TaxTMI 
TaxTMI 
2015 (11) TMI 373
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....t the same are used in the manufacture of iron and steel wires which in turn are used in the manufacture of nails as also barbered wire/fencing. The conversion of HR trimmings to wires and thereafter to nails/barbered wire fencing etc. is carried out by a large number of small scale units. There is concentration of such units in and around Ahmedabad, particularly in place like Viramgam. Since this conversion is done by small scale units who are exempt from payment of excise duty, they are unable to avail the credit of central excise duty paid on HR trimmings by Jindals. 2. On the other hand, the main appellant in the present case is engaged in the manufacture of MS ingots from iron and steel scrap. There are various sources for getting such scrap. From some of these sources, the scrap is duty paid, for example, shavings left out of mechanical process. In addition to this, scrap is also available from non-duty paid sources such as bazaari or scavenger scrap. Such scrap is non-duty paid. However, the final product of the main appellant, MS ingot, is chargeable to excise duty irrespective of the fact that it is made from duty paid scrap or non-duty paid scrap. 3. For the Viranga....
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.... who would have given the draft or account payee cheques to Jindals for the purported purchase of such goods. Cash may also be used to purchase bazaari/scavenger scrap. Detailed investigation of the case was taken up which included searching various places including the office of certain transporters, broker etc. based in Mumbai and certain incriminating records were recovered during these searches. Statements of various persons including the Director, General Manager of the main appellant as also various other appellants and other transporters and vehicle owners were recorded and based upon the investigation, a show cause notice dated 3.7.2007 was issued to the appellants demanding an amount of Rs. 72,84,903/- of fraudulently availed cenvat credit and also proposing penalty under Rule 13(2) of the Cenvat Credit Rules, 2002 read with Section 11AC of the Central Excise Act, and interest under Rule 12. In addition, penalty was proposed on appellant No.2 under Rule 13(1) of the Cenvat Credit Rules, 2002. Penalty on appellant No.3 to 7 was proposed under Rule 26 of the Cenvat Credit Rules, 2002. The case was thereafter adjudicated vide the impugned order wherein the Commissioner has co....
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....sed in respect of the said transporter. Similar is the position in respect of the statement of Shri Praful Jethalal Thanki of Gayatri Transport. It was also submitted that only one invoice of Gayatri Transport is listed among 403 invoices. It was also submitted that similarly the statement of Shri Suresh Jayantilal Vyas, proprietor of Shrinathji Roadways, is relevant in respect of 10 invoices and is not relevant for the remaining invoices. It was also submitted that the case is hit by limitation because the appellant has received the goods and the appellant had no reasons to doubt that the duty paid nature of the goods received by it and the appellant has paid the amount through account payee cheques. It was submitted that reliance is placed on the decision of the Hon'ble Supreme Court in the case of Kay Kay Industries reported in 2013 (295) ELT 177 (SC). It was also submitted by the learned counsel that the evidence brought forth by the department, even if assumed to be true, admittedly covers only 224 invoices and therefore the entire demand on 403 invoices cannot be upheld. 5.1 Insofar as appellant No.2, Shri Sandeep Garg, is concerned, it was submitted that Shri Sandeep Garg....
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....E vs. Navneet Agarwal reported in 2012 (276) ELT 515 (Tri.-Ahmd.); (iv) Vee Kay Enterprises vs. CCE reported in 2011 (266) ELT 436 (P&H). 6.2 In addition to the above case laws, the learned AR relied upon the Honble Supreme Court decision in the case of Indian Special Casting Pvt. Ltd. vs. CCE reported in 2010 (255) ELT A44(SC) which is relating to availment of cenvat credit without receipt of the goods. The learned AR submitted that the Honble High Court of Punjab & Haryana in the case of Indian Special Casting Pvt. Ltd. vs. CCE, Ludhiana reported in 2010 (255) ELT 209 (P&H), has upheld the Tribunals order holding credit availment without receipt of the goods fraudulent and plea on limitation was also rejected. It was also submitted that the appellants plea that they have paid for the goods by cheque and payments to transporter made in cash is not tenable. The learned AR submitted this Tribunals decision in the case of CCE, Ludhiana vs. C.L. Engg. Ltd. reported in 2012 (279) ELT 262, wherein the Tribunal has held that manipulated transactions just to take credit - payment for such transaction through cheque is to be considered as part of manipulation only. 6.3 ....
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....tandis 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. 73.3 The Cenvat Credit Rules, 2004, deal 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 inputs or capital goods and received by the manufacturer for use in or in relation to the manufacture of final products. Rule 4 of the said Rule stipulates that Cenvat credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service. Rule 9 of Cenvat Credit Rules, 2004 deals with the documents and accounts on the basis of which the Cenvat credit can be taken and this includes an invoice issued by a manufacturer, an importer, a first stage dealer or second stage dealer. Sub-rule (2) further stipulates that no Cenvat credit shall be taken unless all the particulars as prescr....
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.... 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 the strength of a certificate issued to the manufacturer or supplier by the jurisdictional Superintendent of Central Excise. 73.5 The Central Excise duty regime underwent a significant change with effect from 1-10-1996. Under the new regime, assessment of the tax liability by the department which hitherto existed was done away with and self assessment facility was extended to the assessees. 73.6 Paragraphs 134? and 135 of the Finance Ministers Budget Speech for the year 1996-97 lucidly explains the new regime which was introduced. "134. Our excise procedures are outdated and not in tune with the times. They need to be modified. They ....
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....ty to use the inputs. Later on, the Government has reposed more faith in the manufacturer-assessees and all such requirements have been done away with. However, reposing the faith on the manufacturer-assessee does not imply that they can avail the credit of duty on the basis of invoices without getting the goods covered by such invoices. Any such act by any manufacturer-assessee is nothing but act of fraud and total misuse of faith and trust reposed in the assessees. 9. In the present case, the Revenue has raised the demand in respect of 403 invoices. Invoices are pertaining to HR trimmings. Revenue's case is that the said HR trimmings were transported from Jindals, Vasind/Tarapur to Viramgam based dealers/SSI units while the corresponding invoices were made in the name of the main appellant and the said invoices did not travel along with the goods, but only the invoices were received by the main appellant and they took credit on the basis of such invoices without receiving the HR trimmings. During the investigation, the main appellant and their officials including appellant No.2 were specifically asked whether they have any evidence whatsoever to prove that the goods viz. HR tr....
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....rayan Transport it was found that 84 vehicles consigned to M/s. AIPL from M/s. JISCO & M/s. JSAL were in fact transported the goods to various destinations in Gujarat. The vehicle numbers in the above 84 cases are appearing on the invoices issued by M/s. JISCO & M/s. JSAL in the name of M/s. AIPL. (iii) "vii) Vehicle No. GJ 10 U 8157 and GJ 13 T 5226 owned by Shri Suresh Jayantilal Vyas, were appearing on ten invoices of M/s. JISCO & M/s. JSAL which was in fact indicating that the goods i.e. H.R. Trimmings & M.S. scrap were transported to Gujarat and not to the factory premises of M/s. AIPL. (iv) "viii) From the records of M/s. Gayatri Transport Service it was found that the goods covered under invoice No. 12109063 dated 31/.2003 of M/s. JISCO, Tarapur issued in favour of M/s. AIPL was transported to Satej in vehicle No. GJ 11 W 2910. (v) "iv) Further from the records of M/s. Star Industries, Tarapur it was found that goods consigned to M/s. AIPL from M/s. JISCO, Vasind under invoice No. 1306515 dated 11.9.2003 and 1307516 dated 11.10.2003 through vehicle No. MCT 5101 and MCU 1051 respectively were in fact delivered to M/s. Star Industries, Tarapur. ....
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....ation with reference to the records recovered from various transporters. Thus, even if the statements of the co-noticees are ignored, the demand will still hold good. If the main appellant would have produced some evidence to contradict Revenues claim, we would perhaps be inclined to hold that denial of cross-examination has prejudiced their case. This Tribunal in the case of Jagdish Shanker Trivedi (supra) has observed as under:- "7. We first take up the contention that there was denial of principles of natural justice by not offering the witnesses for cross-examination by the appellant Ashish Kumar Chaurasia, despite his request that all witnesses should be examined. We have already noted that the appellant, Ashish Kumar Chaurasia had cross-examined two officers on 19-6-1995. It also transpires that summons were sent to Ram Avatar Singhal, Ram Kumar Mishra and Ram Bilas Mandal (driver), Jagdish Shanker Trivedi and Dilip Kumar Singhal, who refused to be cross-examined on the ground that they cannot be compelled to give incriminating evidence against themselves in view of their fundamental right guaranted by Article 20(3) of the Constitution under which no person accused ....
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....es of such HR trimmings were of no use to them, they were trading the invoices through brokers based in Mumbai who in turn were locating the furnace units who could fraudulently avail the credit based on such invoices. The cash amount of HR trimmings being sent through angadia or other services from Viramgam and nearby area and were being converted into Bank Draft etc. through banking channels either by such brokers or by manufacturers of ingots or was used in cash to purchase bazaari scrap/scavenger scrap. In view of the above position, we have no hesitation in holding that the demand and penalty imposed on the main appellant is correct and the appeal of the main appellant is, therefore, dismissed. Appellants contention on limitation is also rejected as this is clear cut case of fraud as credit is availed without receiving the duty paid goods covered by the corresponding invoices. 11.1 As far as appellant No.2 is concerned, we find he was the Director of the main appellant-company and was supervising the day-to-day operation. It is incomprehensible that such a thing could happen without his knowledge. In our view, he would be main beneficiary. We also note that in his initial ....
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....) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rides, shall be liable to a penalty not exceeding the duty on such goods or [two thousand rupees], whichever is greater. (2) Any person, who issues- (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT Credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. In the present case, goods were not transported to consignee as per duty paying invoice and this was done to evade duty by availing credit fraudulently, thus goods are confiscable under Rule 25. ....
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.... cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty. 11. As regards alternative submission of the appellant, that even if there is jurisdiction to levy penalty equal to the amount of duty evaded distinction in culpability may be found in person who actually evades the duty and the person who enables the same to be done. This distinction in culpability may be required to be gone into from case to case. The Tribunal does not seem to have been conscious of this issue. 12. The penalty prescribed is admittedly not the minimum. Its quantum will thus be in discretion to be exercised having regard to mitigating or aggravating circumstances. In the context of exercise of discretion of imposition of appropriate sentence, it was observed in State of Karnataka v. Puttaraja, AIR 2004 SC 433 :- "10.....