TaxTMI 
TaxTMI 
2024 (5) TMI 5
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.... the manufacture of steel granules and powder, cut wire shots and steel casting falling under chapters 72 & 73 of the Central Excise Tariff. They were also availing Cenvat credit on inputs, including MS Waste & Scrap. The Directorate General of Central Excise Intelligence received intelligence and investigated several manufacturers and traders including those which supplied the invoices to the appellant and the supporting manufacturers indicated in the invoices and came to the conclusion that the manufacturers and the traders did not exist at the addresses given in the invoices. The investigation concluded that only documents had been supplied to enable the manufacturers of final products, including the appellant to take Cenvat credit without actually supplying the goods. Based on the intelligence received and investigation by DGCEI and other enquiries, a Show Cause Notice dt 02.12.2016 was issued by the Commissioner of Central Excise, Raipur to 11 noticees, including the present two appellants. It is alleged that during the relevant period, the Appellant received only duty paying documents, without accompanying goods, from two 2nd stage dealers, namely (i) M/s. Jai Balaji Steel & ....
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....y passed the impugned order and confirmed the full demand along with interest and imposed penalties. 4. At the outset, the ld counsel for the appellant submitted that similar proceedings were initiated on the basis of the same investigations against M/s. Prakash Industries Ltd. vide Show cause notice dated 26.05.2017 wherein the duty paid MS scrap had been procured directly by the party from the same 5 first stage dealers, namely, (i) M/s. RMS Steel Tech Company, Raipur, (ii) M/s. Jetking Trading and Agencies (P)Ltd., Raipur, (iii) M/s. Yes Commtrade (India), Raipur, (iv) M/s. SR Metallic, Raipur; and (v) M/s. Bright Metal & Steel, Raipur, as well as one other. The same allegations were made that the party had received only invoices from these dealers without receipt of duty paid goods and, accordingly, Cenvat Credit amounting to Rs.22,25,89,453/- was proposed to be denied. Investigations were done on similar lines, as in the present case, and the evidences relied upon were also the same. The said case was adjudicated and decided against the party vide Order-in-Original dated 19.06.2018. However, on appeal the CESTAT, New Delhi, vide Final Order No. 50426- 50430/2019 dated 27.03.2....
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....lied upon if they have not been subjected to examination-in-chief by the adjudicating authority and thereafter allowed cross-examination by the noticee, as per Section 9D of the Central Excise Act, 1944. He also submitted that no kabari or bazaar scrap was found in the factory premises of the appellants when the officers visited the premises on 19.09.2015, neither was there any discrepancy in raw material or finished goods stocks. 4.3 The learned counsel further stated that as all the manufacturers and dealers were duly registered with Central Excise, it has to be presumed that the addresses given in the registration certificates were duly physically verified and inspected by the jurisdictional Central Excise officers and found to be in order. Whenever a manufacturer/dealer is registered by the Central Excise Department, the department is required to verify the premises of the registrant within 5 days as per para 5.7 of Chapter 2 of the Supplementary Instructions, 2005, relating to Central Excise [Also refer para 5.6 of Board's Circular No 662/53/2002-CX, dated 17-9-2002]. He stated that lt was obvious that the verification was duly done in these cases and no discrepancies wer....
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....mon trade practice and is referred to as "Bill to- Send to" system. Further, in his statement dated 30.09.2016 (RUD-49) Shri Anil Kumar Shivdasani, Director Maa Mahamaya Steels Pvt Ltd, had confirmed sale of finished goods to RMS Steel Tech Co and others. This has not been denied by the department, and consequently is contrary to the stand of the department that the firm RMS Steel Tech Co is fictitious. 4.6. The learned counsel also stated that in the case of M/s. Jetking Trading and Agencies (P) Ltd, the registered address of this dealer was found to exist and the only ground for suspecting its transactions was that the access to its premises was not possible for heavy vehicles carrying waste and scrap of iron and steel. In respect of M/s. S.R. Metallic, Raipur, the learned counsel submitted that this 1" stage dealers registered premises were existing but the premises were found closed on physical verification on 29.09.2015. On this ground, the dealer has been labelled as a fake company and that fake invoices had been issued without accompanying goods. With respect to another 1st stage dealer M/s. Yes Commtrade (India), the ld counsel submitted that the only ground for holding th....
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....ngly abetted the availment and utilization of irregular Cenvat credit. He also submitted that to impose penalty under Rule 26, some goods have to be held liable for confiscation. Since there was no proposal in the show cause notice holding any goods liable for confiscation, no penalty can be imposed under Rule 26 of the Central Excise Rules, 2002. 6. The learned Authorised Representative submitted that 2nd stage dealer, as the case may be, do not pay any duty, but are instrumental in passing the Cenvat credit of the duty which was paid by the manufacturer. In order to pass on the Cenvat credit by a dealer, the invoices issued by them mandatorily require to capture details of manufacturer if invoices are issued by 1st stage dealer, and if the invoices are issued by 2nd stage dealer, then the invoice must contain details of manufacturer and its 1st stage dealer along with details of duty payment. The learned Authorised Representative submitted that the appellant has not offered any evidence to controvert the Panchnama which proves their non-existence. Once the manufacturer was found to be non- existent, no duty would have been as well as the appellant's case is also not on the g....
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....ischarge burden to establish actual receipt of goods; mere production of invoice and payment to selling dealer by account payee cheque was not sufficient. Though this case is about GST credit, but the underline principles of availing credit under the erstwhile law of Central Excise and present law of GST has not change. He further submitted that the rationale of Cenvat Credit is to avoid cascading effect. Once it is established that no duty was paid, the question of cascading effect of tax on tax does not arise. There cannot be any claim of seeking Cenvat Credit on the plea of maintenance of record or payment of an amount as duty by beneficiary to the 2nd Stage dealer. Merely mentioning or naming an amount as duty, it does not acquire character of duty unless said amount is paid to Government Exchequer, which is absent in the present case. The learned Authorised Representative further submitted that fake invoicing is where a registered person issues invoices for the supply of goods without actually supplying such goods. Generally, a fake invoice passes through a chain of fake invoice generators before it lands in the lap of a recipient of goods who is actually involved in making ou....
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....the appellant is that they have paid duty, which the ld AR contended is not duty. The said 2nd stage dealer has not paid this amount as duty to the Govt. Even the said dealer has not paid the duty to 1st stage dealer as he was not in-existence and further to manufacturer since the manufacturer was non-existent. Therefore, this amount supposedly represents duty which was never paid to the Government. The learned Authorised Representative submitted that mere production of a tax invoice, establishment of the movement of goods and receipt of the same and the consideration having been paid through bank accounts would not enable the Cenvat Credit, unless the credit is available by virtue of its payment to the Government account. The seller and purchaser have an independent contract without the junction of the Government. It is clear that the literal nomenclature and the statutory language, mandates that the burden of proof to establish the eligibility is with the purchaser to claim Input Tax and otherwise the claim would be frustrated. 7. We have heard both the sides and perused the records placed before us. We find that the impugned order was passed based on the wide scale investigatio....
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....the physical entry of the inputs in the assessee- Appellant's premises. Further, the ledger account and RG-23A register maintained by the assessee-Appellant supported by weighment slips also prove the receipt of the goods. During the course of arguments before this Tribunal, the assessee-Appellant also produced the invoices against which they have availed the Cenvat Credit along with supporting documents including lorry receipts and weighment slips. Therefore, the burden is cast upon the Revenue to prove that it was merely a paper transaction and goods were not received by the assessee Appellant, which it failed. 17. It is further shown that all the payments made to the First Stage Dealers are through banking channels by way of Cheques/RTGS. The Revenue has not brought on record any evidence to prove any flow back of monies. 18. The Revenue's reliance on the VAT Returns filed by the First Stage Dealers to contend that there is no mention of any receipt of goods from units at Dhanbad is untenable in as much as the VAT Returns sought to be relied upon by the Revenue only pertains to purchases within the State made by the said First Stage Dealers. Purchases made by the First Stage....
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....ble as Cenvat credit is a rupee less of tax paid in cash. The case of the Revenue in this appeal is that the manufacturers and the traders did not exist at all but they were still registered by the department. There is no justification for such registrations by the department. The DGCEI or the Commissionerate does not investigate or even question the officers who issued these registrations to manufacturers and dealers who did not even exist. Further, if the allegedly non-existent registrants were also filing returns which were also being accepted and scrutinized by the officers as claimed by the learned counsel for the appellants, there does not appear to be any investigation as to how the Returns of the "non-existent‟ Registrants were being accepted by the officers. 24. Once the registration is issued by the department, the buyer of goods can procure goods from such a registered trader and take credit on the strength of such invoices. The case of the Revenue is that the traders and the manufacturers never existed but they issued Cenvatable invoices only on paper and had not supplied duty paid scrap at all and they could have supplied bazar scrap (post consumer scrap) again....
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....heir existence was presumed when they were registered and their existence was denied when their registrations were cancelled. In the SCN and the impugned order, their existence was presumed when the SCN and the notices for personal hearing was sent but in the same SCN and the impugned order their existence is denied to deny the Cenvat credit to the assessee. 28. The case of the appellant is that it had placed orders on the registered traders, received the goods, accounted for them in its records and availed Cenvat credit on the invoices. Balancing the two sides, we find that the issue tilts in favour of the appellant. When the department registered the so called "non-existent manufacturers/dealers‟ and it cancelled registrations much later, after this investigation, the irresistible conclusion is that the officers had either fraudulently issued the registrations or they issued registrations believing that the manufacturers/traders existed and only much later came to know that they did not exist at all. There is no evidence or allegation of fraud by the officers, hence, it is reasonable to presume that they believed that the manufacturers/traders existed. Such being the case....