TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 30
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.... SMI and Shri Rupesh Kumar Gaur, is the Accountant of SMI. The period of dispute in this case is 2005-2006. The appellant were availing Cenvat credit of Central Excise duty paid on inputs used in or in relation to manufacture of their final product, as per the Cenvat Credit Rules, 2004. According to the appellant, they were manufacturing copper wire from copper ingots received from M/s V.K. Metal Works, SIDCO Industrial Complex, State of J&K (hereinafter referred to as VKM) and that the copper ingots received from VKM were being converted into wire rods on job work basis under job work challans through M/s Ganpati Rollings Pvt. Ltd. (hereinafter referred to as M/s Ganpati) and M/s J.V. Industries Pvt. Ltd. (hereinafter referred to as JVI). M/s Kanpur Kashmir Roadways (hereinafter referred to as KKR) and M/s Upkar Goods Transport Co. P. Ltd. (hereinafter referred to as UGT) are the transport companies, who according to the appellant had transported the copper ingots from the factory of VKM in Jammu to the premises of their job workers - M/s Ganpati and M/s JVI. During 2005-2006, the appellant took Cenvat credit amounting to Rs. 90,63,027 /- on the basis of invoices issued by VKM reg....
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....s of which a number of other manufacturers of copper products have availed bogus Cenvat credit, as in terms of Rule 12 of the Cenvat Credit Rules, 2004 a customer of a unit located in the exempted areas of the State of J&K availing duty exemption under Notification No. 56/2002-CE is eligible for Cenvat credit as if no part of duty was exempt. It is on this basis that the department has alleged that SMI have availed the Cenvat credit of Rs.90,63,072 /- in a fraudulent manner on the basis of bogus invoices issued by VKM without actually receiving any material. The department, therefore, issued a show cause notice seeking recovery of the allegedly wrongly taken Cenvat credit of Rs. 90,63,072/- from SMI alongwith interest, imposition of penalty on SMI under Rule 15(2) of Cenvat Credit Rules, 2004 readwith Section 11AC of Central Excise Act, 1944 and also for imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on - Shri Pramod Kumar Gupta, and Shri Roopesh Kumar Gaur, Director and Accountant respectively of SMI, KKR and UGT, the transporters, VKM who had issued bogus invoices and M/s Ganpati and JVI, the job workers. 1.2 The above show cause notice was adjudicated by ....
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....y Commissioner, Central Excise & Customs, Allahabad, that copper ingots despatched by VKM had been received, as per the instructions of SMI, directly in the factory of their job workers M/s Ganpati and JVI where the same had been converted into wire rods, which had been received in the factory of SMI and from which the copper wire had been manufactured, that in view of these circumstances, the impugned order confirming Cenvat credit demand against SMI, and imposing penalty on them is not sustainable, that for the same reason, there is no absolutely no justification for imposition of penalty on Shri Pramod Kumar Gupta and Shri Roopesh Kumar Gaur under Rule 26 of the Central Excise Rules, that the appellants have a strong prima facie case and, hence, the requirement of pre-deposit of Cenvat credit demand, interest and penalty from SMI and the requirement of pre-deposit of penalty imposed on Shri Pramod Kumar Gupta and Shri Roopesh Kumar Gaur may be waived and recovery thereof may be stayed till the disposal of the appeals. 4. Shri R.K. Hasija, Advocate, the learned Counsel for VKM pleaded that penalty of Rs. 90,63,072 /- has been imposed on M/s VKM under Rule 25 of Central Excise. R....
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....idence of receipt of copper ingots by Ganpati and JVI and similarly there is no evidence of receipt of wire rods by SMI, that while the job worker's units are located at Shahdara and the factory of SMI is located at Faridabad, there is no evidence of payment to transporters for transportation of wire rods from Shahdara to appellant's factory at Faridabad, that there are no weighment slips; and no inward records at the factory of SMI regarding receipt of wire rods, that though the copper ingots are claimed to have been transported through KKR and UGT, it is on record that the address of KKR at Jammu was found to be fictitious, that there is also evidence in form of statements of Shri Devender Kumar Jain of M/s Vikas Traders, Delhi who has stated that he had never supplied any copper scrap to VKM and had only issued invoices regarding supply of copper scrap for which he was getting commission, and that statement of Shankar Lal Gupta, Authorised Signatory of VKM also shows that there was no manufacturing activity in their factory and only bogus invoices had been issued which had been sent alongwith the GRs of KKR and UGT without actually supplying any material. He also emphasised that....
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....ustoms Act, 1962, Hon'ble Andhra Pradesh High Court in case of SQR International Ltd. vs. CCCE, Hyderabad, relying upon - (i) judgments of the Apex Court in the cases of Benara Valves Ltd. vs. CCE reported in 2008 (12) STR - 104 (S.C.), Indu Nissan Oxo Chemicals Ltd. vs. UOI reported in 2008 (221) E.L.T. 7 (S.C.), S. Vasudeva vs. State of Karnataka reported in AIR 1994 SC - 923 and (ii) judgment of Hon'ble Andhra Pradesh High Court in case of CCE, Guntur vs. Srichaitanya Educational Committee reported in 2011 (22) S.T.R. - 135 (AP), has laid down the following principles - (a) While dealing with the question of waiver of the requirement of pre-deposit and stay on recovery during pendency of appeal, twin consideration of 'undue hardship' and safeguarding the interests of revenue must be kept in view. (b) ' undue hardship' exists when - (i) hardship caused by the requirement of pre-deposit is greater than the circumstances warrant, is not merited by the conduct of the appellant or is very mu....
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....aud, wilful misstatement, suppression or contravention of the law with intent to evade the tax would not deserve the dispensation from the compliance with the provisions of Section 129E of Customs Act, 1962 or Section 35F of the Central Excise Act, 1944. 9.2 The stay application shall be decided keeping the above principles in mind and for this, the main point which has to be decided is as to whether the appellant have a prima facie case in their favour. 10. Coming to the question as to whether the applicants in this case have prima facie case or not it would be worthwhile having a look at the nature and seriousness of the allegations against the appellants which are linked with Notification No. 56/2002-CE available to the manufacturers having factories in certain specified areas in the State of J&K and manufacturing certain specified goods and also Rule 12 of the Cenvat Credit Rules, 2004. Notification No. 56/2002-CE during the period of dispute, exempted the specified goods manufactured in the units located in certain specified areas of the State of Jammu & Kashmir, from the basic excise duty and additional excise duty, to the extent such duty is paid in cash i.e. through PLA. ....
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....had been refunded. The main appellant in this case - SMI Electrowire Pvt. Ltd. is alleged to have availed Cenvat credit of Rs. 90,63,072/- during 2005-2006 on the basis of 23 invoices issued by VKM. Though a separate show cause notice dated 5/1/10 has been issued to VKM and same has not been adjudicated, some of the evidence relied upon in the case against VKM and in the case against SMI and other applicants in this case is common and that evidence is - (a) statement dated 21/1/09 of Shri Shankar Lal Gupta, Authorised Signatory of M/s SKM, wherein he stated that there was absolutely no production in the factory of VKM and only invoices had been issued without supplying any material; (b) the statement dated 4/1/08 of Shri Davender Kumar Jain of M/s Vikas Traders, Bhiwadi who is claimed to have supplied copper scrap to VKM and who in his statement has stated that no scrap was supplied by him and only the invoices had been issued to VKM regarding supply of copper scrap on the instruction of one Shri Deepak Agarwal and for which he was getting Rs. 60/- per M.T. and (c) the fact that the premises of the transporters under whose....