TaxTMI 
TaxTMI 
2012 (10) TMI 549
X X X X Extracts X X X X
X X X X Extracts X X X X
.... respect of the remaining invoices issued by the dealers based 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....steel scraps from the dealers' premises to the premises to the premises of the appellants. 2.7 In the case of M/s. Amar Ispat Pvt. Ltd., there were some additional facts 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....har which do not find mention in the RG-23D register maintained by Simandhar. 5. The reliance placed by the Commissioner on RG-23D register as being sacrosanct is without any basis. Any 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 exc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lled invoice issued by Simandhar to another party Total Qty in MT Qty (MT) mentioned in source invoice of Simandhar No. Dated Qty (MT) No. Dated Qty (MT) 18 225 9.6. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, Mulund Division, Mumbai-III the copy of which is not made available to the appellants despite request made vide letter dated 22.6.2005. 7.4 In any case, the information sought by the aforesaid letter dated 11.2.2004 was regarding the vehicles crossing Bhilad Check post during the period 2000-2001. The appellants doubts the authenticity of letter dated 12.2.2004 issued by sales tax officer inasmuch 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 deliber....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... based on assumptions and presumptions. All the suppliers of M/s. Simandhar have found to be existing and genuine parties. The three units (namely M/s.R.K.Steel Alloy Industries, M/s.Ajay Alloys Casting (P) Ltd., M/s.Baldev Ship Breaking) found closed by the department at the time of investigations were working during the impugned period. In any case, the appellants did not receive any scrap from these three units through M/s.Simandhar. 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d selling at lower rate. Lastly, the scrap dealers purchase scrap in lots in auction and it is a trade practice in scrap that the scrap dealers segregate the scrap, grade it and thereafter sell such graded scrap at varying rate so that they achieve the maximum profit. Hence it is possible that the lower grade scrap for melting purpose would be sold to the appellants at lower rate. The appellants cannot be held responsible for such a practice being adopted by 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/....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also gave reference to first stage dealer. If M/s.Simandhar have mis-represented or made any mistake then the central excise department should proceed against them and not against the appellants. The appellants were not party to the fraud / mistake, if any, committed by M/s.Simandhar. The appellants were totally unaware of the fraud / mistake, if any, committed by M/s.Simandhar. 13.8 For the above submission, the appellants rely upon following decisions: a) 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o bonafide purchaser for value having no connection whatsoever with the fraud, if any, committed by M/s. Simandhar. The Appellants cannot be expected to check the authenticity of each & every invoice. The department was in a position to prevent the fraud & hence the department should be held responsible for it. Besides, the Appellants had taken all reasonable precautions into consideration. 14.4 In view of the above, the impugned Order-in-Original is liable to be set aside. Demand of Rs.10,71,367 on the ground that 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by alleging that the credit availed by the appellants is on account of fraud & willfull mis-statement by the appellants who have suppressed the fact regarding non-receipt of cenvatable input material. 16.2 For the reasons submitted supra, the allegation that the appellants have not received the goods is incorrect and unsubstantiated. Statement of Mr.Hitesh Shah of M/s.Simandhar and Mr.K.D.Singh, G.M.of the appellant company also proves that the Appellants had received goods physically in their factory. Hence, there is no suppression about the 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 reco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....)ELT 332(T) (ii) IDL Chemicals Vs.CCE - 1996(88)ELT 710(T) 16.10 In view of the above, the demand is barred by limitation. No penalty and interest is imposable on the appellants 17. The appellants have not willingly committed any action with an intention to evade payment of duty. The appellants have acted in good faith. The appellants have not willingly sough to avail credit which in law is not available to the appellants. Hence no penalty and interest is imposable. 18. Shri.Vishal Agrawal, learned Advocate appeared on behalf of M/s Amar Ispat 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ware that SSMIPL godown was very small wherein all scrap could not have been stored, despite this no action was taken. This fact was in the knowledge of the department, therefore, it cannot subsequently allege suppression and invoke the extended period on the premise that SSMIPL godown did not have space to store the entire scrap. It is settled law that when the relevant facts are within the knowledge of the department, the extended period of limitation cannot be invoked. He further submitted that Revenue's case is based solely on assumption and presumptions. According to statement 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 r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he appellants' factory and that in some cases, the RTO and the Sales Tax Authorities have stated that the vehicles in which the goods were said to have been transported were in fact incapable of transporting the said goods is concerned, it is submitted that the responsibility of arranging transport was that of the registered dealer; the fact that it has received the materials in its factory covered by a duty paying documents and in respect of which payment has been made through accounts payer cheques is not in dispute. As arranging the transport was responsibility of SSMIPL, it cannot 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecision in the case of Viraj Alloys Ltd., [2004(177)ELT890]. In this 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 Alloys have failed to produce any bills, vouchers evidencing payment of freight for carrying the materials from supplier's location to their factory. It is on this background that an adverse inference was drawn against M/s. Viraj Alloys. Contrary to this case, in the present case, it was undisputed fact it was SSMIPL's responsibility to carry the materials from supplier'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 addi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch an enquiry, the buyer was responsible for the consequence of the same. It is submitted that this decision cannot be relied upon in the present case as undisputedly, the documents issued to the appellants were not forged and were genuinely issued. Appellant had taken due care as provided for in the Rules before availing credit. The Hon'ble Supreme Court's decision cannot be treated as a binding precedent as the party therein did not draw attention of the Hon'ble Court to provisions of Section 28 of the Customs Act,1962 and 11(A) of Central Excise Act, 1944 wherein it is provided that for extended 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Gujarat thereby indicating the source of procurement of duty paid materials by the dealers from the shipbreakers. 20.2 He further submitted that the following evidences have been relied upon by the Department. At the further outset, it is submitted that the case of the Deptt. is based mainly on the following evidences: (i) Three letters of Gujarat Sales Tax Authorities, namely, (a) letter dtd. 12/2/2001 addressed to the Asstt. Commissioner of Central Excise, Mulund Division, Mumbai-III by the Sales Tax Officer, Bhilad Check Post, (b) Letter dtd. 24/5/2004 addressed to the Dy. Commissioner (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 l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts is, therefore, not genuine. In the instant case, copies of all the documents relied upon in the proceedings have been supplied to them. Therefore, principles of natural justice have not been violated. It is not necessary that copies of the documents simply referred to in the proceedings should also be given. In the case of Raletronics Ltd. V/s. Union of India - 1994 (71) ELT 26 (Kar), the Hon'ble Karnataka High Court has held that only copies of the documents relied upon in the Show cause notice should be furnished and not copies of all documents referred to therein. In short, there was no violation of the principles of natural 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 s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... therefore cannot contend that in view of the judgement of the Punjab and Haryana High Court - which was rendered between the same parties in the context of seemingly similar transactions, taking modvat/ cenvat credit by the appellant in the present case too was legal and they cannot be asked to reverse the same and demand cannot be made against them. As a matter of fact, for this reason alone, the issue involved in the appeal being an issue of fact - resulting in inevitable consequence of allowing or disallowing cenvat credit - depending on the outcome of the issue, we proceed to consider on the merit of the case as an independent case notwithstanding favourable decisions in so called similar cases by Single Member Benches. As observed above, at the cost of repetition, if the vehicles in question were really light motor vehicles - incapable of carrying large quantities of steel and iron items, conclusion would be inevitable that there was no actual transportation or receipt of the goods and, therefore, the appellant could not have taken cenvat credit on them - as held by the Division Bench in Viraj Alloys Limited (supra). 20.4.4 The above decision of the Principal Bench has bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sterd Dealers are required to maintain RG-23D Register as is evident from the Board's Circular No. 536/32/2000-CX dated 30/6/2000. Para 12 of this Circular which is relevant for the present purposes is reproduced below:- "12. The previous RG-23D Register for Registered Dealers was specified by a notification issued under Rule 57GG, which rule has since been omitted. However, as this said Register is now required to be mai8ntained under Rule 52AA, it has been decided to re-introduce the same register, with minor modifications specifying the New ECC Number of the manufacturer and Import-Export Code Number of the Importer. A copy of format 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not. This decision has no application to the facts of the present case. Firstly, in the Transpek Industry's case, the dealer's Invoice was genuine, whereas in the present case, the dealer's invoices are found to be fake and invalid. Secondly, in the present case, there is no dispute that the shipbreakers had cleared the scraps on payment of duty, whereas in the Transpek Industry's case, the main controversy was that the manufacturer who supplied the goods to the dealer did not discharge the duty liability. Ld. Counsel has also relied upon the Tribunal's decision in the case of Monarch Metals P. Ltd. & Ors. V/s. CCE, Ahmedabad/Bhavnagar reported in 2009(95) RLT 334 and 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 subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case of CC(Prev.) V/s. Aafloat Textiles (I) P. Ltd. - 2009(235) ELT 587 (S.C.), the Hon'ble Apex Court has held that once the document is found to be fake or forged, consequences will follow. Knowledge or no knowledge of the fraud on the part of the Department is immaterial. The buyer is expected to be cautious, because risk is his and not that of the seller. It has also been held by the Hon'ble Apex Court that where fraud is involved, that is sufficient to invoke the extended period of limitation. 20.6 Reports of the Gujarat Sales Tax Authorities vis-à-vis the Dealer's Invoices : Vide three letters already referred to above, the Gujarat Sales Tax Authorities have reported 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 substantia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cording inward movement of the goods and vehicles by the assessee. This clearly shows that the dealers issued only fraudulent invoices. 20.7.5 In this connection, it may be mentioned that the two dealers were also issued Show cause notices. However, they did not submit any reply nor did they participate in the adjudication proceedings. In fact Shri Hitesh Shah, Proprietor of M/s. Simandhar Enterprises and Director of M/s. Simandhar Steel Movers (India) Pvt Ltd. absconded with his family immediately after the investigation started. This clearly establishes that he had committed a fraud by issuing fraudulent invoices without dispatching the duty paid goods to the appellants. Otherwise, he would not 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 wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment was of the view that there is a modus operandi in the trade that the scrap (manufactured by the ship-breakers), on which he Central Excise duty has been paid, have been diverted to some other places in Gujarat to the dealers/manufacturers, who do not require any duty paid invoices. Therefore, the duty paid invoices were issued in the name of M/s Simandhar, a dealer who issued invoices to the appellants as they are the units which were registered with the Central Excise and needs duty paid invoices. As the goods/scrap manufactured by the ship-breakers have been diverted to some other dealers and only invoices were moved and M/s Simandhar, a dealer of bazaar scrap has supplied the bazaar scrap along with duty paid 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 issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as scrap. A sub-standard bloom or billet is steel bloom or billet. But the scrap of billet or bloom would not be the same thing as semi-finished product. In the commercial sense, scrap and semi-finished products cannot be understood in the same sense. The attempt of the Department, therefore, to levy duty on scrap under Item 26AA was not correct. Melting scrap is defined as :- "Scrap which cannot be used for any other purposes but can be charged into furnace for melting should be classified as melting scrap". The Tribunal held that since the appellant did not dispute that the scrap produced by the appellant could be industrial scrap, the scrap produced 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ir activity since long period, hence the invoices issued by them are not genuine. As no investigation has been made at the end of the authorities in Tipava/Alang at the end of the scrap manufacturers, therefore, the correctness of invoices issued by the suppliers cannot be doubled. 29. The another ground on which the credit was to be denied that some of the vehicles' number mentioned in the invoices, the vehicles are not capable to transport the goods. In defence, it is contended on behalf of the appellants that vehicles' number in the invoices may not be recorded properly, but there is no allegation that the inputs have not been received in their factory under the cover of the said invoices. In fact, in these cases, it is the responsibility of the scrap 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... said decision cannot be applied to the facts of the case in hand. Therefore, mere statement of the truck owners that they have not supplied the goods to the appellants without supporting evidence cannot be relied upon. 31. The another ground taken by the department is that M/s. Simandhar has issued invoices having same serial number to the appellants, which did not find any entry in RG-23D register maintained by M/s. Simandhar. We have examined the issue and the invoices. The invoices issued to the appellants bearing the entry number of RG-23D register. The allegation is that the credit has been taken on a parallel invoices. In fact, in these matters what has happened that M/s Simandhar has issued to parallel invoices bearing the same number. For example, the 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 initia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplier has his place of business." 34. In this case, we find that M/s Simandhar has been supplied the scrap to the appellants from since long back and the invoices issued by M/s Simandhar are genuine one, therefore, it cannot be alleged that the appellants have not taken reasonable steps being the goods received by them. Moreover, in this matter, we observed that investigation against M/s Simandhar has been initiated in 2001 and Panchnama was drawn. Even, if the activities of M/s Simandhar were found to be doubted, why the activities of M/s Simandhar could have been allowed to continue till 2004. If the alert notices would have been issued in 2000 itself, then ineligible credit could have been stopped at that stage itself. 35. In the case of SRT Ltd. (supra) this Tribunal 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 den....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bunal in the case of C.C.E., Chandigarh v. M/s B.T. Steels cited above. 11. We have also perused the Board's Circular, which inter alia set out a procedure in respect of verification of payment of duty exceeding Rs. 10,000/-. In the instant case no such verification to prove the case against the appellants is brought out." 39. In the case of Shree Rolling Mills (supra), this Tribunal has held as under:- "6. I have heard the rival submissions. I note that in the instant case the appellants took credit on the strength of the transporter's copy issued by the registered dealer. I do not find any irregularity in taking credit by the appellants. If some irregularity has happened at the end of the registered dealer then the action should have been taken against 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds manufactured, which were cleared on payment of duty. The department has not been able to prove that any other alternative raw material was used in manufacture of final product and the RT-12 returns have been assessed finally by the Range Officer which contains all the documents including the invoices under dispute on the basis of which the Modvat credit has been availed and utilized and that payments for the purchase of the inputs have been made through cheque/demand draft. Therefore, the allegation that the goods have not been received by the appellants or the vehicles did not have the capacity to carry invoiced goods is not sustainable. 44. In this case, it is admitted that there is no shortage of inputs or final and it has not been proved by the department that for manufacturing the final product, 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... considered the rival contentions of both sides including their written submissions. 3. The brief facts of the case have been clearly brought out in the proposed order made by the learned Member (Judicial). Hence, I am not repeating the same. 4. I find that the main issue to be decided is as to whether the appellant-assessees have correctly availed of the CENVAT credit of duty based on the invoices issued by two dealers, namely, (i) M/s. Simandhar Enterprises and (ii) M/s. Simandhar Steel Movers (India) Pvt. Ltd. 5. It is the common contention of all the appellants that they have received the scrap materials physically from the concerned dealers and have used the same in the manufacture of final products on which duty liability has been duly discharged. However, in the impugned orders, the Commissioner has denied the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntended that the authenticity of the letter dt. 12.2.2004 of Sales Tax Officer Bhilad Post in response to the department's letter dt. 11.2.2004 is doubtful. According to the learned Counsels for the appellant-assessees, it is just impossible that the Sales Tax department could furnish the required information within a day. 10. After giving due consideration to the aforesaid contentions, I find it difficult to accept the same. Firstly, copies of letters of Sales Tax authorities have been provided to all the appellant-assesses. The said letters simply give the information that as per their records during the relevant periods no vehicles carrying iron and steel consignments addressed to the concerned dealers has passed through this check post i.e. Bhilad Check Post. It is for the assesses to say whether the consignments had crossed the Bhilad 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 aff....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reports of concerned R.T.O's according to which, in a large number of cases in respect of each of the assessees, vehicles said to have transported the goods from the dealers premises to the premises of the assessees were found to be non-transport vehicles such as Tankers, Trailer Delivery Van, Bus, Auto Rickshaw, Two Wheelers, Three Wheelers etc. which were not capable of transporting huge quantities of iron and steel scraps. The Department has also relied upon statements of drivers and owners of the vehicles and in a number of cases they have denied having transported any goods from the premises of the dealers to the premises of assessees. Based on these evidences, the Commissioner has held that these evidences clearly establish that the assessees had availed CENVAT Credit without receiving the duty-paid materials physically in their factories. 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 d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gorically denied having transported any goods to the appellant. The plea that the truck owners indulged in malpractices and run them with false numbers is farfetched. In the appellants case 99 vehicles were such that they could not have carried the goods from the supplier to the buyer, some of the numbers belonged to auto-rickshaws, motorcycles and some numbers did not exist. The fact that out of the list of vehicles which were shown to be tankers, according to RTOs, Office, two vehicles turned out to be regular carriers of goods does not establish that the case of other vehicles also it was true. An exception cannot make a rule. Once it is established that the input has not been transported in the vehicle mentioned in the invoice it is but reasonable to say that the inputs were not received in the factory as required under Rule 57G". 13.4 I also find 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wide to suggest that all transactions made by M/s. Adhunik Steels Limited involving M/s. Neepaz Steels (India) and others were fictitious. Each of such transaction has to be considered as separate and independent. The appellant therefore cannot contend that in view of the judgment of the Punjab and Haryana High Court - which was rendered between the same parties in the context of seemingly similar transactions, taking Modvat/Cenvat credit by the appellant in the present case too was legal and they cannot be asked to reverse the same and demand cannot be made against them. As a matter of fact, for this reason alone, the issue involved in the appeal being an issue of fact - resulting in inevitable consequence of allowing or disallowing Cenvat credit - depending on the outcome of the issue, we proceed to consider on the merit of the case as an independent case notwithstanding favourable decisions in so called similar cases by Single Member Benches. As observed above, at the cost of repetition, if the vehicles in question were really light motor vehicles - incapable of carrying large quantities of steel and iron items, conclusion would be inevitable that there was no actual transportat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been omitted. However, as this said Register is now required to be maintained under Rule 52AA, it has been decided to re-introduce the same register, with minor modifications specifying the New ECC Number of the manufacturer and Import-Export Code Number of the Importer. A copy of format of this RG-23D Register (Central Excise Series No.55-J) is also appended for information" 14.2 I find that during the relevant period, the dealers were required to maintain their records as per provisions of Rule 57AE(2)(b) of the Central Excise Rules, 1944 and Rule 7(3) of the CENVAT Credit Rules, 2002. Rule 7(3) of the CENVAT Credit Rules 2002 reads as under:- "3 The CENVAT Credit in respect of inputs or 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 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 provisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d immediately after the investigation started. 15. With the above findings, a few more points need to be considered. In the impugned order, the Commissioner has recorded a finding that though the ship-breakers invoices described the goods as iron and steel scrap, the same were actually re-rollable scrap which cannot be regarded as waste and scrap under heading 7204 of the Central Excise Tariff. The learned Counsels for M/s. Bhagvati Steel Cast conceded that the re-rollable scrap is also scrap fit for melting. In this connection, he relied upon the decision of the Supreme Court in the case of Tata Iron and Steel Co. Ltd. Vs. CCE 1995 (75) ELT 3 (S.C.). I observe that in the background of this case, it is not material to consider whether re-rollable scrap is melting scrap or not. What is material is whether the iron and steel scrap purportedly dispatched by ship-breakers under their 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 sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts, the appellants are not eligible for the CENVAT Credit and the Commissioner's orders are required to be upheld on this count. 19. Now it brings me to the question of limitation. The learned Counsels for the appellants contended that the demand of duty is barred by limitation inasmuch as in the facts of the present case, the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944 cannot be invoked. The assessees were not aware that the dealers had issued fraudulent invoices issued to them. They were bona fide purchasers of the goods. The receipt of the goods has been entered in RG-23A Part I & II Register and that their monthly RT-12 returns including invoices were verified by the Jurisdictional Central Excise Officers without any objection. The learned Special Counsel for the Revenue counter the above contention. He said that the assessees were working 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 dealers invoices were fake and invalid and the assessees have knowingly availed of the CENVAT Credit based on ....