Customs, Excise and Gold Tribunal - Mumbai
Aia Engg. Pvt. Ltd. vs Commissioner Of Central Excise on 13 January, 2006
ORDER Archana Wadhwa, Member (J)
1. All the appeals are being disposed of by a common order as they are directed against the same impugned order passed by Commissioner of Central Excise Ahmedabad vide which he has denied benefit of Modvat credit to the manufacturing units M/s. AIA Engineering Pvt. Ltd., M/s. Reclamation Welding Pvt. Ltd. and M/s. Bhagwati Autocast Ltd. on the ground that they have availed Modvat credit on the basis of invoices issued by the dealers without actually receiving the inputs. In addition personal penalties have been imposed upon the said manufacturers along with imposition of personal penalties of varying amounts on other appellants in terms of the provisions of Rule 26 of Central Excise Rules, 2001 and 2002.
2. We have heard Shri R.S. Dinkar the Id. Advocate appearing for the appellant and Shri U.H. Jadhav the Id. JDR appearing for the Revenue.
3. As a consequence of intelligence report received by the officers, factory premises of M/s. New Siddhi Vinayak Re-rolling Mills were put to search on 6-8-2003. As a result of verification and investigation, it was revealed that the said factory was closed w.e.f. June, 2001 for non-payment of electricity bills and their entire manufacturing activities were stopped. The Central Excise Registration was also surrendered by them in the month of February, 2003. Shri Milan Agarwal of the said unit admitted that they were not into manufacture but during the period June, 2001 to February, 2003 were only doing trading activities of Iron and Steel scrap, though they did not held any dealers registration. It was further revealed that some registered dealers by the name of M/s. Scor Taur Im-pex and M/s. A.K. Trading corporation, were in collusion with the said manufacturers were selling waste and scrap, without actually supplying the inputs and thus facilitating their buyers to avail the Modvat credit.
4. During the course of further investigation, statements of various persons were recorded. As a result, it transpired that though M/s. NSVRRM was not generating any waste and scrap, they were issuing cenvatable invoices to various dealers, who in turn issued these invoices, to actual manufacturers located in that area. The above activity was with an intention to pass on the non-available Cenvat credit to the manufacturers without actual supply of the waste and scrap. It was also noticed that during the course of investigation that the vehicle numbers shown in the invoices issued by M/s. New Siddhi Vinayak Re-roiling Mills for transportation of the goods to their dealers was the numbers of the passenger bus, car, tanker, taxi, auto rickshaw, mini truck etc. which were incapable of transporting the use materials.
5. Inasmuch as, the waste and scrap was received by the three manufacturing units, statements of their representatives were also recorded and it was found that the invoices received by them from various dealers was without actual movement of the goods. The scrap actually obtained by these manufacturing units was Bazar scrap whereas the invoices showed them otherwise. It was also revealed that manufacturing units were aware of the facts that M/s. New Siddhi Vinayak Re-rolling Mills had fraudulently issued cenvatable invoices to their dealers, who in turn had issued the invoices to the said manufacturing unit. In fact M/s. AIA Engineering Pvt. Ltd. and M/s. Reclamation Welding Pvt. Ltd. debited the amount of Modvat credit availed by them on the basis of the said invoices, during the course of investigation itself. All such statements have been dealt in detail by the adjudicating authority in the impugned order.
6. Based upon the above, proceedings were initiated against all the appellants for denial of credit and for imposition of penalties. The proceedings culminated into the impugned order passed by Commissioner.
7. Ld. Advocate appearing for the manufacturing units had drawn our attention to the Tribunal decision in the case of R.S. Industries v. Commissioner of Central Excise, New Delhi-1 holding that the fraudulent credit taken by input supplier who sold the same to assessee on invoices carrying duty payment particulars, cannot be denied to the assessee especially since receipt of inputs by them was not disputed. However, we feel that the said decision is not applicable to the facts of the instant case, inasmuch as, the allegations against the manufacturing unit is that the credit has been availed without actually receiving any duty paid inputs in their factory. The above fact has come on record from the investigations conducted by the Revenue and the admitted position that the factory of M/s, New Siddhi Vinayak Ltd. was closed during the relevant period in question and no manufacturing activity was being undertaken had their premises and no waste and scrap was originated at their end. The above stand by the Revenue is further corroborated by the statement of the dealers as also by the statements of the representatives of the manufacturing unit who admitted to the allegations and also reversed the credit during the course of investigation.
8. Similarly, we find that the appellants reliance on the Tribunal's decision in the case of 1DL Chemicals Ltd. v. Commissioner of Central Excise, Bhubaneshwar is not correct inasmuch as in that case it was held that extended limitation of five years is not applicable since there is no collusion between the supplier of the inputs and the appellants. In the present case the manufacturers being in the knowledge of the fact that the credit was traveling only on the basis of the invoice without actual travel of the inputs is established from the statements of the various persons recorded during the course of investigation. As such, we do not find any force in the appellants plea of the demand being barred by limitation. It is further seen that in the said decision of IDL Chemicals Ltd. The Tribunal observed that the credit taken on the basis of the fake and non genuine duty paying documents is required to be reversed. Accordingly, we are of the opinion that the reversal of credit by M/s. AIA Engineering Pvt. Ltd. and Bhagwati Autocast Ltd. is justified. However, we find that the said reversal was made by the appellants during the course of investigation itself except by M/s. Bhagwati Autocast Ltd. Taking all these facts into account, we reduce the penalties on the said three appellants to Rs. 2 lakhs each (Rupees two lakhs only).
9. As regards the penalties imposed upon the other appellants under the provisions of Rule 26, we find that the appellants reliance on the Tribunal decision in the case of Ruby Impex v. Commissioner of Central Excise 2004 (173) E.L.T. 161 (Tri. - Del.) as appropriate. In terms of the said decision, provisions of Rule 209A cannot be invoked for imposition of penalty, when the dealers have not physically dealt with the goods and there are no goods involved which are liable to confiscation. Ld. Advocate contends that the provisions of Rule 26 of Central Excise Rules, 2002 are pan materia to Rule 209A of the erstwhile Central Excise Rules. Admittedly, there are no goods involved, which are liable to confiscation inasmuch as the Revenue's own case is that the no inputs were supplied under the cover of the invoices. In the said scenario, the above decision of the Tribunal is fully applicable. We, accordingly set aside the penalties imposed upon the other appellants under the provisions of Rule 26 of Central Excise Rules. All the appeals disposed of in above terms.
(Pronounced in Court on 13-1-2006)