TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 841
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (i) The Appellant No.1 is engaged in the manufacture of blooms, billets of alloy, non-alloy and stainless steel, bar and rods of stainless steel, hot and cold rolled coils/strips, etc., falling under Chapter 72, articles of iron and steel falling under Chapter 73,.articles of copper falling under Chapter 74, and electric transformers falling under Chapter 85 of the CETA. (ii) The appellant No.2 and 3 are the commission agents who claims to have cleared Nickel Alloy of M/s J V Industries on high sea sale basis. (iii) The Appellant No. 4, 5 and 6, 7 and 8 (collectively referred to as "Commission Agents") are engaged in the trading of metals namely, SS scrap, copper scrap, ferrous metal as well as non-ferrous metals and alloys on commission basis for the manufacturers of such goods. (iii) (a) The Appellant No.9 is Director of the Appellant No.1. (iv) During the relevant period, the Appellant No. 1 placed purchase orders with the Commission Agents for supply of copper nickel alloy ingots for its use as an "input" in the manufacture of their dutiable final goods i.e., stainless steel. On the basis of such purchase orders, the Commission Agents procured the said goods fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame of the person whose statement is recorded Date of the statement 1. Shri Ravi Aggarwal, Managing Director at Agsons Agencies Pvt. Ltd. 10.1.2008 and 31.3.2008 2. Shri Tabarak Ansari, Representative of KS Enterprises 9.1.2008 3. Shri Rajesh Kumar Singhal, Director of M/s KS Enterprises 27.2.2008 and 29.4.2008 4. Shri Pradeep Kumar, Authorized Signatory of M/s National Udyog and of M/S BR Jindal Udyog 9.1.2008 and 20.3.2008 5. Shri K.K. Gupta, Director of M/s Siddhartha Bronze Products Private Limited and M/s Khushboo India (P) Ltd. 23.5.2008 (ix) On the basis of the aforesaid statements, the Department formed a view that all the consignment agents received goods other than copper nickel alloy ingots from JV Industries and the same were sold to the Appellant under the cover of invoices. showing description of the said goods as copper nickel alloy ingots. (x) In view of the above, the officers of Central Excise Commissionerate, Rohtak extended the investigation to the Appellant No. 1 and visited its factory premises on 12.3.2009. During the search, a physical stock taking of the raw materials/inputs was carried out by the Department officia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esses whose statements had been relied upon by the Department in the abovesaid SCN must be cross-examined in terms of Section 9D of the Excise Act. (xv) The Ld. Commissioner, Central Excise, Rohtak without appreciating the submissions made by the Appellant vide Order-in-Original dated 30.08.2011, confirmed the demand of recovery of Cenvat Credit along with interest and penalties observing that Appellant No. 1 had wrongfully availed Cenvat Credit on copper nickel alloy ingots as the goods of the said description were never received by the Appellant as the manufacturer i.e., JV Industries itself did not receive nickel in its factory premises for manufacture of copper nickel alloy ingots. Being aggrieved, the Appellant filed appeal before the Hon'ble CESTAT, New Delhi challenging the said order. (xvi) This Tribunal vide Final Order No.A/52510-52522/2015-EX[DB] remanded the matter to the Adjudicating Authority for de novo adjudication after affording cross-examination of the persons whose statements have been relied upon by the Department officials. (xvii) In compliance to the remand direction of the Hon'ble CESTAT, New Delhi, the Ld. Principal Commissioner conducted cros....
X X X X Extracts X X X X
X X X X Extracts X X X X
....* During cross-examination, he clarified that his statement dated 27.2.2008 was correct except for the portion where he confirmed the statement of Shri Tabarak Ansari. The same fact was brought to the notice of the Department vide letter dated 28.2.2008. * It is undisputed that KS Enterprises received copper nickel alloy ingots from JV Industries and sold the same to Appellant No. 1. * Further, the statement of Shri Tabarak Ansari could not be relied upon as the same was retracted. 4. * Shri Rajesh Kumar vide statement dated 29.4.2008 stated that they receive any good other than copper ingots/copper items. Further, he stated that he did not bother about the description of the said goods as they were working on commission basis * During the cross-examination, he stated that his statement dated 29.4.2008 was pre-typed by the Department officials and he was merely asked to sign the same. * Although he informed the Department officials that they also dealt in copper nickel alloy ingots, the same fell on deaf ears. The officer merely added the term "copper items" in the statement. He clarified that copper nickel alloy ingots were received in their factory premises an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er, CGST, Delhi-East Commissionerate granted an opportunity of personal hearing to the Appellants on 17.5.2019 and 6.6.2019. After perusal of the reply dated 15.10.2018 and additional submissions dated 7.6.2019, the Ld. Commissioner disallowed the Cenvat Credit to the Appellant No.1 as well as to JV Industries and ordered for its recovery along with interest and penalty. Further, the impugned Order confirmed the imposition of penalties upon Appellant No. 2 to 9. (xix) It is pertinent to mention that JV Industries settled their matter by filing a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. (xx) Being aggrieved with the impugned Order, the Appellants filed the present appeal on the following grounds which are independent of and without prejudice to each other. 3. Learned Counsel appearing for the appellants No. 1, 4, 5 and 9 submitted as under:- Cenvat Credit has been correctly availed on goods whose receipt as "inputs" in the factory premises and subsequent utilization in the manufacture of dutiable final goodsis undisputed. (i) The Department has disallowed Cenvat Credit to Appellant No.1 merely on the ground that the description of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndustries and the Consignment Agents to allege that JV Industries never received nickel, hence, they did not manufacture copper nickel alloy ingots and therefore, Appellant No. 1 had never actually received copper nickel alloy ingots in its factory. (vi) It is pertinent to mention that pursuant to the remand directions, the Department conducted a cross examination of the witnesses. A brief summary of the cross-examined the statements of the witnesses has been reproduced at Para (xvii) above and the same have not been reiterated here for the sake of brevity. Upon perusal of the said statements, it is apparent that the witnesses have either stated that the earlier statements were recorded under coercion or have clarified their position regarding the ambiguous nature of the statements on which the Department has relied upon. (vii) Accordingly, it is submitted that the statements relied upon by the Department do not give a true account of the facts and as such are involuntary. Hence, the reliance placed upon such statements to allege non-receipt of copper nickel alloy ingots is misplaced. (viii) It is further submitted that no reliance can be placed on the statement of Shri Ra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mand was raised for the period from July 2005-April 2005 by invoking the extended period of limitation under the proviso to Section 11A(1) of the Excise Act read with Rule 14 of the CCR, 2004. It is submitted that the entire demand falls beyond the normal time limit of 1 year and is time-barred, thus the impugned Order is liable to be set aside. (xii) It is the department's case that the Appellant suppressed the information regarding non-receipt and non-consumption of copper nickel alloy ingots in the manufacture of their finished goods. Further, Appellant No. 1 has misrepresented and manipulated Cenvat records like RD-23A, Form IV, etc., with intent to avail irregular Cenvat Credit. (xiii) In this regard, it is submitted that the allegation of suppression cannot be levelled against Appellant No.1 as it had a bona fide belief that the Cenvat Credit was correctly admissible on receipt of copper nickel alloy ingots. The reliance placed by the Department on inculpatory statements of the witnesses to allege non-receipt of inputs in the factory is misplaced as all these persons have modified or retracted their statements during cross-examination. Even otherwise, the Department has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....In any case, when it stands established that Appellant No. 1 has correctly availed Cenvat Credit on goods supplied by the Commission Agents, thus no penalty can be imposed upon them. (xvii) In view of above, the Appellants humbly prays that the impugned order passed by the Ld. Commissioner is not sustainable and is liable to be set aside, and the appeal filed by the Appellant is liable to be allowed in full, with consequential relief. 4. Learned counsel appearing on behalf of Appellant No. 2 and 3 submits that as the allegation against the appellants are that they have not supplied Nickel Alloy to M/s J.V. Industries for manufacturing of Nickel Alloy Copper Ingots on high sea sale basis, therefore, penalties have been imposed on the appellants on the ground that they have aided and unaided M/s J.V. Industries to avail inadmissible of cenvat credit of CVD. It is the submission of the learned counsel for the appellant Nos. 2 & 3 that as M/s J.V. Industries has gone in SVLDR Scheme and SVLDRS Form-4 has been issued to them, therefore, the proceedings against the appellants are not sustainable by way of imposing penalty thereof. 5. The Department's submissions on the grounds of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Siddharth bronze products pvt ltd K.K.Gupta, Director 326.397 2,31,95,68 Khusboo India (P) Ltd K.K.Gupta, Director 280.965 2,05,24,825 Total 2147.568 14,80,40,654 (iv) During the investigation, all the persons making a statement on behalf of the above dealers admitted to having supplied goods procured from the M/s JVIP to M/s JSL limited. They had no testing facility, and thus, they did not get the goods tested. They acted as a Commission agent and have placed orders/ had an agreement with JVIP for copper ingots only. They received copper ingots only. They had never ordered "copper Nickel alloy ingots" or received them. While supplying to M/s JSL Limited, they mentioned the same description on the JVIP's sale invoice. (v) The dealers were not privy to the composition of goods received from M/s JVIP. Only M/s K.S Enterprise stated that they had. purchase orders from their buyer, M/s JSL, Hissar, but they never produced them despite an assurance that they would do so. The dealers maintained that they sold the goods in the form and description sent to them by M/s JVIP. As M/s JVIP did not receive nickel and admitted during the investigation that they ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entry to claim inadmissible CENVAT credit because such false papers are never examined before the forgery comes to light. (xii) The Hon'ble Supreme Court in Commissioner of Customs (Preventive) Vs Aafloat Textiles (I) Pvt Ltd 2009(235) ELT 587 (SC) has laid down the principles that the fraud and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudence. It has been observed that : "11. " Fraud ", as well known, vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct, either by letters or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct Of the former, either by words or letter. It is also well-settled that the misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists of leading a man into damages by willfully or recklessly causing him to believe in an act of falsehood. It is a fraud of law if a party makes a representation which he knows to be false, and injury ensues therefrom, although the motive from which the r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s also relevant to the present case. The Hon'ble Court has, in unambiguous terms, held that rebate should be denied in cases of fraud. In Sheela Dyeing & Printing Mills (P) Ltd [2007(219) ELT 348 (Tri) Mum], the Hon'ble CESTAT has held that any fraud vitiates the transaction. Hon'ble Gujarat High Court upheld the said order. Also, in the case of Chintan Processors [2008(232) ELT 663( Tri Ahm), the Hon'ble CESTAT, while deciding the question of admissibility of Credit on fraudulent invoices has held as follows: "once the supplier is proved non-existent, it has to be held that goods have not been received. However, the Applicant's claim that they have received goods but how they have received from a non-existent supplier is not Known." (xviii) The Department has established convincingly, as explained above, that the Appellant did not receive copper-nickel alloy in its factory. It is a settled law that, in quasi-judicial proceedings, the standard of proof is based on the doctrine of the preponderance of probability. Revenue does not need to establish an offence case with the mathematical precision required in a criminal case; instead, the preponderance of probability is also suf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the manufacture of the final product. Rule 4 allows credit to be taken immediately upon receipt of the inputs in the factory and not upon. receipt of the invoice. Hence, the Adjudicating Authority has correctly disallowed the CENVAT credit in the present case. (xxiii) M/s JSL availed the wrongful CENVAT Credit of Rs.14,80,406,54/- with deliberate intention, The Adjudicating Authority, therefore, correctly ordered for recovery under rule 14 of the CENVAT Credit rules 2004 read with the first proviso I to section 11 A (1) of the Central Excise Act 1944, along with interest from the date of taking CENVAT Credit to date till the entire CENVAT Credit involved is paid by them in terms of Rule 14 of the CENVAT Credit rules 2004 read with section 11B of the Central Excise Act 1944. Thus, the Department has rightly invoked the extended limitation period, and the Adjudicating Authority has correctly imposed a penalty and ordered the recovery of interest. (xxiv) Regarding the penalty under rule 26 to the dealers/ consignment agents and high seas seller, the respondent Department humbly submits that all of them were part of the large conspiracy and were in hands and gloves with each o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ngots, therefore, M/s. JSL is not entitled to take cenvat credit on the invoices issued fim Copper Nickle Alloy Ingots. From the various arguments advanced before us, the following questions arose in our mind : (2) When the appellant has contended that they have purchased part of the consignment imported by the supplier of the goods, therefore, it is required to be ascotained how the goods have been transported to the appellant from the suppliers godown? (b) The other question has come to our mind why the physical examination not done to ascertain the fact that the appellant is having a facility to manufacture the Copper Nickle Alloy Ingots? (c) Further, question arose in our mind, why Mis. JV has paid almost Rs.10 Crores of duty through PLA to avail inadmissible cenvat credit of around Rs.4 crores. 9. Therefore, to ascertain the truth, in this case, the cross examination of the witnesses, whose statements have been relied upon by the Revenue is essential in the light of the decision of the Hon'ble Delhi High Court in the case of Basudev Garg Vs. Commissioner of Customs reported in 2013 (294) ELT 353 (Delhi). The same view has been taken by the Hon'ble Delhi High....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... whether cenvat credit can be denied to the appellant or not ? 10. The said issue has been examined by this Tribunal in the appellant's own case vide Final Order No. 61960-61964/2018 dated 26.03.2018 wherein this Tribunal observed as under:- "7. We find that in this case facts on receipt of the goods by M/s JSL against duty paying documents by M/s National Udyog and M/s Ridhi Sidhi Alloys Pvt. Ltd. are not dispute. It is also not in dispute that the appellants have not made the payment of those goods. In fact M/s JSL payment of these goods through account payee cheques. It is also facts on record that on verification by the authorities, it was found that M/s JSL have in fact received the goods supplied by M/s National Udyog and M/s Ridhi Sidhi Alloys Pvt. Ltd. On the basis of above admitted facts, the issue arose before us whether in these circumstances Cenvat Credit can be denied to the M/s JSL or not? 8. The said issue has been examined by this Tribunal in the case of M/s Ridhi Sidhi Alloys Pvt. Ltd. (supra) wherein this Tribunal observed as under:- "7. The main allegation of the Revenue is that M/s AIP Industries is not having manufacture facility, therefore, Cenvat C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds from appellant No. 2. Further, the show cause notice has alleged fraud and invoked extended period for demand. In the entire proceedings no evidence whatsoever has been brought on record about the fact that appellant nos. 1 and appellant nos. 2 have ever connived and that either of them had any knowledge about the alleged fact that M/s. AIP Industries did not have any manufacturing facilities of nickel plates, the goods which are subject matter of the proceedings. Therefore, extended period in this case not justified. The period involved in this case is August 2006 to October 2006 whereas the show cause notice has been issued on 07.09.2011, the entire demand being beyond a period of one year is therefore, not sustainable." 8. I do agree with the observation made by the Ld. Commissioner (A) as the respondent has made all the payments through account payee cheque to the first stage dealer who has accepted that they have delivered the goods along with invoices. Moreover, no statement of transporter have been recorded to ascertain the fact that respondent has not received the goods. In these circumstances, I do not find any infirmity with the impugned order on merits. Further, I ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the goods travelled from the dealer premises to the respondents premises under the cover of form 31 of UP Trade Tax department. This fact is sufficient to prove the physical entries of the inputs in the assesses premises. Further, the ledger account and RG 234 records maintained by the assessee also proves the receipt of the goods. Further, the payment of the said inputs stand made by the recipient through cheque. 8. In terms of the provisions of Rule 7(4) of Cenvat Credit Rules, 2002 and Rule 9(5) of Cenvat. Credit Rules, 2004, a manufacturer is required to check the particulars as mentioned in the invoice issued by the first stage dealer and he should be familiar with him. As rightly observed by Commissioner (Appeals), it is not only possible but impractical also for an assessee to further check the records maintained by the first stage dealer and to verily correctness of the same. It is sufficient if the assessee buys the goods from first stage dealer whose status he has checked and verified. There is no dispute in the present case that M/s M.K. Steels was registered as a dealer with the Revenue and the involces issued by him reflected his registration number, As such,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or to find out from the department of Central Excise whether actually duty has been paid on the inputs by the supplier. No business can be carried out like this, and the law does not expect the impossible. As the Hon'ble High Court has held that the assessee is required to take reasonable steps to ensure that the input in respect of which Cenvat Credit is taken the same are duty paid or not? In this case also, we find that the goods which have been received by M/s JSL are against the duty paying documents issued by M/s National Udyog and M/s Ridhi Sidhi Alloys Pvt. Ltd. As M/s JSL is bona-fide purchaser of the goods against the price of the said goods along with duty, in that circumstances, the Cenvat Credit cannot be denied to M/s JSL. In these circumstances, we hold that the Cenvat Credit cannot be denied to the M/s JSL against the invoices issued by M/s National Udyog or M/s Ridhi Sidhi Alloys Pvt. Ltd." 11. Although, in that case, there was a difference opinion, but finally third member agreed with the Member (Judicial) and the observations made by the third Member are as follows:- "4. Having considered the rival submissions and on perusal of the record, I find that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Tribunal have given cogent reasons to indicate that the assessee had taken reasonable steps to ensure that the inputs 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. Admittedly, in the present case, the assessee was a bona fide purchaser of the goods for a price which included the duty element and payment was made by cheque. The assessee had received the inputs which were entered in the statutory records maintained by the assessee. The goods were demonstrated to have travelled to the premises of the assessee under the cover of Form 31 issued by the Trade Tax Department, and the ledger account as well as the statutory records establish the receipt of the goods. In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer. The assessee, in the present case, was found to have duly acted with all reasonable diligence in its dealings with the first stage dealer. The view which the Tribunal has taken is consistent with the judgment of the Jharkhand High Court in Commissioner of C. Ex., East ....