TaxTMI 
TaxTMI 
2025 (11) TMI 1691
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....ebapriya Sue, Authorized Representative, Shri S.K. Singh, Authorized Representative, ORDER PER SHRI ASHOK JINDAL: The appellants are in appeal against the impugned order. 1.1. Since all these appeals arise out of a common impugned order, they are taken up together for decision by a common order. 2. The facts of the case are that M/s. Hindusthan Engineering & Industries Limited, 27, Sir R.N. Mukherjee Road, Kolkata - 700 001, West Bengal (the appellant-company / appellant no. 1 herein) is a manufacturer of goods falling under Central Excise Tariff Chapters 73 and 86 mainly for supply to the Indian Railways. They had availed CENVAT Credit in respect of M.S. Scrap purchased from three registered dealers viz. M/s. IRO Steel Corporation ("IRO"), M/s. Ganapati Udyog ("Ganapati") and M/s. Green Rose Enterprise ("GRE"). 3. During the course of audit by the officers of the Audit Section of Central Excise, Kolkata-IV Commissionerate, upon scrutiny of the input invoices, it was noticed that the appellant-company had obtained a huge quantity of M.S. Scrap from two registered dealers, viz. M/s. IRO Steel Corporation and M/s. Ganapati Udyog who procured the consignments of M.S.....
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....y of the source of the said vendors/suppliers of M.S. Scrap for the purpose of availment of CENVAT Credit. 3.2. Thereafter, on 07.07.2011, a visit was conducted at the factory premises of the appellant situated at National Highway No. 2, Bamunari, Hooghly - 712 205, West Bengal and several documents were recovered. During the course of such visit, spot summons were issued to Shri Anish Kumar Goenka, Executive Assistant of the appellantcompany and his deposition was recorded wherein it was stated that the appellant obtained 'bazaar scrap' from the firms namely, M/s. Vikas Industrial Corporation, Kolkata, M/s. Ganapati Udyog, Howrah and M/s. Shree Shyam Enterprise, Howrah. Thereafter, Panchanamas were also drawn on 07.07.2011. 4. On 11.07.2011, the Additional Commissioner, Central Excise, Kolkata-II Commissionerate, issued search authorization for the premises of M/s. Ganapati Udyog at Kalitala, Balitikuri, Howrah - 711 113, but the premises were unable to be located by the Officers of the Central Excise Commissionerate. A Panchanama was drawn on 11.07.2011 in the presence of two independent witnesses. 5. After that, scrutiny and examination of the seized records/documents w....
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....ring the course of further investigation, the investigating officers also noticed that the appellant had availed CENVAT Credit on the basis of central excise invoices issued by another company in the name of M/s Green Rose Enterprise (GRE), who were alleged to be engaged in fraudulent activity. 9. On completion of the investigation, the Revenue came to the conclusion that: - (a) The excise invoices issued by the M/s. Ganapati Udyog, M/s. IRO Steel Corporation and M/s. GRE to the appellant-company mentioned that those three companies procured central excise duty paid consignment of M.S. Scrap from either M/s. Ganga Sales Corporation or M/s. Venkatesh Sales Corporation, and subsequently sold those consignments to the appellant and on the basis of the said invoices, the appellant availed CENVAT Credit of the central excise duty shown in respective invoice(s). However, it was found by the investigation that both the M/s. Ganga Sales Corporation and M/s. Venkatesh Sales Corporation had no physical existence indicating any business activity, for which alert notices were issued from the Central Excise Department. (b) Moreover, considering statement of all bank account....
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.... fictitious manufacturers, who never received any payment for any consignment of the mentioned goods from either M/s. Ganapati Udyog, M/s. IRO Steel Corporation or M/s. GRE, as confirmed from the statements of the respective accounts in the Axis Bank, the Karur Vaisya Bank and the ICICI Bank, and never paid any CENVAT in Government exchequer, though showed payment of CENVAT by M/s. Ganga Sales Corporation and M/s. Venkatesh Sales Corporation in the central excise invoices; that each of M/s. Ganapati Udyog, M/s. IRO Steel Corporation and M/s. GRE had fraudulently passed on the benefit of CENVAT and enabled the appellant-company to avail CENVAT Credit wrongfully and fraudulently. (e) From the weighment slips recovered from the appellant-company, it was alleged that they (appellant) was aware of the fictitious nature of both M/s. Ganapati Udyog and M/s. IRO Steel Corporation in as much as they procured the said consignments physically from some other parties, actual names of whom were computer-printed at the time of weighment done inside the factory premises. In respect of most of the consignments, it was found that the weighment slips were destroyed by the appellants in as m....
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....heques issued by the appellant-company were credited in the said account, against which substantial amount was withdrawn in cash. Mr. Subrata Dutta in his deposition dated 13.12.2011 admitted the said fraudulent activity of the said M/s. Ganapati Udyog and also disclosed that being an employee as Xerox operator of Shri Debesh Ranjan Ghosal, he signed the blank cheques on both sides approximately 100 nos in one day as per instruction of Shri Debesh Ranjan Ghosal after some days of opening the account at KVB. Thus it appeared that Shri Debesh Ranjan Ghosal not only involved in fraudulent activity of the transactions of M/s. IRO Steel Corporation with the appellant-company but also acted as an instrument in creation of the fictitious company in the name of M/s. Ganapati Udyog after demise of his father-in-law Shri Amal Kumar Ghosal, proprietor of the said Ganapati Udyog. (h) Another fictitious company in the name of M/s. Ganapati Udyog having address as 12, Hari Ram Goenka Street, Kolkata - 700 007 was opened by one Shri Raju Chowdhury, who opened a current account against the said M/s. Ganapati Udyog at KVB and subsequently another current account in ICICI Bank, Portuguese C....
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....though in the central excise invoices, M/s. GRE showed that the consignments were received (purchased) from M/s. Ganga Sales Corporation on payment of CENVAT in each transaction, which was passed on to the appellant-company, enabling the appellant-company to avail CENVAT Credit of the said amount of CENVAT though the said amount of CENVAT was never credited in Government exchequer. (j) Despite such fraudulent activity on the part of the said suppliers (registered dealers), the appellant-company manipulated their records and documents in such a manner that the truth behind such transactions does not come to surface. 9.1. From the above, it was alleged by the Revenue that the appellant-company had deliberately availed the benefit of CENVAT credit to the tune of Rs.4,56,78,181/- (Rupees Four crore fifty six lakh seventy eight thousand one hundred eighty one) only [CENVAT-Rs.4,43,46,054/- + Ed. Cess-Rs.28,88,108/-+ S.H.E.C. Rs.4,44,019/-] on the strength of fictitious invoices in a fraudulent manner with the concerted effort of Shri Rajendra Prasad Mody, Shri Raj Kumar Agarwal, Shri Laxmi Kanta Rungta, Shri Anish Kumar Goenka and Shri Jayant Kumar Singhania and with active ....
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.... and figures available in the seized documents, depositions made by the several concerned persons and enquiries conducted by the departmental officers, the appellant-company had failed to place on any record showing that M/s. Ganga Sales Corporation or M/s. Venkatesh Sales Corporation had operated as manufacturer(s) during the material period. It was also alleged that the Bank accounts operated in the name of M/s. Ganapati Udyog, M/s. IRO Steel Corporation and M/s. GRE did not have any faint of reference indicating payment to M/s. Ganga Sales Corporation or M/s. Venkatesh Sales Corporation by the said registered dealers, namely, M/s. Ganapati Udyog, M/s. IRO Steel Corporation and M/s. GRE; that though the appellant-company Noticee No.1 had objected to the late issuance of Alert Circulars, they had failed to contradict the contents therein which goes on to show that they have concealed the fact that M/s. Ganga Sales Corporation and M/s. Venkatesh Sales Corporation were fake concerns as both the concerns did not pay anything in the Government account for allowing availment of CENVAT Credit on receipt of cenvatable materials. Therefore, he alleged that the burden of proof regarding ad....
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....ule 26(1) & (2) of the Central Excise Rules, 1944. (vi) I impose penalty to the tune of Rs.30,00,000/- (Rupees thirty lakh only) upon Shri Raj Kumar Agarwal, Noticee No. 3, the Company Secretary of Noticee No.1 in terms of Rule 26(1) & (2) of the Central Excise Rules, 1944. (vii) I impose penalty to the tune of Rs.50,00,000/- (Rupees fifty lakh only) upon Shri Laxmi Kanta Rungta, Noticee No.4, Authorised Signatory & Assistant Vice President (Purchase) of Noticee No.1 in terms of Rule 26(1) & (2) of the Central Excise Rules, 1944. (viii) I impose penalty to the tune of Rs.10,00,000/- (Rupees ten lakh only) upon Shri Anish Kumar Goenka, Noticee No.5, the Executive Assistant and Authorised Signatory of Noticee No.1 in terms of Rule 26(1) & (2) of the Central Excise Rules, 1944. (ix) I impose penalty to the tune of Rs.50,00,000/- (Rupees fifty lakh only) upon Shri Jayant Kumar Singhania, Noticee No.6, Senior Manager (Accounts & Administration) and Authorised Signatory of Noticee No.1 in terms of Rule 26(1) & (2) of the Central Excise Rules, 1944. (x) I impose penalty to the tune of Rs.20,00,000/- (Rupees twenty lakh only) upon Shri Bharat Ra....
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....5% of its M.S. scrap requirements from the three registered dealers GRE, Ganapati and IRO. The precise period during which the appellant had transactions with the three registered dealers, their status on the NSDL "Electronic Accounting System in Excise & Service Tax" of Central Board of Excise & Customs during such period and the dates of the respective alert circulars are as under:- Name Period of transaction Status on Website Date of Alert Circular GRE 18.01.08 to 21.09.08 Active 02.07.09 * Ganapati 17.11.09 to 20.07.11 Active 16/19.08.11 IRO 01.10.08 to 13.07.10 Active 06.09.11 The appellant came to knows of this intra-Departmental circular only in August, 2011. (iii) The said three dealers were introduced to the appellant by Bharat Ratna Jhunjhunwala or Dipak Kumar Nathani, as the case may be, whom the appellant regarded as the contact persons for the said suppliers. The appellant bona fide purchased its requirements of M. S. Scrap from the said dealers on delivered basis. The appellant relied upon the factum of their registration with the Central Excise Department and their "active" status shown on the Departme....
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....nal. The said Debesh Ranjan Ghosal, who was also proprietor of IRO, appeared before the authorities. So did Manoj Kumar Agarwal, proprietor of GRE. The proprietors of Ganapati, GRE and IRO have been penalised by the same impugned order. The documents issued by such registered dealers cannot be termed as fake or forged or fabricated. (vii) Out of more than 1600 consignments received from the said three dealers during the material period from January, 2008 to July, 2011, because of correction of supplier's name in some of the weighment slips pertaining to the year 2010-11, the Commissioner sought to presume that the goods were supplied by someone else. The appellant's officer Anish Kumar Goenka had duly explained the circumstances under which the supplier's name was corrected in some of the weighment slips by the stores department upon rechecking with documents before such slips were made over to the transporters. (viii) The Commissioner sought to disbelieve the explanation given by the appellant's employee Anish Kumar Goenka that the names originally mentioned on such weighment slips printed at the appellant's factory were as given by the driver of the vehicle but ....
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....ncern printed as supplier was struck off and the name of Ganapati was written by hand when he expressed surprise to find mention of his concern's name on the document. In other words, Bharat Ratna Jhunjhunwala did not say that he had supplied the goods mentioned in the weighment slip. The said statement of Bharat Ratna Jhunjhunwala does not advance the Department's case in any way. (xii) No detailed investigation was carried out and there is nothing on record to contradict or disregard the explanation furnished by the appellant's employee. Because the Commissioner chose to disbelieve the explanation of the appellant's employee, he sought to jump to the unwarranted conclusion that the weighment slips for the other periods must have had similar corrections and were therefore destroyed by the appellant and its employees. It is submitted that there was no material before the Commissioner to warrant any such finding. The appellant had duly explained that the weighment slip was not a material document after conclusion of the transaction and as such the said document had not been preserved by the appellant. (xiii) Out of more than 1600 consignments, there were only 8 cas....
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....nt received bazar scrap instead of cenvatable material. It will be relevant to peruse question nos. 12 and 14 and answers thereto appearing in the statement dated July 7, 2011 of the said employee: - "Q.12. It is seen from the raw material ie the scrap of Iron lying in the factory meant for use for production of your final product is of railway scrap nature. Where from and how did you get it? Ans: No, it is not Railway scrap. Never we procure any type of Railway scraps. All the scraps of Iron & Steel found lying in the factory is of Bazar Scrap except my own generated scraps produce while manufacturing our own product. Q.14. From where do you get those bazar scrap for manufacturing of the final product? Ans: We procure bazar scrap from different dealers from open market, and in some cases, from the manufacturers also. The Major dealers for procuring such type of bazar scraps are: - (1) Vikash Industrial Corporation, Kolkata (2) Ganapati Udyog, Howrah (3) Shri Shyam Enterprise, Howrah (Forsh Road)" The answers of Anish Kumar Goenka have to be read in the light of the questions put to him. By question No.12 it wa....
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....t circular dated July 2, 2009 (of which the appellant came to know only in August, 2011), would show that Ganga Sales Corporation continued to be registered with the Central Excise Department and continued to operate even on the date of issue of the said circular viz. July 2, 2009. Paragraph 9 of the said circular dated July 2, 2009 reads as under:- "9. The modus operandi of the said fake manufacturer and the said fake dealer is as follows. (a) Shri Mahendra Kr. Gourisaria, residing at 14, Jelia Para Lane, Salkia, Howrah - 711106, is the Proprietor of the fake manufacturer M/s Ganga Sales Corporation, 121, J. N. Mukherjee Road, Ghusuri, Howrah - 711107. (b) Although the said company is registered with the Central Excise Department, they neither have any infrastructure to manufacture Iron & Steel articles nor is there any existence of the factory premises at the given address. (c) But the said company issued fake duty paid tax invoices showing clearances of Iron & Steel articles like MS Angles, MS Channels, MS Shapes, MS Scrap, CI Scrap etc. falling under Chapter 72 of the Schedule to the Central Excise Tariff Act 1985 to M/s Green Rose Enterprise....
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....to the amendment with effect from March 1, 2007 read as under:- "(2) The CENVAT credit shall not be denied on the grounds that any of the documents mentioned in sub-rule (1) does not contain all the particulars required to be contained therein under these rules, if such document contains details of payment of duty or service tax, description of the goods or taxable service, assessable value, name and address of the factory or warehouse or provider of input service: Provided that the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of a manufacturer or provider of output service intending to take CENVAT credit, or the input service distributor distributing CENVAT credit on input service, is satisfied that the duty of excise or service tax due on the input or input service has been paid and such input or input service has actually been used or is to be used in the manufacture of final products or in providing output service, then, such Deputy Commissioner of Central Excise of the Assistant Commissioner of Central Excise, as the case may be, shall record the reasons for not....
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.... the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit." "RULE 15. Confiscation and penalty. - (1) If any person, takes CENVAT credit in respect of input or capital goods, wrongly or without taking reasonable steps to ensure that appropriate duty on the said input or capital goods has been paid as indicated in the document accompanying the input or capital goods specified in rule 9, or contravenes any of the provisions of these rules in respect of any input or capital goods, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention has been committed, or ten thousand rupees, whichever is greater. * * * * (3) If any person, takes CENVAT credit in respect of input services, wrongly or without taking reasonable steps to ensure that appropriate service tax on the said input services has been paid as indicated in the document accompanying the input services spec....
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....ch any contravention has been committed, or two thousand rupees, whichever is greater. * * * * (3) If any person, takes CENVAT credit in respect of input services, wrongly or in contravention of any of the provisions of these rules in respect of any input service, then, such person, shall be liable to a penalty which may extend to an amount not exceeding two thousand rupees." (emphasis added) (xxviii) The proviso to sub-rule (2) of rule 9 prior to substitution with effect from March 1, 2007 stipulated that the Deputy Commissioner/Assistant Commissioner having jurisdiction over the factory of the manufacturer taking credit should be satisfied that the excise duty due on the input had been paid. Sub rule (3) enjoined upon the manufacturer taking CENVAT Credit to take all reasonable steps to ensure that the input in respect of which he has taken credit are goods on which appropriate excise duty as indicated in the document accompanying the goods had been paid. The Explanation to sub-rule (3) provided as to when the manufacturer shall be deemed to have taken such reasonable steps. Sub-rule (1) of rule 15 provided for confiscation and penalty if any p....
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....he registered dealers or verify whether they had actually discharged their duty liability. (xxxi) During the material period, the appellant was subjected to not only departmental audit but also CERA audit. The particulars with regard to the several audits are as under:- Departmental Audit Period When conducted 2007-08 September 2009 2008-09 March 2010 2009-10 March 2011 CERA Audit Period When conducted 2008-09 June 2009 2009-10 April 2010 (xxxii) Till the audit conducted in March 2011, none of the audit teams which visited the appellant's factory in June 2009, September 2009, March 2010 and April 2010 raised any concern in respect of the CENVAT Credit availed by the appellant on the goods purchased from the said three registered dealers. The audit officers had examined the dealers' invoices on the basis of which the appellant had taken credit. Such dealers' invoices mentioned the names of the registered manufactures viz. Ganga Sales Corporation and Venkatesh Sales Corporation. Though the alert circular in respect of Ganga Sales Corporation and GRE was issued on July 2, 2009, none of the audit teams inform....
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.... during the period January 18, 2008 to July 20, 2011 is barred by limitation for the period up to May, 2011. It is contention of the appellants in this regard that none of the conditions precedent for invoking the longer period of limitation existed and/or was fulfilled or satisfied in the facts and circumstances of the instant case; there was no fraud or collusion or any wilful misstatement or suppression of any fact or contravention of any of the provisions of the Act or of the rules made thereunder, with intent to evade payment of duty or otherwise, on the appellant's part. It is urged that the appellant all along acted bona fide and in good faith in the matter of purchasing its inputs and in taking and utilising the credit of the duty paid thereon. The appellants point out that the alert circular in respect of M/s. Green Rose Enterprise and M/s. Ganga Sales Corporation issued on July 2, 2009 for intra-Departmental use was never communicated to the appellant contemporaneously and was disclosed to the appellant for the first time in course of investigation in August, 2011; the other alert circulars were all issued in August, 2011 or thereafter; that during the entire material per....
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....scrap to them. He had introduced Mr. Raju Lahliwala & Mr. Mohit Lahliwala of M/s. Lahliwala Steels Pvt. Ltd. for supply of scrap. Then after some time he introduced Mr. Vijay Agarwal & Mr. Mahendra Gaurisaria when Mr. Vijay Agarwal, a market broker approached him stating that he has a supplier i.e. Mahendra Gaurisaria who is interested in supplying scrap to the company. Mr. Vijay Agarwal offered him commission from his commission earned, but when he asked him how much commission he would get, he told him of Rs.50/- per M. Ton. He told him (Sri Vijay Agarwal) that it was too small an amount and he could keep it for himself. He then called Mr. Mahendra Gaurisaria to his office and they went to the office of the company where he introduced them to Mr. U.K. Agarwalla, a Senior Executive, and they started doing business with the company. Mr. Vijay Agarwal as a gesture of goodwill had given him Rs. 2000/- to 5000/- (exact amount forgotten) once in a while which also he was not interested; (iii) That he was not aware that Mr. Vijay Agarwal & Mr. Mahendra Gaurisaria were already doing business with the company through Mr. Dipak Nathani, nephew of Mr. R.P. Mody, Director of the com....
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....finding as quoted above, he wrote letter dated 02.08.2013 addressed to the Ld. Commissioner to withdraw his claim for cross examination. (vii) The appellant-company in their reply to the impugned notice, as reproduced in para 2.12 of the OIO last line of Page 232 of the O1O passed by the Ld. Commissioner - submitted inter alia, (to quote) "It is denied and disputed that Shri Bharat Ratna Jhunjhunwala was not the contact person in respect of scrap supplied by M/s. IRO Steel Corporation and M/s. Ganapati Udyog. It is denied and disputed that Shri Bharat Ratna Jhunjhunwala or Shri Dipak Kumar Nathani procured any fake excise document for them." (unquote). The above contention is correct since Sri Jhunjhunwala never knew the above dealers. (viii) That third party record without any corroboration of the records and documents of him or any tangible evidence cannot be made basis for imposition of penalty. He relied on the decisions of the following cases:- * Rhino Rubbers Pvt. Ltd. v. Collector 1996 (85) EL.T. 260 (Tribunal); * Commissioner of C. Ex., Coimbatore v. Chola Spinning Mills (P) Ltd. -2009 (246) E.L.T. 267 (Tri. - Chennai); * Commiss....
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....Central Excise Dealers were M/s. Venkatesh Sales Corporation and M/s. Ganga Sales Corporation, both of them are non-existing at their declared addresses. Alert circular had already been issued in the name of M/s Ganga Sales Corporation and M/s IRO Steel Corporation on 02.07.2009. Case against M/s Hindustan Engineering Industries Ltd. was detected in audit conducted by Hqr. Audit, Kolkata-IV Commissionerate and thereafter, forwarded to Hqr. Anti-evasion Unit for detailed enquiry considering the nature of the case. (ii) Search was conducted on 07.07.2011 on the premises of M/s Hindustan Engineering Industries Ltd and documents contained in 13 folders were recovered and seized under Panchanama proceeding. Statement of Shri Anish Kr. Goenka was recorded on 7.7.2011 wherein, he categorically stated that bazar scrap has been procured, out of which, 210 tons of materials were lying in their stock. Search was conducted on 8.7.2011 at Tiljala Unit resulted no recovery of any document. Search was proposed to be conducted on 12.07.2011 at the declared premises of M/s Ganpati Udyog, Howrah, the Central Excise Dealer but said address could not be located/traced at specified area and pl....
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....nt had issued alert circular on 02.07.2009 regarding this non-existent fictitious manufacturer named M/s Ganga Sales Corporation. Financial Transactions through banking channels shows consolidated transaction from the assessee(company) and withdrawal in cash from the three separate bank accounts of this non-existent central excise dealer. Statements of the transporters involved revealed no such transportation of inputs to the factory of the assessee, as discussed in detail in the OIO. This modus-operandi had been adopted to show the bona fide transaction in guise of non-supply of input materials as well as to hide the paper transaction shown through non-existent and fake firms stated supra. Co-joint reading of all material facts revealed that the statements of various stakeholders and mentioned in the OIO recorded under provisions of Central Excise Act are being corroborated with the documentary evidences brought on record and, thus, these statements are corroborative piece of evidence in terms of the provision mentioned supra and penalty imposed as well as disallowance of the irregular CENVAT Credit availed fraudulently is sustainable in the eyes of law. * M/s IRO Steel C....
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....tatements recorded in the matter shows corroboration with the documentary evidences relied upon in the matter and discussed in detail in the impugned order. (viii) CENVAT Credit availed fraudulently and irregularly had been disallowed and penalty has been imposed on the persons for their act of omission and commission in the matter, as discussed meticulously in the impugned order. 13.1. Accordingly, the Ld. Authorized Representatives appearing for the Revenue have supported the impugned order and prayed for rejecting the appeals filed by the appellants. 14. Heard the parties and considered their submissions. Having given our anxious thoughts to the various issues involved in the appeals and upon appreciation of the entire gamut of evidence adduced by the parties, we are inclined to hold in favour of the appellant-company. 15. We find that at paragraph no. 4.2, page no. 249 of the impugned Order-in-Original, the Commissioner of Central Excise, Kolkata-IV Commissionerate recorded that before framing of the charges, almost all important functionaries' statements had been recorded in terms of Section 14 of the Central Excise Act, 1944, further cross-verified and that ....
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.... IRO Steel Corporation, whose names had been shown in the factory records as the suppliers and not otherwise. We take note of the fact that the said Shri Anish Kumar Goenka consistently maintained a uniform stand while recording of his subsequent statements dated 04.01.2012, 30.01.2012 and 27.04.2012. 16. During the course of hearing of the appeals before us on 17.04.2025, we had put a pointed question to the Learned Departmental Representatives appearing for the Revenue (respondent) as to whether the charge of availing fake credit without receiving the actual goods had been admitted by any of the appellant-company's key managerial personnel, to which no clear answer was forthcoming. The Learned Sr. Advocate appearing on behalf of the appellant-company had submitted that there had been no such admission or acceptance of the Revenue's allegations and we find that such submission is factually accurate. We have also perused the statement dated 02.09.2011 of Rajendra Prasad Mody (since deceased) who was the non-executive director as well as the various statements of Shri Laxmi Kanta Rungta who used to look after purchases, Shri Jayant Kumar Singhania who used to look after accounts ....
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....ad been introduced through brokers namely, Shri Bharat Ratna Jhunjhunwala and Shri Dipak Kumar Nathani. 17.2. The manufacturers were shown in the invoices as M/s. Ganga Sales Corporation and M/s. Venkatesh Sales Corporation, from where the dealers have received the goods. The appellant-company has received about 45% of their order of M.S. Scrap from these three registered dealers and during the impugned period, transactions were dealt by the appellant as per the chart given below: - Name Period of transaction Status shown on Website Date of Alert Circular M/s. Green Rose Enterprise (GRE) 18.01.2008 to 21.09.2008 Active 02.07.2009 M/s. Ganapati Udyog 17.11.2009 to 20.07.2011 Active 16/19.08.2011 M/s. IRO Steel Corporation 01.10.2008 to 13.07.2010 Active 06.09.2011 18. On the basis of the above facts, we find that during the impugned period, status of these dealers were being shown as 'active' and therefore, it was not in the knowledge of the appellant-company that these were non-existent or that alert circulars had been issued against the said dealers. 18.1. Moreover, in the case of M/s. Ganapati Udyog and M/s. IRO Steel Corpo....
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.... properly considered and dealt with and not merely glossed over. To do otherwise would be offensive to the principles of natural justice and fair adjudication. 19. An allegation has also been made as to non-receipt of the goods on the ground that the Proprietor of M/s. Ganapati Udyog died on 12.04.2010 and even after his death, transactions were found to continue, as recorded in the appellant's records. 19.1. If the proprietor of a firm has died, that does not mean that the firm is non-existent. In fact, in this case, the said firm was taken over by one Shri Debesh Ranjan Ghosal, who was issuing invoices to the appellant-company against the goods in question delivered to them and who happened to be the sonin-law of the deceased proprietor, Amal Kumar Ghosal. That apart, persons who were granted registrations by the Department as dealers on the basis of proper documents cannot be termed as fictitious or non-existent. The process of registration includes physical verification by Departmental officers and such registration would have been granted after verification of physical existence. Such would be the case whether the person getting registered is a dealer or a manufacturer. ....
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....ross checking with the accompanying documents, the appellant's employee in the Stores Department had corrected the weighment slips by hand so that the names on such slips were those as appearing in the accompanying documents. The Ld. Commissioner sought to suggest that the goods had actually been sent by the persons whose names were printed on the weighment slips and that such goods were not cenvatable and subsequently such names were corrected to put in the names of the registered dealers so that bazar scrap can be given the identity of cenvatable material under cover of fake cenvatable invoices issued by fictitious dealers. Unfortunately, such findings, being bereft of concrete evidence, are liable to be set aside. 20.4. We agree with the submissions of the Ld. Senior Advocate for the appellant-company that the Central Excise Department should have collected samples of the input scrap from the appellant's factory to ascertain if it comprised discarded articles or scrap which had arisen in the course of manufacturing operations in a factory, which it failed to do. This was all the more necessary because when in course of the statement dated July 7, 2011, it was suggested by the....
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....he raw material ie the scrap of Iron lying in the factory meant for use for production of your final product is of railway scrap nature. Where from and how did you get it? Ans: No, it is not Railway scrap. Never we procure any type of Railway scraps. All the scraps of Iron & Steel found lying in the factory is of Bazar Scrap except my own generated scraps produce while manufacturing our own product. Q.14. From where do you get those bazar scrap for manufacturing of the final product? Ans: We procure bazar scrap from different dealers from open market, and in some cases, from the manufacturers also. The Major dealers for procuring such type of bazar scraps are: - (1) Vikash Industrial Corporation, Kolkata (2) Ganapati Udyog, Howrah (3) Shri Shyam Enterprise, Howrah (Forsh Road)" 20.5.1. The answers of Shri Anish Kumar Goenka have to be read in the light of the questions put to him. By question No.12 it was suggested to Shri Anish Kumar Goenka that the scrap lying at the appellant's factory was railway scrap in response to which he stated that it was not and that what the appellant had was "bazar scrap" as also its own generate....
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....s shown to have been delivered from M/s. IRO Steel Corporation, M/s. Green Rose Enterprise and M/s. Ganapati Udyog or that it had failed to maintain records in any manner or that it had undertaken manipulation of documents to accommodate financial gain. 21. Again, in this case, statements of transporters were recorded, who claimed that no transportation of goods had been done from the premises shown to the manufacturing unit of the appellant. We find that in fact, in this case, the appellant has procured the said goods through dealers, which were received from the respective manufacturers, as shown by the dealers of the goods. The appellant-company is concerned with the procurement of inputs from the dealers and not from the manufacturers. Therefore, if the statements of transporters wherein the transporters have denied transportation of the goods from the said manufacturers' unit to the appellant's unit are relied, that is not admissible evidence in support of the Revenue since the appellants have procured the goods from the dealers only. If Annexures RTO & V of Relied upon Documents to the Show Cause Notice are carefully examined, it would be seen that there are references to ....
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....r on the excisable inputs. The buyer will be therefore entitled to claim Modvat credit on the said assumption. It would be most unreasonable and unrealistic to expect the buyer of such inputs to go and verify the accounts of the supplier 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." 22.2. Further, we observe that in the case of Commissioner of Cue, Cus. and Service Tax v. Juhi Alloys Ltd. [2014 (302) E.L.T. 487 (All.)], the facts of the case were as under: - "3. The assessee is engaged in the manufacture of MS Bars, Rounds, SS flats and SS Products. The assessee is a registered dealer and had procured raw material through M/s. MK Steels (P) Ltd. The inputs covered by the invoices raised by M/s. MK Steels (P) Ltd. were received by the assessee and were entered in the Cenvat credit account. Inputs were used for the manufacture of final products which were cleared against the payment of duty. On enquiry by the Assistant Commissioner, Central Excise Commissionerate, Bolpur, it was found that the original manufacture....
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....including excise duty, action should be initiated against him under Sections 11D and 11DD. In the circumstances, it was held that cenvat credit could not be denied to the assessee." and the Hon'ble High Court has observed as under: - "7. In the present case, both the Commissioner (Appeals) and 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 mai....
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....searched. Further, the appellant taken the credit on the goods and informed the department during investigation. The goods were found entered in the statutory records. The same has been issued for further manufacturing and they have paid duty on manufactured goods. As no investigation was conducted at the end of the transporter to reveal the truth whether they were transported the goods or not. In the circumstances, the revenue cannot deny to take credit to the appellant. As argued by the learned AR that the manufacturer/supplier was not having manufacturing facility, therefore, the credit cannot be allowed to the appellant. I observe as per the provision of Central Excise Act or the Rules, there is no duty cast on the appellant for verification of contents of manufacturer/supplier before procuring the goods as it has been given without credible evidence by the Revenue that the appellant has not received the goods. In the circumstances, the credit cannot be denied to the appellant. Therefore, I hold that the appellant is entitled to take credit on the invoices in question. Consequently, the impugned order is set aside and the appeal is allowed with consequential relief, if any." ....
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....ing by the Commissioner that Ganga Sales Corporation surrendered its central excise registration in 2005/2007 is not altogether free from doubt. One must also bear in mind that the Department started investigating M/s. Venkatesh Sales Corporation only in 2011, its registration as manufacturer was revoked on August 8, 2011 and alert circular was issued on October 24, 2011. 22.6 We find that the case of the Revenue is that the manufacturers and traders / dealers were non-existent during the impugned period. However, it is a fact on record that that M/s. Ganapati Udyog, M/s. Green Rose Enterprise, M/s. IRO Steel Corporation and M/s. Ganga Sales Corporation were having an 'active' status in the portal of the respondents. Therefore, on that ground, it cannot be alleged that the appellant has received only invoices and not goods. 22.7. In any event, we opine that the three alleged registered dealers cannot be understood as non-existent. Our attention has been drawn to page nos. 16 to 31 of the compilation filed by the appellant-company during personal hearing before the Commissioner, which contain the application for Central Excise registration in respect of M/s Ganapati Udyog, the....
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....egistration had been sought for the purpose of business (please see page no. 762 of the relied upon documents filed by the appellantcompany). In the same breath, Sri Manoj Gourisaria (Agarwal) stated in reply to question no. 6 that all business transactions had been looked after by his elder brother, Mahendra Gourisaria and Amal Kumar Ghoshal and that he only used to sign documents as and when they required him to. When read in totality, the said deposition being Annexure ST-X14 does not give the impression that M/s Green Rose Enterprise had been an altogether fictitious concerned. Our attention has also been drawn to the appellant, Sri Dipak Kumar Nathani's statement dated 03.05.2012, wherein he stated that he had acted as 'contact person' for M/s. IRO Steel Corporation and M/s Green Rose Enterprise till November, 2008. We have also taken into consideration the statement dated 07.09.2011 of Sri Bijoy Kumar Agarwal, a scrap dalal whose place of work was at Bajrangbali Market, Liluah, Howrah and who seems to have known the appellant Shri Bharat Ratna Jhunjhunwala, the appellant-company's staff and officials as well as the aforesaid Sri Mahendra Gourisaria (Agarwal). In reply to ques....
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....158503 of 2024 dated 03.09.2024 in Excise Appeal No. 50158 of 2019 & ors. - CESTAT, New Delhi] had an occasion to deal with a similar situation, wherein the facts of the case were as under: - "3. Receiving intelligence, officers of the Directorate General of Central Excise Intelligence conducted enquiries and investigation and it appeared to them that during the period 2013-2014 to 2014-2015 the assessee had availed ineligible Cenvat credit amounting to Rs. 95,90,687/- on the strength of fake invoices issued by registered dealers M/s Jetking Trading and Agencies Pvt. Ltd. and M/s S.R. Metalics. These invoices contained the details of the manufacturers who had supplied the scrap to the dealers as M/s High Tide Infra Projects Pvt. Ltd., M/s Supreme Multi Trade Pvt. Ltd. and M/s Singh Mineral & Infra Tech all from Dhanbad, which according to the investigations of DGCEI, did not exist. In dispute are 122 invoices of which 89 were issued by M/s Jetking Trading and 33 were issued by M/s S.R. Metalics. The case of the department is that these first stage dealers were fictitious and so were the manufacturers indicated in the invoices of these first stage dealers. 4. After....
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....ns to dealers who did not even exist at their premises at all. It is also not clear as to why the department has been accepting returns from such dealers. What is most interesting is that in the show cause notice and the order-in-original issued by the Additional Commissioner proceed on the presumption that these dealers had not existed and for that reason, deny Cenvat credit to the assessee. The very same show cause notice and the order-in-original passed by the Additional Commissioner also made the two dealers at the very same addresses noticees and also imposed penalties on them. In other words, insofar it pertains to denying Cenvat credit to the appellant, the two dealers were fictitious and did not exist. Insofar as issuing registration, accepting returns, even issuing show cause notice and imposing penalties are concerned, both dealers existed at the premises indicated in the registrations. If the department proceeded on the presumption that these dealers existed at those addresses, we do not see how the assessee who bought scrap from these dealers could be penalized for proceeding on the same presumption as the Additional Commissioner. 13. Insofar as the manufacture....
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....ear Vyas Talab, Bhanpuri, Raipur. 1.Shri Rajendra Manohar Soni, Managing Director, 2.Shri Pankaj Trivedi, Director Obtained a central excise registration as a dealer It was not found to exist in declared premises but was told to have existed near by to the declare premises only for few months. No lawful business activity was undertaken during the period of existence. Issued invoices declaring sale of central excise duty paid goods as a dealer without receipt of any goods. 3. M/s S.R. Metalics, Bendri Road, Barjhara, Raipur Shri Sanjay Rajput, Proprietor Obtained a central excise registration as a dealer Declared the address in registration certificate, existed but no business activity was undertaken during the period of invoices were issued. Issued invoices declaring sale of central excise duty paid goods as a dealer without receipt of any goods. 15. The show cause notice relied upon fifty one documents of which six are letters between different officers of the Central Excise and DGCEI, twenty four are statements of various persons, eighteen are panchnamas drawn at various places and one is the letter from the Assistant Commissioner of Commerc....
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....19. The allegedly non-existing manufacturers M/s High Tide Infra Projects P. Ltd. is made noticee No. 7, M/s Supreme Multi Trade P. Ltd. is made noticee No. 8, M/s Singh Mineral & Infratech P. Ltd. is made noticee No. 9 and no penalty was imposed on any of them by the Additional Commissioner. Coples of the SCN and letters offering opportunities for personal hearing were sent to the above said noticees, but they did not appear on any of the dates schedule for personal hearing. We do not find anything in the order-in-original that the notices were not served on these noticees because they did not exist. 20. What emerges from above is as follows :- (a) The department issued registrations to the manufacturers and the traders at their given addresses on the presumption that they existed at those premises and ran their premises therefrom; (b) The investigation by DGCEI indicated that neither the traders nor the manufacturers existed at those prenises; (c) Invoices were issued by the traders on the strength of manufacturer's invoices based on which the appellant had taken Cenvat credit. It is the case of the assessee that it had received duty paid s....