturn M/s. SSMIPL shown sale and issued registered dealer invoices to the appellant, on such invoices appellant has availed Cenvat Credit. During investigation it was also revealed that M/s. SSMIPL against ship breakers duty paid invoices issued multiple set of parallel Cenvat Invoices bearing same serial number simultaneously to various manufacturer and dealers. Due to the above manipulation jurisdictional Central Excise office issued show cause notice No. V/PI/30-29/MDN/01/265 dated 19/1/2004 to M/s. SSMIPL, Mulund proposing the suspension of their Central Excise Registration and in the adjudication registration of M/s. SSMIPL vide order-in-original No. 38/2003-04/AC/Mulund dated 25/3/2004 has been suspended. The said order was also upheld by the CESTAT in its order No. A/577&578/WZB/05/C1 dated 18/5/2005 and the same has attained finality. In further investigation to ascertain whether appellant M/s. VCL has actually received the goods mentioned in invoices issued by M/s. SSMIPL to M/s. VCL, the Department Investigated the matter with concerned sale tax check post, verified the vehicle registration number in the invoices with Road Transport Authority and also with ship breakers who were shown as manufacturer supplier in the same invoices on which M/s. VCL has availed the Cenvat Credit. In the investigation three ship breaker namely M/s. Ajay Alloy Cast Pvt. Ltd. Alang, M/s. RK Steel & Alloys, Pipavav and M/s. Baldev ship breakers Ltd. Alang against annexure D, Cenvat Verification form to the Superintendent of Central Excise, incharge of the respective suppliers/ ship breakers in Alang & Bhavnagar verified and reported that ship breaker namely M/s. Ajay Alloy Cast Pvt. Ltd. Alang, M/s. RK Steel & Alloys, Pipavav and M/s. Baldev ship breakers Ltd. Alang were not in existence during the period when the Central Excise invoices were supposed to have been issued by them to M/s. SSMIPL and moreover no RT-12 returns were submitted to their jurisdictional range office, this shows that invoices issued during that period by these three companies are bogus invoices and the goods mentioned in such invoices did not suffer applicable Central Excise duty. Physical stock verification in the godown of M/s. SSMIPL conducted on 11/11/2003, it revealed that the book stock was showing 1350 MT as against physical stock of only 9 MT. This shows there is huge shortage of physical stock and it indicates that M/s. SSMIPL had not been receiving any stock from ship breaker at Alang and Bhavnagar and engaged in the paper transaction only in order to pass fraudulent Cenvat Credit. The inquiry officers in their inquires regarding transportation of the impugned ship break scrap from Alang Bhavnagar to Bhivandi and Bhivandi to various destination of actual user including the present appellant M/s. VCL found that goods leaving state of Gujarat and coming into State of Maharashtra are neither on payment of Central Sales Tax or against C form issued by the recipient/buyer of the goods located in Maharashtra. In this connection officers visited Gujarat Maharashtra border on the Bombay-Ahmedabad Highway and gathered all the transport vehicles entering Maharashtra from Gujarat into Mumbai/Bhivandi destination have to pass through Sales Tax Check Post and R.T.O. check post, both at Bhilad(Gujarat) before entering Maharashtra state. In the verification of Sales Tax Check post record it was gathered that particulars of the consignments passing through the said check post are recorded. The said verification revealed that particulars of all the vehicles with consignments loads, passing through the said check post are maintained date wise in electronic form at the Sales tax Check post. Scrutiny of the said computerised vehicle movement records revealed that not a single consignment of ship break iron and steel scrap consigned by M/s. SSMIPL had passed through the said check post which indicated that none of the consignment said to have been dispatched by the ship breakers at Alang/Bhavnagar, Gujarat to M/s. SSMIPL as per the Central Excise invoices were never dispatched to Mulund or Bhiwandi and from further inquiry with all concerned regulatory agencies it was substantiated that not a single consignment purportedly purchased by M/s. SSMIPL has crossed over the border of Gujarat State into state of Maharashtra during period 2001-01, 2001-02, 2002-03, 2003-04. The statement of aforesaid three ship breakers were recorded wherein it was stated that goods cleared by them were plates of various thickness obtained by ship breaking. On further inquiry Shri. Rubal Kapoorchand Bansal, Director of Bansal Ship Breakers, Bhavnagar in his statement clarified that the plates obtained by ship breaking are not melting scrap and said plates are generally used for structural use and any other application similar to it and that due to its heavy density and cost it would not be used for melting; that a person who is interested in purchase of melting scrap would not purchase plates at the cost at which they sell their products. Various other ship breakers were enquired and the representatives in the statement recorded under Section 14, also reported that goods cleared by them were plates of various thickness obtained by ship breaking which is generally used for structural purpose and not for melting. They also clarified that these plates are sold at much higher rate than that for melting scrap sold by them. The representatives of various ship breakers categorically submitted that goods in question is not meant for melting purpose. All these depositions lead to the conclusion that (a) the goods, in question, were not meant for melting purpose (b) since Form 45A was supposed to be issued by the ship break supplier, it indicates that no C form issued by the buyer(M/s. SSMIPL) based in Maharashtra.(c) as no CST was paid at the Bhilad Check post in respect of any of the Central Excise invoices of any of the said ship breakers it indicates consigned on paper to M/s. SSMIPL were not actually transported into Maharashtra nor received by the said dealer so as to be eligible to avail the Cenvat Credit of the Central Excise duty and subsequently pass on the same (d) As claimed by the said respective representatives of ship breakers, it is not financially viable to use the goods cleared by them for melting purpose due to higher value thereof as compared to melting scrap. Investigation further proceeds to verify correctness of vehicle registration number mentioned in the Central Excise invoices issued by ship breakers at Alang/Bhavnagar to ascertain whether such vehicles were used for transportation of the goods from Alang/Bhavnagar to Bhivandi i.e. from ship breakers premises to the godown of the said dealer. In this context, details were asked from respective RTOs in respect of randomly selected Central Excise invoices of said ship breakers. As per the information of the RTOs, the vehicle mentioned in the ship breaker/manufacturer invoices issued to M/s. SSMIPL were tanker, motor cycle, tourist car etc. which are not capable of transporting the ship breaking scraps. Inquiry was conducted at the owners of vehicle to find out whether vehicle shown in the invoices were used for transporting M.S. scrap Alang to Bhivandi on relevant dates. In that inquiry it was revealed by the owner of the vehicle that his vehicle is tractor-Trailor and used for his agriculture and he was not aware about any M/s. SSMIPL Mumbai. One of the vehicle owner informed that during his ownership his vehicle did not transport any goods to Mumbai. One, Shri. Mohsin Abdul A. Bimla, owner of Truck No. GJ 17 T 9751 stated in his statement that said truck was not utilized for transportation of iron and steel scrap and during the said period his truck was flying in the M.P. States. Another Shri. P.G. Desai owner of Truck No. GJ 17 X 2151 informed that goods loaded and lifted by him through transport commission agent at Alang were delivered to Indore (not to Mumbai). In further investigation regarding veracity of transport vehicles purportedly utilized as mentioned in the Central Excise invoices issued by M/s. SSMIPL, investigating officer on inquiry from various other vehicle owner it was found that the vehicle are oil tanker, garbage transport vehicle, one of the owner has denied that the M.S. Scrap was transported for M/s. SSMIPL. Inquiry was carried out with the transporters also wherein whereabouts of the transporters was also not known as 256 summons issued to the transporters were returned undelivered. From above investigation of the transport vehicles it was found that goods have not been transported from Alang/Bhavanagar to Bhivandi/Mumbai. Director of M/s. SSMIPL summoned to produce details of transporters or the brokers/dalal utilised by them and involved in the transportation of the ship break scrap purportedly purchased by them from various Bhavnagar/alang based ship break scrap supplier were not able to provide the same. M/s. SSMIPL could not produce a single documents or person, involved in the transactions pertaining to ship break Iron and Steel scrap received/stored and subsequently cleared from its declared godown. During the course of investigation the department filed a case under Section 174 of IPC for non-compliance of various summons, against Hitesh Shah, the Director of M/s. SSMIPL in C.M.M. Court Mumbai, despite issuance of court summons and search warrant the same could not be executed as Hitesh Shah was absconding alongwith his family. Then court issued Proclamation of absconder against Hitesh Shah on 20/12/2005 which was published by way of advertisements in local news papers but Hitesh Shah failed to respond till date. Similar investigation was carried out in respect of other buyers of M/s. SSMIPL and against cases of fraudulent Cenvat credit of Rs. 10,62,90,504/- by show cause notice dated 31/3/2006 proposing for revocation of its Central Excise dealership registration against M/s. SSMIPL and its sister concern M/s. Simandar Enterprises was initiated. Investigating agency in addition to the verification from sale tax check post of Bhilad also carried out verification from entry point from Songadh and it was found that no vehicle carrying iron and steel scrap from Bhilad and consigned to the M/s. SSMIPL had passed through the said check post. On the basis of further scrutiny of the documents it was seen that the Serial number of invoices issued by M/s. SSMIPL to M/s. VCL and also other manufacturer buyer are same which reveals that M/s. SSMIPL were issuing parallel invoices. Copies of RG23D register of M/s. SSMIPL was also verified and found that details relating to consignee/buyer, the duty debit entry number and page number particulars on the Central Excise invoices issued by M/s. SSMIPL to M/s VCL and thus altogether different. In the statement of Shri. Ashish Goradia, Technical Director of M/s. Vipras Castings Ltd. was recorded on 12/7/2004. He submitted that they have never placed purchase order giving its specific quality requirement to its vendor that the scrap of specific requirement are like CRCA Scrap, turning scrap, heavy scrap graded scrap etc. On being asked whether they have ever placed purchase order for ship breaking scrap, he stated that wherever such orders have been placed and available with them the same shall be submitted. However, subsequently they failed to submit even a single such instance of having placed a purchase order for ship breaking scrap. He also stated that it was not possible for them to check the antecedents of duty paid nature of goods in each and every case where inputs received and invoices are received by the dealer of such inputs and as such there was no safeguard prescribed in respect of duty paid inputs vis a vis duty paying documents supporting the same. On being further asked whether iron and steel scrap purchased from M/s. SSMIPL were ship break scrap, Shri. Ashish Goradia stated that they only order iron and steel scrap and have never made any specific contracts for ship break scrap and hence it did not matter which type of scrap was actually sent and received, whether ship breaking/ plant breaking etc. Shri Goradia further admitted that though they have dealt with M/s. SSMIPL/ M/s. Simandar Steel Enterprises but he could not name any person of the said vendor with whom they transacted. The Central Excise Superintendent of Alang/Gujarat vide Letter F. No. AR-I/SBY-ALANG/SIMANDHAR/2003-04 dated 8/6/2004 submitted details of all Central Excise invoices issued in respect of clearance of excisable goods(Ship break scrap) as shown in the relevant monthly RT-12/ER-1 returns filed by the concern units under reference M/s. R.K. Steel & Alloyes Industries, Pipavav; M/s. Baldev Ship Breakers, Alang and M/s. Ajay Alloys Cast Pvt. Ltd. The officers further submitted as per that their verification report M/s. R.K. Steel & Alloyes Industries has not made any clearance after April, 2000. M/s. Baldev Ship Breakers, Alang effected last clearance of goods during month of August, 2000. Thereafter Gujarat Maritime Board, Alang has taken possession of their plot on 26/9/2001 and allotted plot to M/s. Sachdeva Steel Products. M/s. Ajay Alloys Cast Pvt. Ltd. has made last clearance of goods during the month of Aug 2000 thereafter from September, 2000 to March, 2003 they have not filed returns. Gujarat Maritime Board, Alang has taken possession of their plot on 27/12/2001. Above report shows that no clearance was made by these three ship breaker after April 2000, August 2000 and Aug 2000 respectively. In the statement of Common director/partner of aforesaid firm stated that they have not sold/cleared any goods to M/s. SSMIPL during the month of June 2002 against Central Excise invoices referred in Annexure D verification form. Shri. Kadarbhai K. Pirwani further stated that neither any excisable goods in the form of heavy melting ship break scrap has been generated/manufactured and cleared from his said firms nor any Central Excise duty thereon for such fictitious clearances has been paid on the Central excise invoices purportedly issued by these three units in respect of any of the sale invoices mentioned in the Annexure D verification form under reference. He stated that since plot No. 65 and 84- C were taken by Gujarat Maritime Board authority, the question of manufacture and clearance of goods from the said premises/units does not arise. It was alleged that since no sale was made to M/s. Simandar Steel Enterprises by Gujarat based Ship breaking firms, the Cenvat credit passed on such fake invoices is also not admissible to the appellant M/s. VCL. This shows that by availing fraudulent Cenvat Credit M/s. VCL appeared to have carried out its manufacturing activity by consuming Bazar, Commercial Scavenger scrap on which no Cenvat credit was available as it has not suffered any Central Excise duty. From the verification of the vehicle from the RTO, transporter, vehicle owners it was gathered either vehicles are not capable of transporting the goods as it is other than trucks or vehicle has never transported the scrap to the dealer or in some of the cases the vehicle owner are not traceable, that shows that transport vehicle shown in the invoices are also not genuine. Regarding the discrepancies found in transport vehicles, Shri. Goradia, Director of M/s. VCL could not reply satisfactorily, he had no cogent explanation in this regard. Thus regarding evidence colleted related to non-transportation of goods the same could not be refuted by the director of VCL which gives strength to the charge of fraudulent nature of paper credit availed by the appellant M/s. VCL against Central Excise invoices issued by M/s. SSMIPL. From the above facts it is revealed that since purchase of M/s. SSMIPL mulund from the ship break supplier based in Alang/Bhavnagar have been established to be fraudulent and fake, the subsequent sale and passing on Cenvat Credit on the strength of this bogus invoices by M/s. Simandhar Steel Enterprises to M/s. VCL also consequently fake and fraudulent. As regard purchases made by M/s. VCL from M/s. Manohar Manek Alloys(P) who is registered dealer. Investigation revealed that goods sold by M/s. Manohar Manek Alloys(P) was purchased from M/s. SSMIPL and investigation as discussed above revealed that all the purchase made by M/s. SSMIPL are bogus purchases and subsequent sale also fictitious and only on paper to pass on fraudulent Cenvat Credit. In view of the above investigation it was alleged in the show cause notice that the total quantity of 3826.790 MT on which M/s. VCL has availed Cenvat Credit amounting to Rs. 1,29,51,948/- is fraudulent. The show cause notice culminated into adjudication order wherein charges made in the show cause notice have been confirmed after consideration of submissions of the appellant. Aggrieved by the said order the appellant M/s. VCL (formally known as M/s. Goradia Special Steel Ltd.) and Shri. Ashish Goradia are before us.
3. Shri. Prashant Patankar, Ld. Consultant for the appellant made following submissions.
The appellant received goods covered by the subject invoices which acknowledged by the impugned order but question if the goods received were not the same duty paid goods covered by subject invoices or were substituted as per the observations in the impugned order. The appellant acquiring Scavenger scrap from various unregistered dealers without actually receiving goods covered by the subject invoices. This charge of substitution of goods by scavenger scrap is presumptuous and unsubstantiated. For the sake of argument if the goods received by appellant were substituted, they had no reason to know about plausible substitution by the supplier dealer. They had purchased scrap on free delivery basis and were therefore not concerned with the transportation of the goods. They have submitted compilation of subject invoices on sample basis listed in annexure I, II and III of show cause notice alongwith related weighment slips and goods inward cum inspection report for each of the given invoices. Invoices in annexure I and II related to the purchase from M/s. Minion Steels (unregistered broker) who supplied the goods purchased from second stage dealer M/s. SSMIPL during the year 2002-03 and 2003-04 respectively. Respective invoices from second stage dealer M/s. SSMIPL shows M/s. Minion Steels has buyer and the appellant as consignee in the invoices, in annexure III related to purchase from M/s. Manohar Manek Alloys(P) of Second stage dealer who in turn had purchased it from M/s. SSMIPL, the first stage dealer during year 2002-03 and 2003-04. In effect the appellant have purchased the subject goods from M/s. Minion Steels from M/s. Manohar Manek Alloys(P) and received from M/s. SSMIPL on commercial invoices from M/s. Minion Steels and M/s. Manohar Manek Alloys(P) specified that supply was made on free delivery basis; that the appellant have made payment through banking channel and have placed ledger extracted record, the appellant also placed record for that they paid substantial amount of duty through PLA during the relevant period; that without receipt of the goods covered by the subject invoices they could not have manufactured finished goods requiring them to pay substantial amount of duty. Moreover if the appellants were indulged Cenvat manipulation as alleged in the show cause notice they would not require to pay high amount of duty through PLA; that they are bonafide purchaser of the scrap under proper duty paid documents; appellant received goods in their factory and used the said scrap in manufacture of finished goods which they cleared on payment of duty. It was submitted that presumed that supplier played mischief by sending scavenger scrap for the duty paid scrap there is no evidence whatsoever that the appellant played any active role in the process. Show cause notice does not lead to any evidence indicating knowledge on the part of the appellant about alleged fraud. The allegations primarily emerged from the statement of couple of transporters, however the appellant were not offered any opportunity to cross-examination of those transporters. Moreover show cause notice/impugned order does not establish whether these transporters were concerned with any vehicle which delivered the subject goods to the appellant. Appellant also referred the query from the Honble bench regarding classification of the subject goods as ship breaking scrap under head 7230 under Central Excise Tariff Act, in this contest the appellant submits that they purchasedscrap as described under subject invoices and were not responsible for classification of the subject goods. Moreover it is settled principle that the classification could not be question at receiver end. Appellant also submits that they unload the scrap received in the factory with magnetic lifting device therefore do not care for the nature of scrap which essentially melting scrap. Ld. Counsel relied on various case laws as referred below:
(a) RS Industries Vs. CCE, New Delhi-I[2003(153) ELT 114(Tri. Del)]
(b) CCE, New Delhi Vs. RS. Industries [2008(228) ELT 347(Del)]
(c) Haryana Steel Alloys Vs. CCE, Delhi [2002(148) ELT 377 (Tri. Del)]
(d) S.K. Foils Ltd. Vs. CCE, Rohtak [2015(315) ELT 258 (Tri Del.)]
(e) CCE Aurangabad Vs. M/s. R.L. Steels Pvt. Ltd.[Appeal NO. E/1166/09-MUM, Order No. A/317/11/SMB/C-IV]
(f) Bhairav Exports Vs. CCE, Mumbai[2007-TIOL-160-CESTAT-Mum]
(g) CCE, Chandigarh Vs. Sadashiv Castings (P) Ltd. [2005(187) ELT 381 (Tri-Del)]
(h) Genesis Vs. CCE, Mumbai II[2004(176) ELT 496(Tri-mum)]
(i) Basant Rubber Factory Vs. CCE, Mumbai II[2005(185) ELT 280 (Tri-Mum)]
(j) CCE, Mumbai III Vs. Basant Rubber Factory Ltd. [2011(264) ELT 16(BOM)]
(k) Raj Petroleum Products Vs. CCE, Mumbai-1[2005(192) ELT 806(Tri-Mum)]
(l) Lloyds Metal Engineering Ltd. Vs. CCE, Mumbai[2004(175) ELT 132 (Tri-Mum)]
(m) Shree Krishna Rolling Mills Vs. CCE, Jaipur[2001(129) ELT 722(Tri-Del)]
(n) CCE, JAIPUR Vs. Ashok Leyland Ltd. [2001(127)ELT 804(Tri-Del)]
(o) Century Laminating Vs. CCE, Meerut[2001(127) ELT 268(Tri-Del)]
(p) SRF Ltd. Vs. CCE, Indore[2000(124) ELT 448(Tri)]
(q) Shabana Steels Pvt Ltd Vs. CCE, Rajkot[2004(177) ELT 332(Tri-Del)]
(r) Uni Deritend Ltd. Vs CCE, Nagpur[2011(272) ELT 280(Tri-Mum)] In the rejoinder to the submission, Ld Counsel placed heavy reliance on case of M/s. Bhagwati Steelcast Ltd. Vs. CCE, Nashik reported in [2013(293) ELT 417(Tri- Mumbai) appellant submits that the said decision does not help Revenues case for the following reasons:
(i) in the Bhagwati Steelcast Ltd. stated that invoices did not accompany goods but were delivered separately indicating thereby that only invoices moved and not the goods. In the present case no such situation exist and no inculpatory statement has been recorded from the appellants employees.
(ii) In the said case General Manager of the assessee has confessed to the irregularities which were corroborated by the director of the assessee unlike present case.
(iii) In the said case assessee did not produce even single copy of goods received note or consignees copy and they have also not maintained gate register/material inward register which could show receipt of the material. In the present case appellant have placed on record a compilation of invoices, its corresponding GRNs and weighment slips.
(iv) In the said case upon difference of opinion the matter was referred to third member. His findings infact support the case of the appellant. In para 74.4 of the said decision it is observed as under.
The evidence that can be said laid by the assessee, are the GRNs or the consignees copy of the transport document. In the case before me, one of the appellants have been able to produce even single coy of the GRN or consignee copy even in respect of a single case. Further, it is on record that the appellants have not maintained any gate register or materials inward register which would show the entry of the transport vehicle in the factory premises of the receiver and receipt of the materials in the factory premises In the present case the appellant have maintained material inward register and placed on record compilation of invoices supported by GRNs and weighment slips. Also in the said case Honble Lordship observed that large number of invoices(306 invoices) were found to be mentioning non transport vehicles(Refer para 74.6). This not in case in the present matter. In the present case show cause notice seeks to deny Cenvat in respect off 273( 53+207+13) invoices and RTO verification report in 18 of show cause notice refers to 17 vehicles, which cannot be considered to be large number. Moreover the said RTO report as proceeded on the basis of three wrong vehicle number as detailed in para N.7 of the Ground of Appeal. Ld. Counsel on behalf of the appellant submits that unlike in the present case, in the case of Bhagwati Steelcast Ltd. the argument on limitation was turned down for the reason that the assessee could not produce single GRN/Consignee copy of the transport documents or any corroborative evidence in the form of Material Inward Register. Also there was admission by the General Manager of the assessee corroborated by its Director about the alleged irregularity therefore in the present case extended period is not invokable and demand is time bar. It was further submitted that the impugned order has imposed penalty on the appellant under Section 11 AC of the Central Excise Act, read with Rule 13 of the Cenvat Credit Rules, 2002 besides a separate penalty of equal amount under Rule 13(1) of CCR, 2002. In effect for the demand of Cenvat Credit of Rs. 1,29,51,948/- the impugned order has imposed double the amount of it(2xRs. 1,29,51,948/-) as penalty; that the appellant has taken reasonable steps as contemplated in explanation to Rule 7(2) of the Cenvat Credit Rules, 2002. There is no doubt about the identity and address of M/s. SSMIPL issuing the invoices on the basis of which the appellant availed Cenvat credit. Therefore appellant submits that the penalty under rule 13(1) is not attracted in the present case. It was further submitted that penalty under Section Rule 13(1) as distinct from penalty under Section 11AC in reference to Rule 13(2) are not attracted simultaneously. Rule 13(1) as well as Rule 13(2) both refer to the penalty for Cenvat Credit taken wrongly. Rule 13(2) comes into play in cases where ingredients requiring invocation of extended period exists. Thus, the penalty under rule 13(2) is mandatory in nature in the light of provisions of section 11AC of the Act. The Rule 13(1) on the other hand prescribes only the maximum limit of the penalty and leaves discretion with the adjudicating authority for the quantum of penalty. The provisions are analogous to the provisions of rule 25 of Central Excise Rules, 2002 and section 11AC of the Central Excise Act, 1944. As penalty under Rule 25 is not imposed/imposable when the penalty is imposed under Section 11AC, the penalty under Rule 13(1) and Section 11AC should not be imposed simultaneously. The Harmonious reading of two provisions[Rule 13(1) of CCR, 2002 and Section 11AC read with 13(2)] would imply that the penalty should not be imposed under both the provisions simultaneously. Even otherwise there no justification for the high quantum of penalty under rule 13(1) when penalty under Section 11AC. Regarding the penalty on Director, Shri. Ashish Goradia it was submitted that there is no evidence about his knowledge or involvement in the alleged irregularity. Neither he nor any of the employees or suppliers have admitted his role in the alleged irregularity. The Ld. Counsel for the appellant relied upon following judgments.
(a) B.R. Sule Vs. Union of India[1990(48) ELT 343(Bom)]
(b) Man Industries (I) ltd. Vs. CCE, Indore [2004(175) ELT 435(T)]
(c) Siddharth Agarwal Vs. CCE, Delhi-I[2003(160) ELT 195(T)]
(d) Kamdeep Marketing Vs. CCE, Indore[2004(165) ELT 206 (T)]
(e) Ramnath Singh Vs. CCE, Delhi-I[2003(151)ELT 451(T)]
(f) Cipta Coated Steels Ltd. Vs. CCE, Aurangabad[1999(113) ELT 490(T)]
(g) Godrej Boyce & Mfg. Co Ltd. Vs. CCE, Mumbai[2002(148) ELT 161(T)].
4. On the other hand, Shri. V.K. Agrawal, Ld. Addl. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. Ld. A.R. made further following submissions:
(a) This is a case where appellant have availed Cenvat Credit fraudulently on the first stage dealers invoices of M/s. SSMIPL. During investigation and the in the O-IN-O, the adjudicating authority held that the dealer M/s. SSMIPL has indulged in to mere paper transaction and issued Cenvat Credit invoices without actually dealing in material. This is confirmed from the following aspects:-
(i) On verification of RG-23 D register of the dealer, it was found that the duty debit entry no. and page no. particulars as per the RG-23 D register were altogether different from the duty debit entry no. and page no. as indicated on the Central Excise invoices issued by the said dealer on which Cenvat Credit has been availed by the appellant which proves that the invoices of M/s. SSMIPL on which the appellant has taken Cenvat Credit are bogus.
(b) The said dealer has not received the goods against which he issued the Cenvat Credit invoices. It is amply proved from the following:
(i) The Sales Tax Authority have reported by their letter dated 12/2/2004, 25/5/2004 and 12/1/2005 that not a single transaction of vehicles movement carrying iron and steel scrap pertaining to M/s. SSMIPL has been recorded in any of the check post of the Gujarat State entering Maharashtra during the said period.
(ii) The transporters have confirmed in their statement that they have never transported any such goods either to the dealer or the appellant.
(iii) The vehicle number mentioned in the invoices issued by the ship breakers in the name of the first stage dealer i.e. M/s. SSMIPL are found to be motor cycle, delivery van, non existing vehicles etc. which are incapable of transporting such scrap declared in the Central Excise invoices.
(iv) Non-production of form 45-A duly sealed by the Sales Tax Authorities while crossing Gujarat border for taking concessional rate of Sales Tax for scrap claimed to have been purchased at Alang by the said dealer against C form.
(c) The three parties namely, M/s. R.K. Steels Alloys Industries Pvt. Ltd., M/s. Ajay Alloys Pvt Ltd. And M/s. Baldev Ship breaker from whom the said dealer M/s. SSMIPL have alleged to have purchased ship breaking scrap, have confirmed in their statement that they have stopped the manufacturing activities since very long time and they have not filed any ER-1 RETURN since April 2001, which clearly proves that the dealer has not purchased any goods from these units and issued only cenvatable invoices without receiving any goods for passing on the Cenvat Credit.
(d) Director of the appellant company, Shri. Ashish Goradia could not produce any purchase orders of ship breaking scrap either from the said dealer or directly from the ship breaking units located at Alang, although during investigation, he stated that he will produce the purchase order.
(e) Regarding cost of Transportation of the such large huge quantity of iron and steel ship breaking scraps, the supplier of the goods have claimed that the transportation cost was borne by M/s SSMIPL whereas, Director of the appellant company maintained goods covered under the said invoices were free delivery. Since cost of transportation is neither borne by the manufacturer nor by the appellant, it clearly proves that there was no movement /transportation of the any goods.
(f) As per provisions of Rule 7(2) Rule 7(3) and Rule 7(4) of Cenvat Credit Rules, 2001, and Cenvat Credit Rules, 2002 to avail Cenvat Credit, the party must have received the inputs in the factory and it should have suffered the duty and the said inputs shall be used in the manufacture of final products. It further stipulated that the burden of proof regarding admissibility of Cenvat credit shall lie upon the manufacturer taking such credit, Sub Rule 2 of Rule 7 of Cenvat Credit Rules, further stipulated that the manufacturer taking Cenvat Credit on inputs or capital goods shall take reasonable steps to ensure that the inputs or capital goods on which he has taken credit are the goods on which appropriate duty of excise has been paid. In the present case, the appellant could not produce any document to prove that the goods on which they have taken the Cenvat credit have been received by them in their factory. They could not produce even a single Lorry Receipt or proof of payment of transportation charges which clearly proves that they have failed to discharge the burden of proof as contemplated in the Cenvat credit Rules.
(g) Regarding denial of Cenvat credit in respect of Central Excise Invoices issued by Second stage dealer M/s. Manohar Manek Alloys Pvt. Ltd. this is to submit that the said Second stage dealer has shown to have purchased, these goods from M/s. SSMIPL, the first stage dealer and who in turn supplied only invoices without any goods. It become amply clear that when the first stage dealer m/s. SSMIPL have not purchased/received any goods against the invoices issued by them to the second stage dealer M/s. Manohar Manek Alloys Pvt. Ltd. who have also supplied only the invoices without any goods. Since, they have not received any goods and enabled the appellant to avail Cenvat Credit only on the invoices without receiving any goods which is not allowed as per the Cenvat Credit rules.
(h) This is to submit that identical issue has been decided by this Honble Tribunal in the case of M/s. Bhagwati Steelcast Ltd. Vs. CCE, Nashik(Supra) In the said case also, the same first stage dealer i.e. M/s . SSMIPL has supplied invoices of ship breaker to M/s. Bhagwati steel casting pvt. Ltd. without supplying any goods and after having considered the various submissions made by the appellant, it was held that the appellant were not eligible to avail cenvat credit and the extended period of time was also upheld. Since the fact in the present case are similar to the facts in the above mentioned case, the said judgment of this Tribunal is squarely applicable in the present case.
(j) Ld. A.R. also rely upon this Tribunal judgment in the case of M/s. Steel India Company Vs. CCE, Pune-III 2014(320) ELT 184 (Tri-Mum).
(k) Regarding the penalty on the notice Director of the Company Shri. Ashish Goradia, he submits that since he was the part of the conspiracy to defraud the Government and avail Cenvat Credit without receiving any goods in the fraudulent manner and he was actively involved in the whole scheme, the penalty has been rightly imposed on him.
(l) Regarding other appeals, this is to submits that penalty has rightly been imposed on all of them since they were part and parcel of the conspiracy and actively abated the appellant to take Cenvat Credit for he was not eligible.
In view of the above submissions, Ld. A.R. prayed that the appeals of the appellant be dismissed and order of the original adjudicating authority be upheld.
5. We have gone through the records, considered overall oral and written submissions made by both sides.
6. The issue to be decided is whether the Cenvatable invoices issued by M/s. SSMIPL o the appellant are genuine or fake/fraudulent invoices. The investigation in the independent case undertaken against M/s. SSMIPL and all the persons who have availed the Cenvat credit on the invoices of M/s. SSMIPL revealed that M/s. SSMIPL have been issuing invoices without receipt of the material from the so called Gujarat based ship breaking firm. Even it was revealed that no duty has been paid under the invoices received by M/s. SSMIPL and the Cenvat Credit was passed on the basis of such fake invoices. Accordingly, it was unearthed that M/s. SSMIPL have fraudulently passed on Cenvat Credit to the tune of Rs. 10,62,90,504/- to various manufacturers including the present appellant M/s. Vipras Casting Ltd. In view of the detailed investigation and after issuance of show cause notice bearing NO. V-PI/30-29/MDN/01/265 dated 19/1/2004 to M/s. SSMIPL proposing suspension of Central Excise dealer registration on the allegation that the M/s. SSMIPL issuing the fake invoices and fraudulently passing on the Cenvat credit to the various manufacturers. The said show cause notice has been adjudicated under order in original NO. 38/2013-04/AC/ Mulund dated 25/3/2004 wherein suspension of dealer ship registration of M/s. SSMIPL, Mulund has been confirmed. M/s. SSMIPL moved appeal before CESTAT, CESTAT vide order No. A/577 & 578/ WZB/05/C-1 dated 18/5/2005 upholding order-in-original rejected the appeal, accordingly the same has attained finality. Consequently another show cause notice F. No. V-PI/12-7/Gr. D/7/2003/PT.VI/3013 dated 31/3/2006 was issued to M/s. SSMIPL for revocation of its Central Excise dealership registration for issuance of fake invoices, passing thereby fraudulent Cenvat Credit totaling Rs. 10,62,90,504/- alongwith 86 co-noticees where present appellant M/s. VCL is one of the noticee. From the above proceedings, it is clear that M/s. SSMIPL is indulged in passing of fraudulent Cenvat credit. The investigation revealed that M/s. SSMIPL being first stage dealer under the Central Excise Act, 1944 shown procurement of traders goods from a manufacturer as per its statutory sale purchase record maintained in form RG23 D register. The procurement seems to have been made from various ship break manufacturer based in Alang/Bhavanagar in Gujarat. However we find from the investigation carried out which clearly established that M/s. SSMIPL had indulged some paper transaction of procuring forging Cenvat credit bearing Central Excise invoices with the sole intention to pass on such paper credit to various end users to defraud the Revenue. On the verification by the investigating officers glaring evidences were gathered from which it was found that from RG23D register of M/s. SSMIPL with corresponding input invoices submitted by the appellant it was found that the duty debit entry number, page number and particulars etc. as per the RG23 D register of M/s. SSMIPL were altogether different from the particulars like duty debit entry number and page number etc. indicated on the input Central excise invoices issued by M/s. SSMIPL to M/s. VCL in the records maintained by the M/s. VCL which clearly substantiates that sale invoices of M/s. SSMIPL found on the records of M/s. VCL were bogus and parallel as corresponding Central Excise duty consignee particulars shown in the dealers RG23D register do not match with details declared in the dealer Central Excise invoices. As regard the procedure for the passing on Cenvat credit of duty paid on the input the dealer is under obligation to maintain correct and true records under RG23D register wherein entry of duty paid invoices is made and entry of sale invoices are also made on face to face so that it can be ascertained that whatever quantity of input purchased by the dealer the same has been sold and actual duty paid under the purchase invoices of the manufacturer has been passed on. This records show clear picture that the credit to the extent duty was paid by the manufacturer is only passed on. In the present case when the details of invoices issued by M/s. SSMIPL to M/s. VCL are not matching with inward invoices and it was found as parallel invoices this itself shows that invoices issued by the M/s. SSMIPL to M/s. VCL are nothing but bogus invoices and these invoices were not issued against duty paid invoices. Further investigation clearly revealed that sale tax authority under their official report informed that not a single transaction of vehicle movement carrying iron and steel scrap consigned to M/s. SSMIPL has been recorded and there is no record of sales tax payment in the check post of the Gujarat state entering into Maharashtra during the entire period form 2000-01, 2001-02, 2002-03 and 2003-04. We find that it is impossible that interstate sales transaction can be made without recording transaction at the check post between two states and without payment of sales tax. We also find that the appellant could not give any explanation on the report submitted by sale tax authority therefore same attained finality and this report clearly shows that no transaction has been taken place from Gujarat to Maharashtra therefore subsequent passing of Cenvat credit of transaction which has never taken place is out of question. In the various statement of the transporters they have denied having transported the goods of the dealer from Bhivandi to end user i.e. M/s. VCL. In the investigation, it was clearly found that invoices issued by ship breakers in the name of the dealer M/s. SSMIPL the vehicle numbers found to be motor cycle, light delivery vans etc. which are incapable of transporting scrap declared in the Central Excise invoices. In the several cases registration numbers borne by the vehicles in which goods were shown to have been transported were reported to be not in existence by concerned RTO authority. In some of the invoices issued by the said dealer to end users vehicles found to be tanker, which are incapable of transporting iron steel scrap. The investigation at the Gujarat based ship breaker firm clearly revealed that during the period when the manufacturers invoices were issued by the ship breaking firms, either were not existing or the same were closed down therefore there is no question that non-existence ship breakers have cleared the goods on payment of duty. The investigation report on the ship breaker clearly revealed that no duty paid clearances were made by them even partner of the ship breaking firm also categorically stated that during the period they have not made any transactions with M/s. SSMIPL. Since this part of the investigation not under dispute then the subsequent issuance of Cenvatable invoices by M/s. SSMIPL and passing on credit on such invoices is nothing but pre-planned fraud only on paper this clearly shows neither there is movement of goods nor there is payment of excise duty. One of the glaring evidence is that on physical verification of stock at M/s. SSMIPL it was found that as compared to the stock of 1350 MT shown in the RG23 D register only 9 MT stock was found, this is very clear indication that since there was no movement of material and only transaction was on paper obviously paper can be found but material cannot be found. It is also observed that for availing concessional rate of sale tax in the course of sale purchase transactions the M/s SSMIPL was supposed to produce form 45A duly sealed by sales tax authority while crossing Gujarat border against C form. However not a single such either form 45 A or C form has been produced. This further re-enforced the charge of the Revenue that no single vehicle has crossed the Gujarat border into Maharashtra. Investigation also revealed that in the statement, the Director of the appellant company, Shri. Ashish Goradia could not give any plausible explanation regarding the mismatch of the transport detail. He only stated that they normally purchase the scrap on free delivery basis and it is not possible to recollect under which vehicle they have received the scrap. We are of the view that once the concerned Government authority i.e. RTO has given report wherein it was found that vehicle number mentioned on the invoices are not capable of being transporting the goods in question, purchaser if could not give any contrary evidence or he did not discard the evidence provided by RTO with appropriate counter evidences the RTO report has to be taken as correct and the lower authority has rightly used as evidence to hold that there was no transportation of the inputs either from Gujarat to dealer M/s. SSMIPL nor from said dealer to the appellant. It was found that despite all the opportunity given to the director of the appellant by way of recording the statement he could not give a single contrary material/evidence to demolish the evidences gathered by the investigation and relied upon for confirming the demand. It was also observed that on the basis of the investigation that there is no record to show that transportation charges either paid by the dealer or by the appellant in respect of purported transportation of the input. It was found that huge transaction was shown to have been made between M/s. SSMIPL and M/s. VCL, however there was not a piece of evidence of any of the participant/parties to the transaction to have ever interacted with each other directly and is aware of the other. On this it was stated that sale transaction were conducted through broker however not single broker and their address is available and only mobile number used in interaction. Moreover, no brokerage payment to intermediary of this transaction appears to have been made by M/s. SSMIPL, this clearly shows that such huge transactions without any interaction and without a piece of paper, except fake invoices is absolutely impossible. Appellant submitted that they ordered for iron and steel scrap and they have received the same and invoices also shown the description as iron and steel scrap and the said scrap is unloaded by way of magnetic lifter. It is observed that the appellant, according to the process of their manufacturing needs melting scrap however invoices of M/s. SSMIPL are in respect of ship breaking scrap which according to ship breakers firm they only supply plates out of ship breaking scrap which is not meant for melting. The details of manufacturer given in the invoices in respect of ship breaking scrap and classification of the ship breaking scrap shown in the manufacturers details. It is beyond the imagination that plates are used for melting purpose therefore it is very clear that appellant even as per the statement of their director used melting scrap which cannot be ship breaking scrap which clearly established that the invoices received by the appellant is in respect of ship breaking scrap and the scrap used by the appellant in their manufacturing process is other than ship breaking scrap. This established that whatever scrap the appellant used but they have neither received ship breaking scrap nor used the same in the manufacture of their final product. Therefore Cenvat credit of duty shown to have been paid on the ship breaking scrap can not be allowed to the appellant. Regarding the submission of the appellant that they have taken reasonable steps inasmuch as they received the scrap alongiwth the invoices and no discrepancy was found in the invoices therefore no reason to doubt the transaction and invoices issued, we observed above that invoices were issued in respect of ship breaking scrap which is not melting scrap however they received melting scrap therefore it is apparent from the invoices itself that the invoices were made for ship breaking scrap and the material which was said to have been received by the appellant is not ship breaking scrap. In this case appellant should have pointed out to the dealer that material shown in the invoices are not the same which was supplied physically. It is not convincing that the documents issued for a particular items and material received is some different item and still appellant maintained that they have taken reasonable steps. The conduct of the appellant clearly shows that they are in collusion with dealer for availment of the fraudulent Cenvat Credit. As per the Cenvat Credit Rules, assessee cannot be permitted to avail the Cenvat Credit of a item covered under duty paying document which he has not received but received some other item. This fact that the scrap received and used by the manufacture appellant is not the same for which Cenvatable invoices were issued which however appellant could not dispute. The submission of the appellant in this regard that they have ordered for iron and steel scrap and they received the same alongwith duty paying documents therefore there is no wrong doing on their part and if at all any manipulation is done it is by the dealer, therefore they should not be made suffer for same as they have legitimately purchased the input under cover of invoices and made payment through cheque. We do not agree with this, so long admittedly material shown in the invoices were not received by the appellant, credit of such invoices cannot be allowed to the appellant. The Ld. Counsel submitted that in the impugned order, the Adjudicating Authority recorded the findings that the Appellant acquired the scavenger scrap from various unregistered dealers, this Ld. Counsel countered that this observation is presumptuous and unsubstantiated. In this regard, we observed that when it became clear that the invoices on which the cenvat credit was passed on is admittedly in respect of ship breaking scrap which is not in the nature of melting scrap and the same is not capable of being used by the melting unit, obviously the scrap which was used by the Appellant would undoubtedly is scavenger scrap. Even if it is presumably not correct, the fact that the goods covered by the cenvatable invoices were neither received nor used by the Appellant, thereafter even it is accepted the goods is received but it is different goods, the cenvat credit can not be allowed as the very same goods covered by the invoices were not received. The revenue heavily relied upon the judgment of Bhagwati Steelcast Ltd. In this case also the similar modus operandi was involved and the Cenvat invoices issuing person is same i.e. M/s. SSMIPL. Ld. Counsel tried to distinguish the said judgment mainly on the ground that in the said judgment there was finding of the Honble member that appellant in that case have not maintained gate register and material inward register and good receipt note whereas in the present case appellant have been maintaining goods receipt note, gate register and material inward register therefore ratio of the judgment in the Bhagwati Steelcast Ltd is not applicable. We have observed that there are ample of evidences such as non transportation of the goods, confirmation of sales tax authority that the goods have not been transported from Gujarat to Maharashtra and no sales tax have been paid, ship breaking firms were also not in operation during the period. RTOs confirmation regarding different nature of vehicle which are not capable of transporting the goods and various statement of transporter and vehicle owners denying the transportation of the inputs to conclusively proved that goods have neither been transported from ship breaking firm to M/s. SSMIPL nor from M/s. SSMIPL to the appellant. It is also proof from the investigation that ship breaking scrap shown in the invoices have not been received by the appellant as the same was not being used in the process of manufacture being not melting scrap. In view of these evidences merely because the appellant have maintained GRN, gate register, material inward register this cannot disprove other evidences and charges made thereupon. All these GRNs, gate register, material inward register are the documents of appellant and for preparing and maintaining these documents the appellant is free to do the same and such documents can be maintained with or without receipt of the material covered under the Cenvatable invoices in question therefore on this basis the ratio of the whole judgment cannot be made inapplicable. We are of the view that the ratio of the judgment is squarely applicable in the present case as most of the evidences are in identical nature. The appellant also contended that the investigation has been carried out not in respect of 100% invoices but only in few cases therefore entire Cenvat credit cannot be disputed on the basis of investigation of few cases. We do not agree with this submission of the appellant on the ground that it is not necessary that investigation should be done in respect of 100% transaction. The Honble Supreme Court in the case of CC, Madras & Others Vs. D. Bhoormull [1983(13) ELT 1546(SC)] has categorically held Department is not required to prove its case with mathematical precision but what is require is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. It is undisputed facts that whatever investigation /inquiries made from various authorities such as RTO, sales tax, transporters, vehicle owners and ship breaking firm all have confirmed that goods were not transported to M/s. SSMIPL and subsequently to the appellant. The appellant not in single case could demolish the evidence with their counter evidence therefore even if inquiry was not conducted for 100% transactions, out of the total transaction, in part of the transaction inquiry was made and it was proved against appellant, it is not necessary that inquiry of 100% transaction should have been made. From entire investigation it has been conclusively proved that M/s. SSMIPL was fraud company and they were exclusively operating only for passing fraudulent Cenvat Credit by issuing fake invoices therefore no doubt can be raised that in some of the cases transaction are genuine and in some of the case it is not. Therefore we are of the view that the investigation conducted in respect of whatever number of transaction are sufficient to hold that in all the cases it is a case of fraudulently passing of Cenvat credit. As regard the time bar the appellant relied upon the findings of the Bhagwati Steelcast Ltd. wherein Honble Member stated that extended period is invokable for the reason that the assessee has not maintained goods receipt note, material inward register, gate register etc whereas in the present case these records are regularly maintained by the appellant. As we have already observed that there are various evidences where from it is established that entire modus operandi was under serious fraud and we also found that merely maintenance of these records it does not disprove other evidences therefore only on the basis of these records it cannot be said that appellant have not indulged into fraud, collusion, suppression of facts etc. The appellant knowingly that they were not receiving the goods covered under the invoices i.e. ship breaking scrap availed the Cenvat credit, this clearly shows that appellant is the main person who is the part of this modus operandi of fraud therefore judgment of Bhagwati Steelcast Ltd case is not of any help of the appellant regarding the issue of time bar. It is also fact that if any genuineness in the whole transaction is there, the Director of M/s. SSMIPL would have presented himself before the investigation agency however right from the initiation of the investigation the person of M/s. SSMIPL got absconded despite courts notices and never made any presence before the investigation agency. This act of absconding of the person further reinforce the charges of fraudulent passing of the Cenvat credit and availment thereof by the appellant. In view of our above discussion we are of the view that M/s. SSMIPL have issued fake invoices without receipt and supply of any material to the appellant and accordingly passed on the fraudulent Cenvat credit to the appellant. Therefore the appellant has fraudulently taken the Cenvat credit on the invoices issued by M/s. SSMIPL. Ld. Counsel relied upon the various judgments, we have gone through judgments and found that every case of this type involved different facts therefore case of this nature based on it peculiar facts and every case has its own facts which varies from one case to another therefore on the basis of investigation and evidences found in this case, we have taken view that order passed by the Ld. Commissioner is maintainable therefore ratio of the judgments relied upon by both rivals cannot be directly applicable. In our above observations the demand for extended period is legally maintainable, penalty under Section 11AC also does not require any interference. However, we are of the view that if the penalty under Section 11AC which is equal to the Cenvat amount has been imposed, separate penalty of similar amount imposed under Section Rule 13(1) of Cenvat Credit Rules, 2002 was not warranted. Moreover penalty of Rs. 1,29,51,948/- was imposed under Rule 13(1) towards confiscation of the 3826.790 MT on which fraudulent Cenvat credit was availed. First of all, the case of the Revenue is that that Cenvat Credit to the appellant is not admissible on the ground that they have not received the input. Secondly no goods were seized and therefore confiscation of the goods not available for seizer cannot be made, on these observations, we are of the view that penalty of Rs. 1,29,51,948/- under Rule 13(1) (correct Rule 15(1)) of Cenvat Credit Rules, 2002 was wrongly imposed. Therefore, we waive the said penalty, however the demand of service tax, interest and penalty under Section 11AC are maintained. As regard penalty on the Director, since it has been conclusively established that appellant have fraudulently availed Cenvat Credit by showing bogus purchase, it is impossible that the Managing Director of the appellant company who looks after overall affairs of the company is not involved in the entire modus operandi therefore penalty imposed on the Director, Shri. Ashish Goradia is also maintained. The appeal of the M/s. Vipras Castings Limited is partly allowed in the above terms. The appeal filed by Shri. Ashish Goradia, Director of the Company is dismissed.
(Order pronounced in court on ______________) P.K. Jain Member (Technical) Ramesh Nair Member (Judicial) sk 2