TaxTMI 
TaxTMI 
2020 (1) TMI 543
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....uthority also appropriated an amount of Rs. 50,00,000/- (Rupees Fifty Laks) only as sdeposited by the appellant towards the aforesaid liabilities of payment of Central Excise duty. A penalty of Rs. 24000/- (Rupees twenty four thousand) only under Rule 209A of the Rules was also imposed upon the appellant No. (2), Shri Kamal Kumar Choudhary, the Director of the appellant company. Being aggrieved by the said order the appellants are in appeal before us. 2. This is the second round of litigation before this Tribunal. In the first round the Tribunal vide its Order No. A-1151-1152/Kol/08 dated 17.11.2008 set aside the Order-in-Original No. 03/Ch.-72/Commr./CE/Kol-ii/Adjn/04 dated 28.01.2004 passed by the Commissioner of Central Excise Kolkata. 3. The brief facts of the case are that the appellant is a manufacturer of alloy and non alloy Steel Ingots falling under Tariff Act item No. 7206.90 of the First schedule to the Central Excise Tariff Act, 1985. During the course of manufacture of their finished goods, the appellant had availed Modvat Credit of duty paid on the raw materials during the year 1995-1996 (01.04.1995 to 28.01.1996) on the basis of alleged fake duty paying documen....
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....only modvat documents and show cause notices were issued to them also. 7. Shri Kamal Kumar Agarwal, Partner of M/s. Ram Kumar and Shri Kamal Kumar in his statement dated 27.01.1996, recorded under Section 14 of Central Excise and Salt Act, 1944 stated that he used to deal with SAIL, TISCO, IISCO and used to supply steel products to re-rollers/ cutters and other manufacturer. This supply was made in cash transactions without any official accounting like bills, chalan etc. The purchase papers of these traders/dealers were thereafter purchased by him in his company's name, M/s. Ram Kumar, Kamal Kumar and Saraswati Enterprises. For these purchases he used to get back cash from the buyer less the commission which used to vary between Rs. 50-100 per M/T. Thereafter, he used to sell these documents to furnace units like Agarwal Steel Complex, Bengal Hammer, Sarvopari and Refine and others. The system was to receive payment in cheque/ Purchase order/ DD from these units for the value of the material covered by the documents sold by him and return cash minus his commission and brokerage which varies between Rs. 100-250/-. 8. The appellant had been using 'bazaar scrap' as apparent from....
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....mitted. Therefore, the finding in respect of Vindhya Steel has attained finality. The position about the other appellant was not known to the appellant. 13. The Learned Advocate has also placed reliance on the decision of this Tribunal in case of Shri Mahesh Kumar Goel and another Vs. Commissioner of Central Excise, Kolkata-II (Order No. A-827-830 dated 18.09.1998), wherein it is held that the evidence relied by the department against the registered dealers, who passed on the credit to their customers, were not adequate to prove the case against the dealers. Such allegations are not maintainable under the law. This order of the Tribunal has been up held by the Hon'ble Kolkata High Court. 14. Shri Hardhan Dutta, who was produced for cross examination before the Adjudicating Authority on 17.11.1996, categorically denied his statement dated 11.07.1996, which is relied upon by the department in the proceeding. He further stated that his statement was obtained by Shri Anand Gupta, officials of DGAE, kolkata under duress. 15. In view of above, the Learned Advocate contended that the Modvat credit has been availed on the basis of receipts of the input material and payment of cent....
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....tigation is purely on the basis of imagination and without any legal basis. It is up to the manufacturer to use the goods as input or raw material in the process of manufacture and the department cannot force them to use a particular kind of input / raw material for the manufacture of finished product considering their economic viability, technical feasibility and infrastructural requirement. The department has also accepted the payment of duty on the goods sold by these dealers and hence it cannot deny the availment of modvat credit by the buyer of these goods, if put to use in the manufacturing. 20. In this regard we find that the decision of Hon'ble Allahabad High Court in case of Commissioner of Central Excise, Customs and Service Tax Vs. Juhi Alloys Limited 2014 (302) EL.T. 487 (All.) is squarely applicable to the facts of the present case. This decision has been referred in case of Cenvat Credit Rules 2004, however, the same would be equally applicable in case of modvat as well. The relevant paragraph of the order is reproduced of the order: 4. This view has been affirmed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (in short 'the Tribunal'....
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....or input service, or the input service distributor distributing Cenvat credit on input service shall take all reasonable steps to ensure that the input or capital goods or input service in respect of which he has taken the Cenvat credit are goods or services on which the appropriate duty of excise or service tax as indicated in the documents accompanying the goods or relating to input service, has been paid." 6. The Explanation to Rule 9(3) of the Rules of 2004 provides a deeming fiction where a manufacturer or producer of excisable goods who takes Cenvat credit on inputs, would be deemed to have taken reasonable steps, if he satisfies himself about the identity and address of the manufacturer or supplier or provider of input services, as the case may be, issuing the documents specified in sub-rule (1) on the basis of his personal knowledge or on the basis of a certificate given by a person with whom he is familiar or on the basis of a certificate issued to the manufacturer or the supplier by the Superintendent of Central Excise concerned. In other words, the Explanation to Rule 9(3) provides a deeming definition as to when a manufacturer or a purchaser of excisable goods ....