TaxTMI 
TaxTMI 
2012 (10) TMI 549
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....ased on Ship Breaker's Invoices & No. of such Invoices Total No. of Invoices 1. M /s. Bhagawati Steel Cast Ltd. Rs. 80,57,834/- 368 Invoices Rs. 10,71,367/- 59 invoices Rs. 24,78,140/- 234 invoices 661 2. M/s. Bhav Shakti Steelmines Pvt. Ltd/ Rs. 16,06,272/- 166 Invoices Rs. 5,72,655/- 36 Invoices Rs. 17,79,160/- 121 Invoices 323 3. M/s. Jai Prakash Strips Ltd. Rs. 25,95,907/- 142 invoices Rs. 5,26,809/- 29 Invoices Rs. 25,62,219/- 201 Invoices 372 4. M/s. Nasik Strips Pvt. Ltd. 12,96,637/- 56 Invoices Rs. 2,21,169/- 14 Invoices Rs. 13,98,283/- 113 Invoices 183 5. M/s. Amar Ispat Pvt. Ltd. Rs. 78,32,342/- 357 Invoices Rs. 29,90,321/- 168 Invoices ------- 525 2.0 The brief facts of the case are that all the cases are having similar facts, therefore, M/s. Bhagwati Steelcast Ltd. is taken up for the sake of convenience. 2.1. The appellants herein are engaged in the manufacture of iron & steel products, namely, MS Ingots, CTD Rounds/Bars, etc. They were availing of the benefit of Cenvat Credit facility. One of the main inputs for manufacture of the finished products is melting scrap which was purported to have been purchased f....
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.... inasmuch as the investigation also recorded statements of some of the ship-breakers who had, inter-alia stated that they had sold plates of various thickness, re-rollable scraps and not melting scraps which are cheaper. The investigation also examined the aspect of transport of goods from Gujarat to Bhiwandi/Mumbai. Details of vehicles appearing on the invoices issued by the ship-breakers were received from the R.T.Os, which showed that in some of the cases, the vehicles were Motorcycle, Tanker, Car, Auto Rickshaw, Delivery Van, etc. incapable of transporting Iron & Steel scraps. The investigation also obtained statements of some of the Transporters who had purportedly transported the goods from Gujarat to M/s. Simandhar Steel Movers India Pvt. Ltd. (M/s. SSIMPL, for short). None of them had stated that they had transported the goods to M/s. SSMIPL during the relevant period. 2.8. After completion of the investigation, Show cause notices were issued to the appellants seeking to recover the Cenvat Credit under Rule 57AH of the erstwhile Central Excise Rules, 1944 and Rule 12 of the Cenvat Credit Rules, 2001/Rule 12 of the Cenvat Credit Rules, 2002 as applicable from time to time r....
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....ny record maintained by the dealer is sufficient for the purpose of passing credit to the customer. The contention of Commissioner that credit would be available only when the invoice finds mention in the RG-23D register is not correct. Undisputedly, the invoices on which credit has been availed by the appellants find mention in the register maintained in the regular course of business by M/s. Simandhar. Hence, denial of credit is not sustainable on the ground that the appellants have availed credit on the invoices issued by Simandhar which do not find mention in the RG-23D register maintained by Simandhar. Factually, the invoices issued by M/s. Simandhar and on which credit was availed by the Appellants, are not parallel in nature. 6.1 As per impugned Order-in-Original, M/s. Simandhar was issuing parallel invoices to different parties bearing same serial numbers and hence the credit is not available. 6.2 It is submitted that the invoices are not parallel in nature. It is submitted that except invoice number there is not similarity in so called parallel invoices. As an illustration, invoice number 01216 (at serial Number 157 in Annexure-D to show cause notice) issued by M/s. Sim....
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....2002 16.460 225 26.5.2002 10.945 27.405 27.530 (Page 188 of appeal memo) 28 248 11.6.2002 15.100 248 29.5.2002 12.600 27.700 27.640 Page 189 of appeal memo) 124 1680 20.1.2003 13.200 1680 17.1.2003 13.345 26.545 26.560 (page 190 of appeal memo) 133 1743 3.2.2003 13.5.00 1743 26.1.2003 14.630 28.130 27.520 (page 191 of appeal memo) 144 1765 5.2.2003 12.630 1765 27.1.2003 13.860 26.490 26.615 (page 192 of appeal memo) It is clear from the above table, which represents illustrative invoices for year 2002-2003, that M/s. Simandhar supplied scrap from its source consignments to more than one customers. But the total quantity on which credit was passed was equal to total quantity which was sourced by M/s. Simandhar from the manufacturers of scrap. Hence the allegation of so called parallel invoices is totally contradictory to factual situation. The impugned Order-in-Original is therefore liable to be set ....
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....uch as the information has been provided in one day which is humanly not possible. 7.5 The letter dated 24.5.2005 issued by Deputy Commissioner of Sales Tax (Enforcement) also cannot be relied upon against the appellants. The said letter is issued pursuant to letter dated 17.5.2004 by the Deputy Commissioner (Preventive), Thane the copy of which is not made available to the appellants. The appellants request for copy of the letter dated 17.5.2004 also went unheeded. 7.6 Had the appellants provided with copies of letter dated 24.12.2004, 11.2.2004 and 17.5.2004, the appellants would have asked for further documents and cross-examination of concerned officials to verify the tenacity of the bald statements made in their letters. 7.7 This omission to supply the documents is deliberate & not accidental or incidental. This has resulted in the violation of principles of natural justice & led the Commissioner to rely upon irrelevant evidence. 7.8 The Tribunal in Lloyds Metal Engineering Limited Vs. CCE - 2004 (175) ELT 132 (T) held that non-production of octroi receipt for transport of the consignments is not sufficient to hold that the goods were not actually transported. The octroi d....
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....dhar. This fact has been conveniently ignored by the Commissioner while passing the impugned Order-in-Original. 10.2 Suspicion howsoever grave cannot be substitute for concrete evidence. The department has to prove its case with positive evidence and not based on wild surmises and conjectures. In view of the above, the impugned Order-in-Original is not sustainable. Credit cannot be denied to the appellants when such credit was taken based on invoices issued by the dealer & transaction is genuine 11.1 It is undisputed that the appellants are bonafide buyer and consumer of the scrap. It is beyond reasonable doubt that the appellants had indeed received quantity of scrap mentioned in the impugned invoices issued by M/s.Simandhar which were used by them in the manufacture of final products. 11.2 The description given in the invoices issued by M/s. Simandhar i.e., "Iron & Steel Scrap" was generic in nature and it was not of the nature that it could arouse suspicion / doubt in the appellants' mind. 11.3 It is submitted that the appellants have taken all reasonable steps before purchasing the scrap from registered dealer. The appellants sought for and received the scrap under necessa....
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....the scrap dealers. Besides, the appellants are in the business of melting scrap and it is beyond their business perspective to enquire as to what happens with the entire lot and how the credit has been worked out by the dealer and passed on to the appellants. The appellants have taken reasonable steps contemplated in law. 13.1 Rule 173Q(1)(bb) of the erstwhile Central Excise Rules, 1944 and Rule 7(2) of Cenvat Credit Rules, 2001/2002 prescribe that the manufacturer availing credit shall be liable if such manufacturer has not taken " reasonable steps". Explanation clarifies that "reasonable steps" would mean satisfaction of the identity and address of the dealer by personal knowledge. 13.2 The identity and address of M/s.simandhar has not been disputed even in the show cause notice. Besides, the appellants had paid valuable consideration for purchasing the scrap from the dealers through Letters of Credit (in majority of cases) & cheques (in few instances) issued under normal banking channels. The reply would show that the Appellants had enclosed copies of LCs and given details of all LCs opened in favour of the Bankers of the supplier namely M/s.Simandhar. These LCs were encashed....
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.... SRF Ltd. Vs. CCE - 2000(124)ELT 448 (T) b) CCE Vs. Sadashi Casting - 2005(187)ELT 381 (T) c) CCE Vs. Genesis - 2004(176)ELT 496 (T) d) Haryana Steel Alloys Vs. CCE - 2002(148)ELT 377 (T) e) CCE Vs. Ashok Leyland Ltd. - 2001 (127)ELT 804 (T) f) Shree Rolling Mills Vs. CCE - 2001 (129) ELT 722 (T) g) Century Laminating Co. Vs.CCE - 2001 (127) ELt 268 (T) 13.9 Further, CBEC has issued Circulars with an intention to avoid misuse of modvat to the effect that credit availed by a manufacturer on the strength of dealers invoices for an amount exceeding Rs.10,000 should be cross verified by the department internally. Refer: (a) Circular No.18/86-CX.6 dated 28.5.1986 (b) Circular No.12/93-CX.8 dated 2.11.1993 (c) Circular No.33/33/94/CX.8 dated 4.5.1994 (d) F.No.B-4/7/2000-TRU dated 3.4.2000 13.10 Failure of the department to carry out cross verification cannot be used against the appellants. 13.11 The appellants have fulfilled all of their legal obligations. The law does not oblige the appe....
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....the vehicle numbers indicated in the invoices are fake is not sustainable. 15.1 Out of total demand of Rs. 1,26,07,341, demand of Rs. 10,71,267/- has been confirmed on the ground that the vehicles numbers as indicated in the dealers invoices are not genuine. 15.2 It is been alleged that vehicles appearing on the invoices under which the dealers have supplied the goods to the appellants are vehicles registered as tankers, trailers, dumpers, two-wheelers, three wheelers, etc. It is accordingly concluded that it is impossible to supply scrap in such vehicles and therefore no actual physical transportation of scrap has taken place. 15.3 It is submitted that the appellants are not aware of the fact of wrong mentioning of vehicle numbers. The appellants have received the scrap physically and that has been used by the appellants for the manufacture of their final products. The statement dated 19.4.2005 of Shri. K.D. Singh, G.M. of the appellant company also supports the stand that the scrap was actually received by the appellants in the truck. The supplier has also given a statement that they have supplied the scrap to the appellants. 15.4 It is submitted that the human-error in menti....
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....e fact of non-receipt of goods in the factory because the appellants have actually received the goods in the factory which were used by them in the manufacture of the final products. 16.3 Without prejudice to above and without prejudice to the submission that the entire demand is barred by limitation, it is submitted that some of the invoices on which credit is denied are defaced by the Superintendent of Central Excise. Therefore, demand in respect of such invoices no suppression can be alleged. 16.4 Further, proceedings and investigations against M/s.Simandhar were started in the year 2001 itself. This is apparent from the fact recorded in the show cause notice that panchnama was drawn on 23.2.2001 at the godown of the dealers premises for verifying the physical stock of the scrap. It was found by the officers on verification that there was meager quantity of scrap in the stock. This fact has been relied upon in the show cause notice to allege that there was no physical movement of scrap from Mumbai to Sinnar. It is submitted that, if the investigations were started in the year 2001 itself and the department was of the view that M/s.Simandhar is committing fraud, the department ....
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....spat pvt. Ltd. and Shri Sandeep Gar, Director and submitted that the appellants have been procuring iron and steel scraps from various manufacturers/dealers and M/s.Simandhar Steel Movers (I) Pvt. Ltd., (SSMIPL for short) was one of them and procuring the iron and steel scrap since last many years. Therefore, there was no reason or basis to presume that the scrap being supplied by them is other than the duty paid scrap. 18.1 It was not alleged that the appellants had procured local scrap from local bazaar. It was not disputed that iron and steel scrap had been received by the appellants in their factory and the same was utilized in the manufacture of dutiable finished goods which were cleared on payment of Excise duty. It was also not in dispute that they made payments to SSMIPL were made through Account Payee cheque's and it was also not the case of the department that there was any flow back of cash. It was submitted that appellants, as buyers, had taken all reasonable precautions that it was required to take in terms of Rule 7(3) of the Cenvat Credit Rules by personally satisfying itself about the identity of the supplier, who had signed the duty paying documents from its perso....
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....ent of scrap manufacturer, it has been relied upon to suggest that what has been sold to SSMIPL was re-rollable scrap (iron and steel scrap) which is not melting scrap. The statement of ship breakers has been misquoted as they had not made any such statement but have in fact stated that the re-rollable scrap can be used for melting purposes also. He further submitted that the issue as to whether re-rollable scrap would qualify as melting scrap has been considered by the Hon'ble Supreme Court in the case of TISCO Vs. Collector of Central excise [1995(75)ELT 3(SC)] wherein the Hon'ble Supreme Court held that re-rollable iron and steel scrap which was used for melting purposes was classifiable as melting scrap. By referring to the statement of the transporters and also the report of RTO at Bhilad check post it was sought to be contended that, the vehicles did not cross Gujarat and the goods had not been transported. In this regards it is submitted that the movement of goods between the ship breaker and SSMIPL can be explained only by the two parties, however in its reply appellant had pointed out that there are several other alternative routes to enter Maharashtra from Gujarat. The co....
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....ot be denied credit for some discrepancy in the transport details followed by transport details record in the invoices of SSMIPL. He further submitted that transportation carried out in 2001-2003, the statements of the truck-owners were taken in 2006 without reference to any documents how could the truck owners based on memory state that they had not transported. Therefore, the statements cannot be relied upon. 18.6 As per availment of Cenvat Credit as contemplated under Rule 7(2), the Ld. Counsel has contended that the iron and steel scraps were purchased by SSMIPL on higher prices than the price at which they were sold to the appellant. In this regard appellant submits that it is presumptuous to draw an adverse inference merely because there was difference in the purchase price and selling price in the invoices. It is settled law as stated in the case of Guru Nanak Refrigeration Vs. CCE 2003(153)E.L.T. 249(SC) that even if a manufacturer sells his goods at loss, the same cannot be the basis for drawing any adverse inference or rejecting the selling price. Appellant also wishes to draw its attention to the decision in the case of Business Combines Ltd. Vs. CCE, Nashik 2005(190) E....
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....lier's godown to appellant's factory. Thus, the adverse inference drawn against Viraj Alloys for non-production of evidence in support of freight payment cannot be relied upon in the instant case. It is settled law laid down by the Hon'ble Supreme Court in the case of CCE Vs. Alnoori Tobacco Products., reported in 2004(170) ELT 135 that a case can be treated as binding precedent if the same is factually identical to the matter in dispute. The Hon'ble Supreme Court has once again reiterated that facts of the decision relied upon has to be shown to fit the factual position of a given case. One additional or a different fact may make a world of difference between the conclusions in two cases. Disposal of cases by blindly placing reliance on another decision is not proper. It is submitted that the decision in the cases of Rajeev Alloys (supra) and Viraj Alloys (supra) cannot be treated as binding as the same are based on entirely different sets of facts. (c) The decision of the Tribunal in the case of AIA Engg. Pvt. Ltd., Vs. CCE 2006(185) ELT 154 is also irrelevant to the facts of the present case inasmuch as in that case, the manufacturing units had only received ....
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....nded period to be invoked there has to be suppression, willful misstatement, fraud etc., with an intent to evade duty on the part of the manufacturer or the importer or his agent. In the absence of any of the aforesaid ingredients being invokable against us the extended period cannot be invoked consequently the entire demand is barred by limitation. (e) The decision of Gujarat High Court in the case of CCE v. Neminath Fabrics Pvt Ltd. 2010 (256) ELt 369 (Guj.) will not apply to the present case, in as much as in that case it was an admitted fact that clandestine removal of goods had taken place and thus fraud with an intention to evade tax, as provided under proviso to sec. 11A, was not in dispute. The Gujarat High Court rules that when requisites mentioned in proviso to sec. 11A are satisfied, knowledge on part of department is not relevant and extended period of limitation can be invoked. However, in the present case, neither there is any admission on part of the assessee nor any evidence to even suggest their involvement in commission of fraud. Therefore, the decision of Hon'ble high court in case of Neminath Fabric will not apply in the present case. 19. Sh....
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....ioner (Prev.), Central Excise, Thane by the Dy. Commissioner of Sales Tax (Enforcement), Gujarat and (c) letter dtd. 12/1/2005 addressed to the Dy. Commissioner (Prev.), Central Excise, Mumbai-III informing that no consignment of iron & steel scraps addressed to the aforesaid two dealers had crossed the Sales Tax Naka at the Gujarat Border during the period 2000-2004 as per their official records. (ii) Two letters - one dated 5/2/2004 and another dtd. 015/4/2005 of the Superintendent of Central Excise, Alang, Bhavanagar, inter-alia, stating that suppliers like M/s. R.K.Steel Alloy Industries, Pipavav, M/s.Ajay Alloys Casting Pvt., Ltd. and M/s. Baldev Shipbreakers, Alang have closed their manufacturing activity since a long period and hence the invoices issued by them were not genuine. (iii) Reports of R.T.Os showing that some of the vehicle Nos. shown in the dealers' invoices were of Auto Rickshaws, Motorcycles, Tractors, Trailers, Tankers, Delivery Van, Bus, Two Wheelers, Three Wheelers, etc. (iv) Statements of drivers & owners of vehicles whose details were appearing on the dealers' invoices denied having transported an....
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....tural justice by not providing copies of the Department's letters referred to in the letters of the Gujarat Sales Tax authorities. 20.4 Non-Transport Vehicles: Admittedly, in a large number of cases, as per the reports of concerned R.T.Os, the vehicles purported to have transported the goods from the dealer's premises to the premises of the appellants, were found to be non-transport vehicles, such as, Trankers, Trailers, Delivery Van, Bus, Auto Rikshaws, Two Wheelers, Three Wheelers, etc. which are not capable of transporting huge quantities of iron and steel scraps. This apart, in a number of cases, the drivers and the owners of the vehicles have denied having transported any goods from the premises of the dealers to the premises of the appellants. These evidences clearly establish that the appellants had availed of the Cenvat Credit without receiving the duty paid materials physically in their factories. 20.4.1 It is contended by the appellants that human error in mentioning wrong vehicle numbers on a few invoices cannot be ruled out. It is claimed by them that they have received scraps physically and that the same have been used by them for manufacture of final products on wh....
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....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). 20.4.4 The above decision of the Principal Bench has been maintained by the Hon'ble Punjab & Haryana High Court as reported in 2009 (247) ELT 27 (P&H). 20.4.5 Further, in the above decision, the Principal Bench has relied upon the Division Bench decision in the case of Viraj Alloys Ltd. V/s CCE, Thane-II - 2004 (177) ELT 892 (T). The following observation of the Division Bench in Para 11 which is also very relevant is reproduced below: " 11 .......... 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 a....
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....mat of this RG-23D Register (Central Excise Series No.55-J) is also appended for information" 20.5.3 From the above, it is quite clear that the Registered Dealers are still required to maintain RG-23D Register showing details of receipts of duty paid goods and issue thereof. It is, therefore, incorrect to say that after 1/4/2000, there is no requirement in law to maintain RG-23D Register. 20.5.4 Further, during the material period, the dealers were required to scrupulously maintain their records as per mandate of Rule 57AE (2) (b) of the Central Excise Rules, 1944, Rule 7(3) of the Cenvat Credit Rules, 2002 which were identically worded. For the sake of proper appreciation, sub-rule (3) of Rule 7 of the Cenvat Credit Rules, 2002 is reproduced below: "(3) The CENVAT Credit in respect of inputs of capital goods purchased from a first stage or second stage dealer shall be allowed only if such dealer has maintained records indicating the fact that the inputs or capital goods were supplied from the stock on which duty was paid by the producer of such goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him". 20.5.5 Su....
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.... submitted that the transporter's statement being in the nature of statement of co-accused is not reliable. This case has also no application to the present case for the reason that in the case of Monarch Metals, the assessee had produced ample evidence to show that they had actually received the inputs from the dealer, whereas in the present case, none of the appellants has been able to show that the goods covered by the dealer's invoices were actually received by them. 20.5.9 At the cost of repetition, it is submitted that the case of the Department is that the appellants availed of the Cenvat credit without physically receiving any duty paid inputs in their factories. The dealers invoices based on which Cenvat credit was availed have been found to be fake and invalid. Therefore, the credit cannot be taken on such invalid documents. Commissioner's finding in para 66 of the impugned order (relating to M/s. Bhav Shakti Steelmines Pvt. Ltd.) is noteworthy in this regard. Relevant portion of the finding is reproduced below: " 66 ............... I find this as a fraud case of availing cenvat credit on the basis of cenvat documents/invoices without receiving the sa....
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....ed that the vehicles carrying goods consigned to the two dealers from the shipbreaking units at Alang did not cross the Gujarat Border at Bhilad Check Post during the material period. Therefore, the dealers could not have received the said goods at Bhiwandi/Mumbai. Consequently, they could not have sold the very same goods to the appellants under their invoices. 20.6.1 It was claimed that the goods might have come to Maharashtra from some other routes. However, the said claim could not be substantiated by any tangible evidence. In the circumstances, the obvious conclusion would be that the dealers did not receive the goods from the shipbreakers and they simply issued fake and invalid invoices to the appellants to pass on the inadmissible Cenvat Credit. 20.7 Letters dtd. 5/2/2004 & 15/4/2005 of the Superintendent of Central Excise Alang: Vide the above two letters, the Superintendent had informed that three of the shipbreaking units, namely, M/s. R.K.Steel Alloy Industries, Pipavav, M/s.Ajay Alloy Castings (P) Ltd. & M/s.Baldev Shipbreakers, Alang had closed their manufacturing activities since a long period and hence their invoices were not genuine. 20.7.1 Except for Amar Ispat....
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....have run away with his family. 20.8. Limitation: It is contended by the assesses that the demand raised is barred by limitation. They were not aware that the dealers had issued fraudulent invoices to them. They have not suppresses any fact. They were bonafide purchasers of the goods. The receipt of the goods has been entered in RG-23A Part-I & Part-II Register and that their monthly RT-12 Returns including the invoices were verified by the jurisdictional Central Excise Officers without any objection. 20.8.1 It is submitted that the appellants ignore the fact that they work under 'Self Assessment Scheme'. The onus is, therefore, on them to certify the correctness of all the information furnished in the Returns. The investigation has successfully established that the dealer's invoices were fake and invalid and the appellants have availed the Cenvat Credit based on the said invoices. In the case of CC (Prev.) V/s. Aafloat Textiles (I) P. Ltd. cited Supra, the Hon'ble Apex Court has held that once it is established that the documents are fake or forged, that is sufficient to extend the period of limitation. 20.8.2 It is contended that the dealers were investigated by the Department....
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....invoices. As the goods are not those goods on which Central Excise duty has been paid, therefore, the appellants are not entitled for credit on the basis of invoices. TO arrive at this decision, the department has relied on the following evidences:- (a) The vehicles carrying the ship-breaking scrap supplied by M/s Simandhar has not crossed at the Checkpost being a entry point for vehicle in Maharashtra from Gujarat by relying upon the letters issued by the Sales Tax authorities of Gujarat. (b) There were no physical movements of goods from Ship-breakers at Gujarat to M/s. Simadhar in Maharashtra. (c) Three manufacturers and first stage dealers specified in the show-cause notice have closed their factory and stopped filing returns. (d) The vehicles indicated in the invoices issued by M/s Simandhar were fake and they were not capable to carry the scrap/inputs. (e) M/s Simandhar issued parallel invoices to different parties appearing the same serial numbers in the invoices issued to the appellants, based on which, the credit was taken. 23. We have examined all the contentions of the ap....
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....d by it could not be taken to be re-melting scrap. Item 26 purports to levy duty on re-melting scrap. The Tribunal having found that the scrap produced by the appellant was remelted the products cleared by the appellant was remelted the products cleared by the appellant satisfied the test of being re-melting scrap." 25. In view of the above observation, scrap is a scrap, if it was to be used in other than melting scrap, the specific description of the goods was to be mentioned in the invoices by the scrap suppliers, which has not been done and admittedly re-rollable scrap is also scrap which can be melted. Therefore, admittedly, no proceedings were initiated against the scrap suppliers, therefore the statements of the suppliers supports the case of the appellants that the goods mentioned in the invoices were the scraps. 26. There is a categorical finding of the Commissioner that the scrap was received by the appellants from M/s Simandhar, which has observed in the impugned order as under:- (a) para 48: "..It evidences the fact that, the dealers have supplied the raw material to M/s. Bhagwati Steel Cast......" (b) para 53: ".. However, as re....
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.... suppliers to arrange the vehicle and it is nowhere the case of the department that the scrap has not been received in the factory of the appellants. There may be human error in mentioning the vehicles' number in the invoices. Moreover, the statements of truck-owners have been recorded but no cross-examination to the appellants was granted. The truck-owners did not produce any logbook or records to support their statements that they have not supplied the goods to the appellants. The statements of the drivers were also not recorded. In the case of Utility Alloys Vs. CCE - 2005 (184) ELT 80 (T), the Tribunal held that demand cannot be confirmed against the appellants based on statements of truck drivers without any corresponding log sheet or trip sheet to corroborate the statement. The same view was confirmed by the Kerala High Court as reported in 2009 (236) ELT A19 (Ker.). The reliance placed by the special Counsel for Revenue in the case of Ranjeev Alloys (supra) and Viraj Alloys Ltd. (supra) is not relevant as in the case it was admitted factual position that responsibility of carrying the goods from the supplier's premises was that of M/s. Viraj Alloys. Further, M/s. Viraj Alloy....
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....he scarp manufacturer issued invoice No. 100 having the scarp of 500 MTs. Against the invoice, M/s Simadhar issued two invoices bearing same number, one to the appellants for 400 MTs scrap and another to some other parties for remaining 100 MTs scrap (whose record is maintained in the RG-23D register) by making the entry and the said entry no. has been put in the invoice issued to the appellants. The department has not initiated any proceedings against another party whose name is recorded in the RG-23D register. In these circumstances, the department's case is weak on the ground that the department has admitted that the scrap has been received by M/s Simandhar and part of the scrap has been supplied to the another party whose name has been entered in the RG-23D register. As the names of the appellants are not registered in the RG-23D register, the demands against the appellants are not sustainable on the ground of discrimination. In fact, the invoices issued to the appellants having the entry no. to RG-23D register. 32. The other allegation that the purchase is more than the sale price for M/s. Simandhar i.e. M/s. Simanhar has purchased the scrap on higher rate and sold the scrap ....
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....l has observed that the assessee has taken credit based on the invoices issued by the dealer. Mistake, if any, is committed by the dealer in issuing invoice, the best course open to the department is to take action against such dealer. Since the assessee has not contravened any provision and he has no means to verify whether the dealer took credit on copy of the invoices there is no justification either in denying the Modvat credit or in imposing the penalty on the appellant for the action of the other person. 36. In the case of Sadashiv Castings (P) Ltd. (supra) again it was observed that as it is not disputed by the Revenue that the invoices under which the respondent had received the inputs from registered dealers having contained all information, the respondent not to cause further investigation to en sure that appropriate duty has been paid on inputs. 37. In the case of CCE Vs. Genesis (supra), this Tribunal has held as under:- "........It could not be expected to go beyond the dealer of the manufacturer and verify in each case the details of the transaction between the manufacturer and the dealer. This is not provided for in the rule. It is also humanly ....
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....gainst the registered dealer and not against the appellants before me. I also find that the ratio of the judgment cited and relied upon by the Counsel of the appellant squarely covers the present case. In the circumstances all the five appeals are allowed......." 40. In the case of Century Laminating Co. (supra), this Tribunal has held as under:- "3. I have carefully considered the submissions made before me. In this case appellants have availed the modvat credit on the strength of the invoices issued by a dealer registered under Rule 57GG. The case of the department is that the dealer who issued the modvatable invoice, had received the goods from another dealer who had not got himself registered with Central Excise authorities. I am of the view that so long as the present appellant availed the Modvat credit on the admissible document under the rules, he cannot be denied the benefit of the same on the grounds that the dealer who had issued the modvatable invoice had received the goods from another dealer who had not got himself registered. First of all the appellants had no means to verify that the dealer who had passed on the modvat credit to him had in turn r....
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.... some other goods have been brought by the appellants. Therefore, inferences has drawn that the appellants have received the goods against these invoices and have taken reasonable step as per Rule 7(2) of the Cenvat Credit Rules,2002 for availment of CENVAT Credit. The Board's Circular No. 766/82/03-CX dated 15.12.2003 clarified that on the issue of availment of credit by the user-manufacturer, it is clarified that the action against consignee to reverse/recover the CENVAT Credit availed of in such cases need not be resorted to as long as the bona fide nature of the consignee's transaction is not in dispute. 45. In the case of Uni Derinted Ltd. Vs. CCE, Nagpur - 2011(272)ELT 280 (Tri-Mum), this Tribunal has observed that it is not disputed by both the parties that the appellants have not received the inputs against the duty paying documents. Only dispute in this case is that the inputs which were received by the appellant are not those inputs which are mentioned in the invoice, this allegation can be verified only by inspection of the input in the factory of the appellants only, which could not be done in this case as the inputs have already gone in the process of manufacturing. B....
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....he CENVAT Credit on the ground that the invoices issued by concerned dealers on the basis of which the appellant-assessees have availed of CENVAT Credit were not valid inasmuch as the scrap materials supplied against these invoices were not duty paid. 6. From the facts of the case as recorded in the impugned orders, I find that there is no dispute that in all the cases, the invoices issued by dealers to the appellant-assessees have the reference of the ship breakers at Alang, Bhavnagar in the State of Gujarat indicating thereby the source of procurement of duty paid iron and steel scraps by the dealers from the ship breakers. According to the appellant-assessees, the said duty paid iron and steel scraps have been supplied to them under the dealers invoices. Hence, the transactions between them and the dealers are genuine and they have rightly availed of the CENVAT credit. 7. However, the Commissioner has rejected the contention of the appellant-assessees mainly relying on three letters of Gujarat Sales Tax authorities. These letters are: (i) Letter dt. 12.02.2004 addressed to the Assistant Commissioner of the Central Excise, Mulund Division, Mumbai-III by the ....
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....lad Check Post or the same came through some other route. It is not necessary to see what letters were written by the department to the Gujarat Sales Tax Authorities. In view of this, I do not think much significance can be placed on the letters written by Department to the Gujarat Sales Tax Authorities and non-supply of copies of the same has affected their defence. I, therefore, do not agree with the contention that there has been any violation of principles of natural justice. Secondly, authenticity of the letter dt. 2.02.2004 has been doubted by the learned Counsels for the appellants, as according to them, it is just impossible for any Government department to furnish information pertaining to the period 2000-2001 within a day from the records. I am unable to accept this argument. I do not think, that the department could create any evidence against the dealers for the assessees. In any event, it was open to the assessees to verify authenticity of the letter from the Sales Tax Authorities of Bhilad Check Post. It was also open to them to ask for cross examination of the author of the letter. I, therefore, reject the contention that the authenticity of the letter dt. 12.02.2004....
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..... 13.1 During the hearing as also in the written submissions, it has been contended that the human error in mentioning the wrong vehicle numbers on a few invoices cannot be ruled out. It is claimed that the assessees have received the scraps physically and the same have been used by them in the manufacture of the final products on which duty was duly discharged. 13.2 I find that the Commissioner has considered this contention of the assessee. According to the findings of the Commissioner, bona fide mistake or human error is possible in one or two cases, but not in a large number of cases where the vehicle numbers appearing in the dealers invoices were found to be the registration numbers of Trailers, Tankers, Buses, Delivery Vans, Auto Rickshaws, Motorcycles etc. I also find that in a number of cases, vehicles said to have transported the iron and steel scraps from the dealers premises to the premises of the assessees were the types of vehicles mentioned above. Such vehicles are not capable of transporting of huge quantity of iron and steel scraps. Therefore, the Commissioner's findings cannot be faulted on this count. 13.3 I also find that in similar circumstances in case of Vi....
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....that in similar circumstances, another Division Bench of the Tribunal in the case of Ranjeev Alloys Limited Vs. Commissioner of Central Excise, Chandigarh reported in 2009 (236)E.L.T. 124 (Tri.-Del.) relied on the decision in the case of Viraj Alloys Ltd. Case. Paras 9 and 11 of the Division Bench which are relevant for the present purpose are reproduced below: 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 ....
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....otwithstanding 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). 13.5 I also find that the aforesaid decision of the Tribunal was appealed in the Hon'ble High Court of Punjab and Haryana and Hon'ble High Court dismissed the said appeal as reported in 2009(247)ELt27(P&H). 13.6 The learned Counsels for the appellant-assessees sought to distinguish the above two cases by saying that in those two cases, the goods were transported by the buyers, while in the present case, the goods were transported by the supplier. Even so, the ratio of the cited decisions are certainly applicable to the present cases inasmuch as the vehicles said to have transported the goods from the dealers' premises to the premises of assessees were found to be non-transport vehicles as per r....
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....r capital goods were supplied from the stock on which duty was paid by the producer of such inputs or capital goods and only an amount of such duty on pro rata basis bas been indicated in the invoice issued by him" Like wise, the manufacturer of final product shall also maintain proper records as per provisions of Rule 7(4) of the CENVAT Credit Rules 2002 which is reproduced below: "4 The manufacturer of final products shall maintain proper records for the receipt, disposal, consumption and inventory of the inputs and capital goods in which the relevant information regarding the value, duty-paid, the person from whom the inputs or capital goods have been purchased is recorded and the burden of proof regarding the admissibility of the CENVAT Credit Shall lie upon the manufacturer taking such credit". 14.3. Combined reading of sub-rules(3) and sub-rule(4) of Rule 7 will make it clear that not only the supplier of inputs or capital goods but also the recipient of inputs or capital goods shall maintain proper records for availing the benefit of CENVAT Credit. In other words, for availment of CENVAT Credit, the maintenance of proper records is a must at both the en....
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....invoices crossed the Gujarat Border. I have already held herein before that the appellants have not been able to prove the same. Therefore, the matter should rest there. 16. I also find that in the impugned order, the Commissioner has given a finding to the effect that while the dealers invoices show the price of iron and steel scrap varying from Rs. 6750/- to Rs. 7,500/- PMT, the original manufacturer's invoices show the price varying from Rs. 8,000/- to Rs. 10,500/- PMT, and hence, this proves that the assessees did not receive the same duty-paid goods purportedly sent by the ship-breakers at Alang. The learned Counsels for the appellants contended that this ground is not taken in the show-cause notice. I observe that the concerned invoices are part of the relied upon documents. As an adjudicating authority, the Commissioner is required to examine the relevant records. In that process, if the Commissioner has found that dealer's invoice price is less than that of manufacturer, no fault can be found with the Commissioner's findings. I, therefore, hold that the Commissioner's findings on this count cannot be said to have gone beyond the show-cause notice. 17. One more point needs....
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....elf Assessment Scheme. The onus is therefore on them to certify the correctness of all the information furnished in the Returns. The investigation has successfully established that the dealers invoices were fake and invalid and the assessees have knowingly availed of the CENVAT Credit based on such invoices. He relied upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Customs (Prev.) Vs. Aafloat Textiles (I) Pvt. Ltd. 2009 (235) ELT 587 (SC) holding that once it is established that the documents are fake or forged, that is sufficient to extend the period of limitation. It was also contended by the learned Counsel for the appellant that the dealers were investigated by the Department as early as in 2001. Therefore, the Department was aware of the activities of the dealers. But no action was taken against them by the Department. Therefore, extended period of limitation is not available to the Department on this ground also. 19.1 I have considered the submissions of both the sides. I have already held that the dealer's invoices bases on which the appellants have availed CENVAT Credit were not genuine and valid and hence the judgment of Apex Court cited supr....