TaxTMI 
TaxTMI 
2026 (8) TMI 639
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....denial of CENVAT Credit, along with interest thereon, and imposition of penalties. 1.1. Since the present appeals emanate from a common impugned order, the same were heard together and taken up together for disposal by way of a common order. 2. The facts of the case are that intelligence was gathered by the Revenue to the effect that the appellant-company, M/s. C.P. Re-Rollers Ltd. had irregularly availed and utilized CENVAT Credit on the strength of Central Excise invoices purportedly issued by M/s. Shyam Sky Steel, a registered dealer, without actual physical receipt of the inputs, and had, in turn, issued invoices in favour of the said dealer without corresponding clearance of excisable goods. Acting upon the said intelligence, the factory premises of the appellant-company (appellant no. 1) were searched on 17.01.2017, during which records and documents relating to the transactions between the aforesaid entities were scrutinized. 3. It emerged during investigation that, during the Financial Year 2014-15, M/s. C.P. Re-Rollers Ltd. had availed CENVAT Credit amounting to Rs.97,93,739/- on the strength of invoices issued by M/s. Shyam Sky Steel. It was further noticed that ....
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....enalties upon the noticees under the relevant provisions of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the Central Excise Rules, 2002. Consequent upon administrative reorganisation pursuant to Central Excise Trade Notice No. 03/2017 dated 29.06.2017, the proceedings stood transferred to the Commissioner, C.G.S.T., Bolpur Commissionerate for adjudication. 4.1. Upon adjudication, the proceedings culminated in the passing of the impugned order dated 28.03.2018 confirming the proposed demands and penalties against the appellants. The ld. adjudicating authority disallowed the CENVAT Credit amounting to Rs.97,93,739/-, alleged to have been irregularly availed and utilized by M/s. C.P. Re-Rollers Ltd. on the strength of invoices issued by M/s. Shyam Sky Steel, and ordered recovery thereof under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A(10) of the Central Excise Act, 1944, together with applicable interest under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AA of the Act. A penalty equivalent to the aforesaid amount of Rs.97,93,739/- was also imposed upon M/s. C.P. Re-Rollers Ltd. under Rule 15(2) of the CENVAT Credit Rules, 2004 ....
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....ons expected of a bona fide purchaser and could not, in law, be expected to verify the internal affairs or duty compliance of the registered dealer or its suppliers. The burden cast upon the appellant by the Revenue is contrary to the settled principles governing availment of CENVAT Credit. (vi) That the reliance placed by the Department upon a few allegedly mismatched vehicle registration numbers is wholly misconceived, particularly when the disputed instances constitute only a negligible fraction of the total consignments transported during the relevant period and are incapable of discrediting the entire chain of transactions. (vii) That the appellant's records had also been subjected to departmental audit/CERA scrutiny without any objection regarding the impugned availment of credit, thereby lending further credence to the bona fides of the transactions. (viii) That the allegation of fraudulent availment of CENVAT Credit is unsupported by cogent evidence, proceeds merely on suspicion and contradictory statements, and is liable to fail in the absence of substantive corroborative material. Mere suspicion, however grave, cannot substitute legal proof.....
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....of investigation constitute reliable and legally admissible evidence sufficient, by themselves, to sustain the demands confirmed in the impugned order, or not. (iii) Whether the particulars obtained from the Vahan portal regarding certain transport vehicles are, by themselves, sufficient to conclude that no physical movement of goods had taken place and that the transactions in question were merely paper transactions intended for wrongful availment of CENVAT Credit, or not. Issue No. (i): Whether, in the facts and circumstances of the case, the Revenue has been able to establish, on the basis of cogent and legally admissible evidence, that M/s. C.P. Re-Rollers Ltd. had availed CENVAT Credit on invoices issued by M/s. Shyam Sky Steel without actual receipt and consumption of the inputs in its factory, or not. 9. At the threshold, we find considerable substance in the contention advanced on behalf of the appellants that the very edifice of the Revenue's case rests upon an assumption which has not been substantiated by any independent and cogent evidence. It is an undisputed position that M/s. Shyam Sky Steel was, during the material period, a duly registered first-....
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....cured. No such investigation appears to have been undertaken. 9.3. It is also equally well settled that allegations of fraudulent availment of CENVAT Credit cannot rest upon conjectures or presumptions. The burden lay upon the Revenue to establish, by cogent, affirmative and corroborative evidence, that the goods covered by the impugned invoices were never received by the appellant and that the entire chain of transactions was merely a paper arrangement. Save and except the materials which shall presently be examined separately, no investigation appears to have been conducted regarding the procurement of alternative raw materials, the manufacturing process, stock records, consumption pattern or any other contemporaneous evidence which could reasonably substantiate such a serious allegation. Such omissions strike at the very foundation of the Revenue's case. 9.4. The appellants have further placed various supporting documents on record, including year-wise reconciliation statements, invoice-wise purchase particulars, party ledgers, stock summaries, proof of payment of Central Excise duty, payment of Service Tax under the reverse charge mechanism on transportation charges a....
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....'s side acknowledging that the disputed invoices represented mere paper transactions or that the inputs covered thereunder had never been physically received. The absence of any admission assumes considerable significance, particularly when the allegation pertains to fraudulent availment of CENVAT Credit carrying serious civil consequences. 10.2. Equally, the statement of Shri Arun Jhunjhunwala, on which the Revenue has placed overwhelming reliance, does not inspire such confidence as would justify fastening liability solely on its basis. A plain reading thereof reveals that while, on the one hand, he purportedly asserted that no physical movement of goods had taken place and that the transactions were merely book entries, on the other hand, he simultaneously admitted that the consideration against such transactions had been realised through recognised banking channels by way of RTGS and cheques. Such mutually inconsistent assertions considerably erode the evidentiary value of the statement and lead to the conclusion that the same cannot be the sole foundation for disallowing substantial CENVAT Credit. A statement suffering from internal contradictions cannot, without substa....
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....ance, by itself, is insufficient to sustain the serious allegation of fraudulent availment of CENVAT Credit. As rightly pointed out by the appellants, during the relevant period more than 150 consignments were received from M/s. Shyam Sky Steel involving nearly 80 transport vehicles, whereas discrepancies have been pointed out only in respect of a handful of vehicle registration numbers (i.e., 5 odd cases as specified in the impugned order). The records further indicate that the appellant had dealt with several suppliers during the material period, involving transportation through more than 1,000 vehicles in the ordinary course of business. Such isolated discrepancies, viewed in the overall factual matrix, cannot ipso facto justify the inference that the entire series of transactions was fictitious or that no goods had, in fact, been received. It is imperative to note that a few irregularities cannot be elevated into a determinative circumstance for disallowance of substantial CENVAT Credit. 11.1. What assumes greater significance is that the investigation remained conspicuously incomplete. Apart from obtaining particulars from the Vahan Portal, as evident from the records place....
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....tice by the Learned Sr. Advocate for the appellant-company that specimen copies of the disputed invoices have been enclosed as Annexure C/1 to Annexure C/14 of the Show Cause Notice, appearing at page Nos. 228 onwards of the Paper Book filed by the appellant-company, and that on the face of such invoices it does not appear that any irregularity or default had been committed by the said supplying dealer, namely, Vikash Industrial Corporation or the specified manufacturers. We have gone through the said specimen invoices and we agree with the submissions by the Learned Sr. Advocate that when all relevant particulars stood duly mentioned in the said invoices, it was wholly impractical and quite unreasonable to expect the recipient-company to go behind the said documents, examine the actual procurement of goods from the concerned manufacturer and establish transportation of such goods from the factory premises or godown or other premises of the concerned manufacturers up to the premises of the concerned dealer and then to the recipient's premises. 10. We find that during the course of investigation, statements of the owners of few vehicles were recorded, who stated that they h....
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....not find any legal provision for confirmation of the demand of Rs.1,00,55,148. We allow the appeal to this extent. 17. Coming to the demand confirmed in respect of 32 Invoices, wherein statements have been recorded from the owners of the Vehicles. The appellant has a point on this issue. First of all only about 12 persons have recorded their statements, with 6 persons neither denying nor affirming the allegation. When the statement itself is recorded after about 1 to 5 years of the transaction, how far their statement can be relied on is doubtful. It is also on record that the appellant has sought cross-examination of many of the persons, which has not been granted by the Adjudicating authority for which he has come out with some justification. But Section 9D requires the recorded statement before the investigation officer to be once again reiterated before the Adjudicating authority for having been given without any coercion or force, before the same can be admitted as evidence. This has not been done in this case. Normally in such cases, we remand the matter to the Adjudicating authority to produce these persons for Cross-examination. However, in this case we find that t....
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....ted out by the Tribunal, no investigation has been conducted at consignors place or at the place where the said goods are alleged to have been supplied. Under the circumstances, it cannot be said the Tribunal has committed any error in deleting the aforesaid demands." 10.4. Further, in the case of Commissioner of Central Excise, Indore v. Mittal Appliances Ltd. [2017 (345) E.L.T. 283 (Tri. - Del.)], this Tribunal has made the following observations: - "5. The reasons given by the Commissioner to drop the demand is summarized by him as below : a. The show cause notice does not deny removal of goods from the factory of M/s. Indo Micro Nutrients and M/s. Inter Metal. Nothing has been brought on record to show as to what happened to the goods which are alleged to have not been transported in the trucks in question. b. It is further noticed that nothing objectionable has been mentioned in the panchnama of search dated 12-1-2007 at the factory premises of M/s. Inter Metal and M/s. Indo Micro Nutrients in respect of the stock of finished goods/inputs. c. Nothing has been brought on record to show the place to which the goods were sent on paymen....
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.... 10.4.1. We observe that the above order in the case of Mittal Appliances Ltd. (supra) was challenged by the Revenue before the Hon'ble High Court of Madhya Pradesh reported in 2018 (12) G.S.T.L. 297 (M.P.) and the Hon'ble High Court observed as follows: - "4. Considering the aforesaid, the Commissioner vide order dated 6-5-2010 dropped the demand. The order was assailed in appeal before the Learned Tribunal. On due consideration of the material evidence which has come on record the Tribunal came to the conclusion that no case is made out to reverse the findings recorded by the Commissioner and upheld the order and dismissed the appeal. Relevant Paragraph Nos. 4 to 6 reads as under :- "4. The Cenvat credit availed by the appellant was sought to be denied mainly on the basis of certain irregularities alleged with reference to transportation and non-existence of evidence for transportation of duty paid inputs to the premises of the respondent. The dispute relates to 18 invoices. The respondent claims that these raw materials were actually cleared and received from M/s. Inter Metal Trade Ltd. and M/s. Indo Micro Nutrients Pvt. Ltd. of LRs covered by proper invoice....
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....ssed at length by the original authority (Paras 23, 24 of the impugned order). 5. On due consideration of the aforesaid so also the argument advanced by the Counsel for the parties, we are of the view that there is no material to reverse the findings of fact recorded by the CESTAT and Commissioner. No substantial question of law arises in this appeal." 11. Moreover, mere recording statements from transporters/vehicle owners, with regard to few invoices, cannot be the reason to deny the whole of the CENVAT Credit availed by the appellant-company. The Revenue has also failed to bring on record as to from where the appellant-company procured the inputs, as it is the claim of the appellants that the inputs procured by them have been used in the manufacture of their final products, which have finally suffered duty." 11.3. Respectfully following the aforesaid principle and having regard to the totality of the facts and circumstances of the present case, we are of the view that the case of the Revenue, on the basis of the said particulars obtained from the Vahan portal, is devoid of any merit. Accordingly, we hold that the said details, by themselves, cannot form the ....
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....sstatement or suppression of material facts with intent to evade payment of duty, which alone could have justified recourse to the extended period contemplated under the proviso to Section 11A(4) of the Central Excise Act, 1944. Mere allegations, howsoever emphatic, cannot substitute the statutory burden resting upon the Department to establish the existence of the jurisdictional facts necessary for invoking the extended period of limitation. Such burden, in our considered view, has remained wholly undischarged in the facts of the present case. 13.2. In that view of the matter, we are of the view that the Show Cause Notice dated 20.06.2017, insofar as it seeks to raise demands pertaining to the period from July, 2014 to February, 2015, having admittedly been issued beyond the normal period of limitation prescribed under the statute, cannot be sustained on the ground of limitation as well. The demands emanating therefrom are thus liable to be set aside on this count. The appellant therefore succeeds on the ground of limitation as well. 14. In view of the foregoing discussions and findings, we hold that the denial of CENVAT Credit to M/s. C.P. Re-Rollers Ltd. is unsustainable i....
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....NGAL M.S.Scrap (Pur) Item Register For 21-Jul-2014 Date Particulars Vch Type Vch No. Inwards Quantity Outwards Quantity Closing Quantity 21-07-2014 Billet (Production) Stock Journal 215 17.000 MT. 21-07-2014 Shyam Sky Steel : Vat Purchase 176 11.040 MT. 21-07-2014 Shyam Sky Steel Vat Purchase 177 13.000 MT. 21-07-2014 Shyam Sky Steel Vat Purchase 178 16.040 MT. 21-07-2014 Shyam Sky Steel Vat Purchase 179 15.940 MT. 21-07-2014 Shyam Sky Steel Vat Purchase 180 16.100 MT. 21-07-2014 Shyam Sky Steel Vat Purchase 181 16.220 MT. 21-07-2014 Shyam Sky Steel Vat Purchase 182 14.880 MT. 21-07-2014 Shyam Sky Steel Vat Purchase 183 20.100 MT. 195.178 MT. Totals : 123.320 MT. 17.000 MT. 195.178 MT. offers Lithi Document 3 (Onginal for Buyer) CHALLAN CUM INVOICE (ISSUE OF INVOICE UNDER RULE 11 OF CENTRAL EXCISE RULES 2002) First Stage Dealor SHYAM SKY STEEL 1/A SriKrishnapur Road, Kazipara Brinsat, North-24 Prg Kolkata-7000124 VAT TIN 19694879031 CST No. 19694879031 PAN / Income Tax No. Excise Regn No. ARUPJ8760D ARUPJ8760DED002 Buyer C.P.RE-ROLLERS LTD Raturia Angadpur Industrial Area Durgapuf-713215 Dist-Burdwan West Bengal VAT TIN 19801794080 C....
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....ars are true under Cortfied for SHYAM SKY STEEL SHOULD Be covered under this invoice that the guide ware - (A) impuried directly by us or Hetived First Stage Duster of M/s who are the Authorised. Signatty This is a Computer Generated Invoice CHALLAN CUM INVOICE (ISSUE OF INVOICE UNDER RULE 11 OF CENTRAL EXCISE RULES 2002) First Stage Dealer (Onginal for Buyer) SHYAM SKY STEEL . !/A. SriKrishnapur Road, Kazipara Barasat, North-24 Prg Kolkata-7000124 VAT TIN 19694879031 CST No 15694879031 PAN / Income Tax No ARUPJ8760D Excise Regn No. ARUPJ8760DED002 Range III 12/09/14 Division BARASAT Commissionerate KOLKATA-III Buyer C.P.RE-ROLLERS LTD Raturia, Angadpur Industrial Area Durgapur-713215 Dist-Burdwan West Bangal VAT TIN 19801794080 CST No. 19801794274 Excise Regn No. AABCC8495QXM001 Range DURGAPUR-2 Division : DURGAPUR-IV Invoice No. SSS/EXC/117/2014-15 Daled 12-Sep-2014 Buyer's Order No. . Dated Delivery Note SSS/EXC/117/2014-15 Dated 12-Sep-2014 Supplier's Ref. Despatch Document No. Despatched through Destination EX.STOCK Date & Time of issue of Invoice 12.9.2014 AT 8.00AM Motor Vehicle No WB-23A-....