TaxTMI 
TaxTMI 
2014 (3) TMI 412
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....ions were conducted at the end of the first stage dealer, M/s. Bhagwati Trading Co. and the manufacturer M/s. Khemka Ispat Ltd. In terms of the statement of various persons recorded by the Revenue, it turned out that M/s. Bhagwati Trading Co. was issuing only invoices in the name of M/s. Khemka Ispat Ltd. without the corresponding supply of the inputs and M/s. Khemka Ispat Ltd. was issuing excise invoices without the actual supply of their final product. As such, the bogus credit availed by M/s. Khemka Ispat Ltd. on the basis of the cenvatable invoices issued by M/s. Bhagwati Trading Co. was being used for showing payment of duty on their final product, which was never manufactured by M/s. Khemka Ispat Ltd. As M/s. Bhagwati Trading Co. were further issuing cenvatable invoices to M/s. Steel Mongers (I) Pvt. Ltd., who were further issuing the invoices to various manufacturers, Revenue entertained a view that the purchaser of the raw-material from the second stage dealer M/s. Steel Mongers (I) Pvt. Ltd. were not entitled to the benefit of the CENVAT credit. Accordingly, investigations were also conducted at the appellant's end. Shri Sunder Lal Aggarwal, Director of the appellants, ....
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....y on their final product, the Revenue's remedy lies at their end. Admittedly, the present appellants have got nothing to do either with the first stage dealer or with the manufacturer of the goods. He has admittedly purchased the goods from the second stage dealer after making consideration of the goods in question along with excise duty, by way of cheque/Demand Draft. In fact, it is not even the Revenue's case that the said appellants have not received the raw-materials in question in as much as there is no evidence to that effect and the appellants have produced the ST 38 challans showing movement of the goods to the appellants factory. 5. In terms of the provisions of Rule 7(2) of the CENVAT credit Rules, 2004, the manufacturer taking CENVAT credit of inputs or capital goods is required to take all reasonable steps to ensure that the inputs or capital goods in respect of which he has taken the CENVAT credit are goods on which the appropriate duty of excise as indicated in the documents accompanying the goods has been paid. How and in which manner the reasonable steps are required to be taken by a manufacturer. The answer lies in the Explanation to Rule 7(2). The same is to th....
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....ed that the appellant had procured the inputs from M/s. steel Mongers (India) Pvt. Ltd., a second stage dealer under the proper duty paying documents. There is no dispute on this aspect as the adjudicating authority has not mentioned anything indicating non-receipt of inputs under the cover of the said invoices. In the present case I find that the adjudicating authority has adjudicated the case on the basis of investigations and statements of Shri K.P. Khemka, Director of M/s. Khemka Ispat Ltd., the manufacturers and Shri Rupesh Bansal, Pro. M/s. Bhagwati Trading Co. a first stage dealer who were issuing cenvatable invoices to various parties. He has relied only on evidence of manufacturer supplier and first stage dealer without looking into the records of the appellants. Therefore, it is not the case of the department that the goods were not received in the factory. Further there is no dispute that the appellant had discharged its contractual liability by making the payment of invoice price to M/s. Steel Mongers, a second stage dealer who supplied the inputs to the appellant no.1. In fact the payments have been made through banking channel. The appellant has submitted sufficient e....
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....the basis of preponderance of probabilities. He has also relied upon various decisions of the Tribunal but has simplicitor observed that they are not applicable to the facts of the present case in as much as the Revenue has been able to prove that the original manufacturer has not manufactured the goods at all and accordingly, rejected the appeal. 9. I find that in the light of the observations made by the Commissioner (Appeals) as also the factual position that the appellants have received the goods, the burden placed upon them under Rule 7(2) of the CENVAT Credit Rules, 2002 stands discharged. A manufacturer cannot be expected to undertake investigations like Revenue officers and to find out the truth behind the scene. As long as he is receiving the goods from a known dealer under the cover of the invoices and making payments by cheques, he is deemed to have discharged the onus placed upon him under the said rule. This has been the ratio of all the precedent decisions of the Tribunal. Tribunal in the case of Rishab Industries Vs. CCE & ST, Goa [2007-TIOL-1330-CESTAT-MUM] has held that the fraudulent cr....