TaxTMI 
TaxTMI 
2018 (2) TMI 16
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.... case, the demand raised by the Respondents is sustainable since even if credit is denied to the Appellants, it is simultaneously available to other factories who according to the Respondents have received the inputs under consideration? b) Whether, in the facts and circumstances of the case, the Respondent is correct in invoking extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 12 of the erstwhile Cenvat Credit Rules, 2002? 2. Since we have heard extensive arguments of both sides, we dispose of these Appeals by the present order. 3. The assessee has pointed out that it is a company duly incorporated under the Indian Companies Act, 1956. The respondent exercises powers and discharges duties conferred upon him under the Central Excise Act, 1944. The appellants are engaged inter alia in manufacture of rolled products of iron and steel falling under Chapter 72 of the Central Excise Tariff Act, 1985. There are six factories of M/s. Sanvijay Group of Industries (for short, "Sanvijay Group"). Out of six factories, five are located in MIDC, Hingna Road, Nagpur and one is located at MIDC, Butibori. In para 7 of the memo of....
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....Tons (MTs). The statements were recorded of various persons and the officers came to the conclusion that there was no proper explanation provided. It is in these circumstances, it was alleged that the appellants had taken wrong credit of Rs. 21,14,189/­ on the inputs which were received and consumed in another factory of Sanvijay Group located at Butibori, whereas only duty paying documents were received in the factory of the appellants. That is how a common show cause notice dated 18th/24th December, 2003 was issued to all the units listing out the alleged irregularities noticed in the individual units. The appellants were therefore called upon to show cause as to why the amounts mentioned in the notice besides penalty should not be recovered. 6. Replies were filed to notice on 18th November, 2004 after which the order­in­original was passed on 30th March, 2007. Aggrieved thereby, an appeal was carried to the Commissioner (Appeals). The Commissioner (Appeals), after a personal hearing, proceeded to dismiss the Appeals by the order­in­Appeal dated 12th September, 2007. 7. That is how the appellants and others preferred Appeals before the CESTAT and which h....
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....tiated by any error of law apparent on the face of record or perversity warranting our interference in our further appellate jurisdiction. He would submit that once the allegations are admitted, then, the consequences must follow. The explanation that has been given by the assessee is not reasonable and truthful. This is a case where inputs have been diverted in order to evade payment of duty. All the explanations now given are pure after thought. In the circumstances, we should dismiss these Appeals. 12. Since the paper book is complete, as noted above, we have proceeded to dispose of these Appeals. The show cause notice which is common to all the units, proceeds and alleges that the six units named therein are of M/s. Sanvijay Group of Industries. They have common registered office. That was visited by the officers of Central Excise Commissionerate, Nagpur on 20th May, 2003 to carry out preventive checks. During the course of verification of the statutory records with the physical stocks of finished goods as well as raw materials with cenvat credit, it was prima facie revealed that there were discrepancies in the stock of finished goods as compared to the recorded balance, ....
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....e order­in­original and the orderin­Appeal, proceed on the footing that there has been no serious denial of the allegations in the show cause notice. The order­inoriginal goes unit wise and in the discussions and findings, the order­in­original says very clearly that the assessee did not maintain the statutory record of finished goods/raw materials correctly. If the Central Excise Officer had not detected the shortcoming, it would be continued for future and the Department would be deprived of Central Excise duty. That is a conclusion which runs throughout, but what we find from the reasons is that this surprise visit revealed that the shortage of finished goods/raw materials was noticed during verification of the statutory records with the physical stocks at the six units. The assessee did not maintain that record correctly, but in none of the findings and conclusions it is held that there was a diversion of stocks. It is only an omission to record the inter­unit transfer. It is in these circumstances that we expected the Commissioner (Appeals) at least to take an appropriate decision. However, the Commissioner (Appeals) as well, while confirming the vi....
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.... the demand in respect of shortage found in the physical stock and consequent penalty commensurate to the duty on such shortage. Thus, the Group, the units and their activities were known to the Revenue. It is not as if the shortage was noticed for the first time. The shortage was not to such an extent as would make a demand for duty interest and penalty sustainable. It was in the permissible range. 16. Thus, the Appeals succeeded partly. 17. As far as the issue of wrongful availment of cenvat credit is concerned, the Tribunal did not consider the arguments and submissions in their proper perspective. Throughout, the admission was not of any guilt but of an irregularity. The inputs were initially received and delivered on different unit, but credit was availed of by the unit in whose name the invoices were issued. The finding is that the assessee could not produce any single evidence regarding re­transportation of inputs from wrong factory to the correct factory. Therefore, it is clear that the cenvat credit was availed by the assessee but the input was delivered at different factory and it was used in the production by the different factory. At the same time, the assesse....
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....ness, managed and administered by common partners and directors and have a common head office. The product namely the inputs which were raw materials for all three companies/concerns arrived at the factories and were cleared without payment simply because they were exchanged with the associate companies. It is no doubt true that the procedure adopted was not in consonance with the formalities prescribed by law, however, even the examination of private books and the entries therein having been corroborated by the transporters, resulted in no revenue loss, then, the Tribunal's conclusion cannot be said to be perverse. The Tribunal has found that the jurisdictional Gujarat High Court considered a similar controversy and questions. The Tribunal found that once the inputs have been delivered only at the factories of the assessees from the associate companies, then no loss occurs to revenue. The assessees would derive no benefit by not reversing Cenvat credit on the inputs, when sister concerns are also eligible to take Cenvat credit. Therefore, in the absence of cogent and reliable evidence particularly on the diversion of these inputs, the Tribunal applied the doctrine or principle....