TaxTMI 
TaxTMI 
2013 (1) TMI 123
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....of duplicate/ parallel invoices Demand of duty on account of dealers' invoices where vehicles were found to be non-transport vehicles as per RTO's Report & No. of such invoices Demand of duty in 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, there....
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....steel scraps. 2.6 In this connection, statements of some of the truck owners (whose truck Nos. were appearing on the dealers' invoices) were recorded by the investigation. In that, they had denied having transported any iron & 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 the....
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....y to fraud, if any, committed by M/s. Simandhar & hence proceedings against the Appellants need to be dropped. The demand 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. 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-Origin....
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.... of the quantities mentioned in the invoices issued by M.s. Simandhar. 6.7 The table below would clear the above point. S.No. In Annexure "D" to scn (2002-03) Invoices issued by Simandhar to the appellants Alleged paralled 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.....
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....nable in law. 7.3 It is submitted that letter dated 12.2.2004 issued by the Sales Tax officer, Bhilad Check Post also cannot be relied upon. This letter was issued pursuant to letter dated 11.2.2004 by the Assistant Commissioner, 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....
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....d that size of scrap is not determinative whether it is melting scrap or not. 9.3 Hence this portion of the order of the Commissioner is not sustainable. Demand based on assumptions and presumptions. 10.1 Entire demand is 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 tha....
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....nts submit that such an allegation was never put up in the show cause notice and hence it cannot be taken for the first time in the Order-in-Original. The appellants are not responsible for M/s.Simandhar purchasing at higher rate and 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 liab....
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....lants is not from and out of the scrap sold by first stage dealer referred to in the invoice issued by M/s.Simandhar. M/s.Simandhar, in their invoices, represented that the scrap being sold by them to the appellants is duty paid and 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 2....
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....endor. It was further held that since the assessee had taken precautions as envisaged in Rule 9 (actually it should have been Rule 7) of the Central Excise Rules, 2002, denial of rebate was unsustainable. 14.3 The Appellants are also 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, traile....
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....me, the demand could have been more than Rs. 3 lakhs. There is no fraud or collusion by the appellants much less with an intention to evade payment of duty. Hence demand is barred by limitation. 16.1 Extended period has been invoked 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 ....
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....uty. 16.9 The following rulings also hold that demand is time barred when there is no collusion between purchaser & seller and the purchaser is a bonafide purchaser for value. (i) Shabana Steel Vs.CCE - 2007(177)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 t....
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.... of it having paid the value of the goods. 18.3 It is also submitted that the premises of the registered dealers were searched in the year 2001 and a panchnama was drawn thereafter, records have been summed and the department being aware 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 ....
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.... of the goods received by him. With regard to credit sought to be denied on the premises that on an investigation some of the transporters have stated that they did not transport the goods from the premises of the registered dealer to the 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....
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.... (b) The decision of the Tribunal in the case of Rajeev Alloys Vs. CCE, Chandigarh [2009(236)ELt 124 (T)] which was maintained by the Hon'ble Punjab & Haryana High Court as reported in 2009(247)ELT 27 based on the decision 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 bin....
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....licence was forged and consequently, non-est. The said decision was based on the principle of caveat emptor and holds that the buyer ought to have made enquiries regarding the genuineness of the licence and having failed to undertake such 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. &n....
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....namely, M/s. Simandhar Enterprises and M/s. Simandhar Steel Movers India Pvt. Ltd. (ii) All the invoices issued by the dealers to the appellants show the reference of invoices of ship-breakers at Alang, Bhavnagar, 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 ....
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....epartment's letters to the Gujarat Sales Tax authorities. From the contents of the letters of the Gujarat Sales Tax Authorities, it is quite apparent what information was sought for from them by the Department. Grievance of the appellants 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 th....
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....uld be too 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 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 ....
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....ellants that after 1/4/200, there is no requirement in law to maintain RG-23D Register. Therefore, the reliance placed by the Commissioner on RG-23D Register is without any basis. 20.5.2 It is submitted that even after 1/4/2000, Registerd 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, inco....
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....n 2010(249) ELT 91 and submitted that an assessee buying goods from a registered dealer cannot be expected to examine whether the manufacturer who has sent the goods to the registered dealer has actually discharged his duty liability or 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 re....
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.... based on the invoices issued by the dealers cannot be denied. 20.5.10.3 It is submitted that once it is found that the documents based on which credit has been taken are fake and invalid, the assessees cannot take the credit. In the 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. Conse....
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....nsport vehicles. The invoices were being sent separately to the assessee after a day or two for the purported removal and dispatch of the goods. Also no weighment slips accompanied the material and no gate register was maintained for recording 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 wer....
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....22. In nutshell, the demands have been confirmed on the ground that the inputs have been received by the appellants are not those inputs which have suffered duty at the end of the scrap manufacturers. To come to this finding, the department 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....
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....oducing finished products. Under Entry 26AA what is exigible to duty is semi-finished steel including blooms, billets, slabs, sheet bars etc. Semi-finished may mean between raw material and finished products. But it cannot be described 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 appel....
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....of the letters issued by the Sales Tax Officer, Bhilad Check-post. 28. It is also alleged that the suppliers of the scrap like M/s R.K.Steel Alloy Industries, M/s Ajay Alloys Casting (P) Ltd., M/s Baldev Ship Breaking have closed their 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 vehi....
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....ply the goods but only supplied documents for which they earned 3% (approx.) commission. This being the factual position, credit was denied to the recipient of the goods. In the present case there is no such admission. Consequently, the 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 ....
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....bsp; (c) on the strength of a certificate issued to the manufacturer or the supplier, as the case may be, the Superintendent of Central Excise within whose jurisdiction such manufacturer has his factory or the supplier 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 ope....
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....ds from place to place and from one dealer to the other. Thus it is not possible for the recipient of the scrap to verify whether the scrap was actually from one source to the other. This view finds supports from the judgment of the Tribunal 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 a....
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....In the case of CCE Vs. Shakti Roll Cold Strips Pvt. Ltd. - 2008(87)RLT 793(P&H), the Hon'ble Punjab & Haryana High Court has held that the inputs supplied by the respondent were duly received by the manufacturer and were used in the goods 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 in....
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....hab Singh: I have carefully gone through the proposed order made by the Learned Member (Judicial). However, I have different views on the issues. Hence I am recording this separate order. 2. I have perused the relevant records and 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 a....
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....ities by the department. However, copies of the same were not provided to them resulting in violation of principles of natural justice. Therefore, the Commissioner ought not to have relied upon the same. Further, it has also has been contended 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....
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....icles which had purportedly transported the goods from the dealers premises to the premises of the assessees were not capable of transporting heavy materials like iron and steel scraps. In this connection, the Department has relied upon 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....
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....dger and registers were destroyed in the fire. 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 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 Allo....
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....here there is actual transportation and receipt of goods by the manufacturer entitling them to take Cenvat credit, but where there is no such proof of actual transportation and receipt, credit cannot be allowed. Surely, it would be too 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 o....
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.... 30.06.2000 and referred to para 12 of the said circular which reads as follows: "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 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 pr....
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....teel Movers (India) Pvt. Ltd. absconded along with his family as brought out by the investigation in the case of M/s. Amar Ispat Pvt. Ltd. If the transaction between the dealers and the assessees were genuine, he would not have absconded 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 bef....
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....crossed the Gujarat Border and the same were received by the dealers. It has, therefore, to be held that the dealers had supplied to the assessees locally procured bazaar scrap. 18. In view of my foregoing finding I hold that on merits, 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 cer....
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....CENVAT credit of duty on the basis of invoices issued by the dealers in the facts and circumstances of the case as held by the Member (Technical) 3. Whether the demands are barred by limitation in the facts and circumstances or not. Per: P R Chandrasekharan: 22. This case was heard by me on 18/05/2012, 25/05/2012, 08/06/2012 and 15/06/2012. The difference opinion referred to me for decision is reproduced verbatim below: "Following difference of opinion is placed before the Hon'ble Vice President/HOD:- 1. Whether the appellants have correctly availed CENVAT credit of duty on the basis of invoices issued by the dealers in the facts and circumstances of the case as held by the Member (Judicial). OR 2. Whether the appellants are not entitled to avail CENVAT credit of duty on the basis of invoices issued by the dealers in the facts and circumstances of the case as held by the Member (Technical). 3. Whether the demands are barred by limitation in the facts and circumstances or....
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....when the taxes are levied at various stages in the production/manufacturing chain. The input duty relief can be granted in three ways, namely, (1) invoice credit method, (2) subtraction method; and (3) addition method. These concepts have been lucidly explained in the e-book "Modern Vat" published by the International Monetary Fund, 2001 edition. Pages 19 to 20 of the said book deals with methods for determining VAT (Value Added Tax) liability. The relevant extracts are reproduced. "Methods for Determining VAT liability As noted, it is a key feature of VAT that tax is charged - in effect, if not in form, only on the difference between purchase and sales. There are three main ways in which this can be done * Under the 'invoice credit' where each trader charges output tax at the specified rate on each sale and passes to the purchaser an invoice showing the amount of tax charged. The purchaser, is subject to VAT on his own sales, is in turn able to credit such payment of input tax on his own purchases against the output tax charges on his sales, remitting the balance to the authorities and receiv....
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....tes that the invoices shall be serially numbered and shall contain registration number, address of the concerned Central Excise Division, name of the consignee, description, classification and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon. The proviso to the said rule provides the dispensation of the copies of the invoices i.e., original copy for the buyer, duplicate for the transport and triplicate for the assessee. Sub-rules (4) to (6) deal with certain procedural requirements relating to invoices and sub-rule (7) provides that the provisions of said Rule shall apply mutatis mutandis to goods supplied by a first stage dealer or a second stage dealer. Similar provisions were stipulated in the Central Excise Rules, 2001 and also the Central Excise Rules, 1944 to the same effect. 26.3. The CENVAT Credit Rules, 2004, deals with the procedure relating to availment of credit. As per Rule 3, a manufacturer or a producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as CENVAT credit) of the duties specified therein paid on any input....
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...., an additional condition is stipulated to the effect 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 invoices issued by him. It is further stipulated that the burden of proof regarding admissibility to CENVAT credit shall lie upon the manufacturer taking such credit. Sub-rule (2) of Rule 7 of the CENVATY Credit Rules, 2001/2002 (as they stood at the relevant time) further stipulated that a manufacturer/producer taking CENVAT credit on inputs or capital goods shall take all reasonable steps to ensure that the inputs or capital goods in respect of which he has taken CENVAT credit are goods on which appropriate duty of excise as indicated in the document accompanying the goods has been paid and the manufacturer shall be deemed to have taken reasonable steps if he satisfies himself about the identity, name and address of the manufacturer/supplier issuing the document specified in the said Rule either from his personal knowledge or on the strength of a certificate given by a person with whose handwriting or signature he is familiar with or on th....
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.... the present case need to be examined. 27. The issues involved have been categorised into three by the hon'ble Member (Judicial) in para 1 of his order, namely, (1) demand of duty on account of duplicate/parallel invoices; (2) demand of duty on account of dealers' invoices where vehicles were found to be non-transport vehicles as per RTO's report; and (3) demand of duty in respect of invoices issued by dealers based on ship breakers' invoices. I propose to examine the issue based ont eh categories indicated above, though not in the same order. 27.1 I first take up the issue relating to admissibility of ENVAT credit in respect of dealers' invoices where vehicles were found to be non-transport vehicles as per RTO's report. The total number of invoices in respect of all the five appellant herein in 306 involving a total credit amount of Rs. 53,82,321/. The details in respect of each of the appellants are given in para 1 of Member (Judicial)'s order. The case of the department is that, in all these invoices, as per the reports of the Regional Transport authorities at Thane, Mumbai, Nasik,. Jalgaon, Pune, Raigad, Dhulia, etc., the vehicle numbers mentioned were found to be of tank....
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..... If the particulars declared in the document are found to be untrue, the onus of proof shits to the appellant-assessees to show that they have received the goods covered by the document. The evidence that can be led by the assessees are the GRNs or the consignee's copy of the transport document. In the case before me, none of the appellants have been able to produce even a single copy of the GRN or the consignee copy even in respect of a single case. Further, it is on record that the appellants have not maintained any gate register or materials inward register which would show the entry of the transport vehicle in the factory premises of the receiver and receipt of the materials in their factory premises. In the absence of any such evidence, it cannot be concluded that the appellant-assessee has discharged the onus cast on them regarding the admissibility of the CENVAT credit. As per the provisions of sub-rule (4) of Rule 7 of the Cenvat Credit Rules, as they stood at the relevant time, the onus is on the manufacturer who avails credit to show that he is entitled for the credit. Inasmuch a s the appellant-assessees have not discharged this onus, it would be reasonable to conclude ....
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....in the factory, the appellant are not entitled for the CENVAT credit. 28. The next issue for consideration is regarding the demand in respect of invoices issued by dealers based on ship breakers' invoices. These invoices are 669 in number and the duty credit involved is approximately Rs. 1.02 crore. The case of the Revenues that the scarp has been procured from ship breakers in Alang/Bhavnagar in Gujarat by the first stage dealers, M/s. Simanhdar Enterprises (SE in short) and M/s. Simandhar Steel Movers (India) Pvt. Ltd (SSMIPL in short). Some of the ship breakers whose name figures in the invoices issued by the first stage dealers., from whom the ship breaking scrap was allegedly procured, namely, M/s. R.K. Steel Alloy Industries, Pipavav, M/s. Ajay Alloys Castings Pvt. Ltd. and M/s. Baldev Ship breakers, Alang had closed down their activities since a long time and hence the invoices said to have been issued by them are not genuine. This fact has been confirmed by the letter dated 05/02/2004 and 15/04/2004 issued by the Superintendent of Central Excise, Aland. Further, enquiries made with the transport of goods from Gujarat to Bhiwandi/Mumbai revealed that in some cases, the ve....
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....f Central Excise 1995 (75) ELT 3 (SC). It has also been argued that it is not the responsibility of the appellants to ascertain the source of scrap by the dealers and how it has been transported. So long as they have paid the consideration for the scrap received and paid the duty liability thereon, they are entitled for the CENVAT credit. It has also been argued that scrap could have been transported from Gujarat to Mumbai not only through Bhilad check-post but also through other check-posts and, therefore, the letters of the sales tax authorities at Bhilad does not conclusively establish that the scrap has not been received by the aforesaid dealers. Further, doubts have been expressed about the reliability of the records maintained by the sales tax authorities at Bhilad check post. It has also been argued that the appellants can not be asked to prove the impossible about the movement of scrap from Gujarat to Mumbai. It has also been contended that there has been denial of principles of natural justice in as much as the department has not furnished a copy of the letter written by them to the Sales Tax Authorities in Gujarat and they have reserved the right to cross-examine the Sale....
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....been allegedly received by the appellants from the dealers are not the same as what has been received by the dealers form the ship breakers. This conclusion is further corroborated/strengthened by the reports of the Transport Authorities in Gujarat wherein it was found that some of the vehicles said to have been used for transportation were two-wheelers, three-wheelers, etc. which is incapable of transporting steel scrap. Again in a few cases, statements of the transporters (Owners of vehicles which figure in the invoices) were recorded and they have denied transporting any scrap from Gujarat to the dealers in Mumbai/Bhiwandi. These facts have been further corroborated by the letters issued by the check-post and sales tax enforcement authorities in Gujarat which categorically state that no vehicle carrying scrap from the ship breakers to the two dealers in Mumbai have crossed the commonly used check post at Bhilad during the impugned period. Thus, it is not one single piece of evidences that have been brought out by the Revenue which corroborate and strengthen each other and which substantiate the fact that from the documents available on record, the scrap claimed to have been rece....
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....roduced to enable it to cross-examine them. In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities". The same reasoning applies to the facts of the present case. Therefore, I do not find any merits in this argument adduced by the appellants and reject the same. 28.3 As regards the case laws relating to Transpek Industry Ltd. and Monarch Metals Pvt. Ltd, cited supra, the facts of those cases are different and distinguishable. In Transpek Industry Ltd.'s case, the issued related to purchase of capital goods by the appellant therein from a registered dealer on payment of duty. In that case there was no dispute about the goods supplied by the dealer and receipt of the same by the assessee. In that context it was held that the assessee buying goods from a registered dealer cannot be expected to examine as to whether the credit availed by such dealer is in accordance with law or not. In the other case pertaining to Monarch Metals Pvt. Ltd. it was held that t....
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....t with mathematical precision. Once the presumption as to the existence of a fact is raised against the assessee that the input has not been transported in the vehicle mentioned in the invoices, it is reasonable to say that the inputs were not received in the factory. In the case of R.V.E. Venkatachala Gounder vs. Arulmigu Viswesaraswami & V.p. (order dated 08/10/2003 in Civil Appeal No.10585 of 1996) the hon'ble apex Court held as follows: " Whether a civil or a criminal case, the anvil for testing of 'proved', 'disproved' and 'not proved', as defined in Section 3 of the Indian Evidence Act, 1872 is one and the same. A fact is said to be 'proved' when, if considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of a particular case, to act upon the supposition that it exists. It is the evaluation of the result drawn by applicability of the rule, which makes the difference. "The probative effects of evidence in civil and criminal cases are not however always the same and it has been laid down that a fact may be regarded as proved for purposes of a civil su....
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....absolute proof being unattainable, the law accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof; often it is nothing more than a prudent man's estimate as to the probabilities of the case. The other; cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered - to use the words of Lord Mansfield in Batch v. Archer (1) "according to the proof which it was in the power of one side to prove, and in the power of the other to have contradicted". Since it is exceedingly difficult, if not absolutely impossible, for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as parts of its primary burden. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is imposs....
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.... obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt. There is an unmistakable subjective element in the evaluation of the degrees of probability and the quantum of proof. Forensic probability must, in the last analysis, rest on robust common sense and ultimately, on the trained intuitions of the Judge. ..............................". 28.8 From the case laws cited above, the department need not prove the case with mathematical accuracy. So long as the department has established the case with such degree of preponderance the existence of a fact, it is sufficient. In the instant case, the burden to establish eligibility to the credit is on the appellant-assessee and if they fail to establish or explain the facts established by the department, and adverse inference arises against them coupled with the presumptive evidence adduced by the department. 28.9 The appellants have also argued that if they required to show that the dealer form whom they purchased the scrap procured the same legitimately, they are being asked to prove the impossible, which is not permissible a....
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....e number of invoices involved in 1089 entailing a credit of Rs. 2.44 crore approx. The case of the department is that in the RG23-D account mai8ntained by the dealers, the invoices issued to the appellants are not reflected and invoices bearing the same number are shown to have been issued to other buyers though for a different quantity and value. Further, in many cases, the transporters who are said to have transported these goods from the dealers' premises to the appellants have denied transporting these goods. In the case of appellants situated in Nasik, the Municipal Corporation authorities have confirmed that as per their records, escort permits, which are statutorily required for movement of these goods into the Corporation area, have not been issued at all which again corroborates the fact that the impugned goods (melting scrap) have not been received by the appellants at all. 29.2 In the case of M/s Amar Ispat Pvt Ltd., one of the appellants in the present case, Sri. Sunil Fakirchand Agarwal, who was working as the General Manager of the said appellant firm during the material period, in his statement dated 03/08/2006, recorded under Section 14 of the Central Excise Act,....
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....crap such as small cuttings of plates, pipes and remnants. In his statement dated 30-4-2004, Mr. H.S. Shah, Director of M/s Simandar Steel Movers (P) Ltd., had, inter alia, stated that they were dealing in both cenvatable material as well as non-cenvatable material. Bo the these goods were stored in the same godown at Bhiwandi. The non-cenvatable material covers the scrap material such as pieces of angle-channel, plate cuttings, pieces of pipes etc. On comparison of these two statements with respect to the nature of the materials supplied by the dealer and received by the appellants, it is clear that the material was non-cenvatable material. In other words, non-cenvatable material, which once again shows that the documents supplied by the said dealer did not pertain to the goods supplied and the cenvat credit was transferred fraudulently. 29.4 The appellants' contention is that they are not responsible for maintenance of the accounts by the dealer. So long as they have paid consideration for what has been received by them, it is sufficient and they cannot be expected to undertake any responsibility more than this, 29.5 This argument is wrong for the following reasons. Sub-rul....
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....e appellants and as per sub-rule (4) of Rule 7 of the CENVAT Credit Rules, as it stood at the relevant time the onus of proving that they are eligible for the CENVAT credit lies on the appellants which they have failed to discharge. Therefore, ratio of the judgment in the cases of D. Bhoormul, cited supra, and A.N. Guha cited supra, apply squarely to the facts of the case and, therefore, even in respect of the parallel invoices/duplicate invoices the appellants are not entitled for the credit. 29.6 The facts of a case decided by the hon'ble High Court of Bombay on 11 Th May, 2012 in M/s Mahalaxmi Cotton Ginning Pressing and Oil Industries v. The State of Maharashtra & Ors. [2012 (191) ECR 0433 (Bombay)] closely resembles the case before me and the ratio decided therein has great relevance. In that case, the constitutional validity of section 48(5) of the Maharashtra Value Added Tax Act, 2002 was under challenge. If the constitutional validity was upheld, the petitioner sought a mandamus to the State to recover from the vendor tax paid on goods of which a set off was claimed. Consequential orders of set off and refund were sought. The petitioner was a re-seller of cotton bales an....
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....). 29.7 Navigating the contentions of the petitioner, the Hon'ble High Court held as follows:- "27. The legislature did not contemplate the grant of a set off without any tax being received into the Government Treasury. The grant of set off without receipt of tax into the treasury would result in a loss of revenue, a consequence which the provision of set-off does not contemplate. .................................................................................................................................... 29. A set off constitutes a concession granted by the legislature. In the absence of a set-off under section 48(5), the selling dealer would be liable under the charging provision of MVAT Act, 2002 to pay tax on the sale consideration. There is no independent right to a set off apart from section 48. The entitlement to a set off is created by the taxing statute and the terms on which a set off is granted by the legislation must be strictly observed. ..............................................................................................................................................
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.... prove that he is eligible for the credit. In none of the cases, the appellants have shown any proof of receipt of the materials supplied by the dealer. The primary evidence of receipt of goods is the consignee's copy of the transport document and the corroborative evidence would be the gate register/material inward register which shows the entry of the vehicles carrying the goods into the factory premises of the appellants. The appellants have not submitted by such proof or maintained any such records showing he receipt of the materials. In a few cases there is a clear admission that the documents on the strength of which credit was availed was not accompanying the goods said to have been received but were received separately. So long as the appellants have not discharged the onus case on them about the receipt of the materials, the presumption that they have not received the materials remain valid and irrebuttable. In such a situation, the only reasonable inference that can be drawn is that they are also a party to the fraud committed by the dealers. This Tribunal in the case of AIA Engineering Pvt. Ltd. vs Commissioner of Central Excise, Ahmedabad - II 2006 (195) ELT 154 held th....