2017 (12) TMI 1240 - AT - Central Excise

CENVAT credit - duty paying documents - it was alleged that the invoices, accompanying the inputs and the Cenvat showed therein is doubtful and/or fraudulent - Held that - the issue is squarely covered by the decision in the case of The Commissioner of Central Excise Customs & Service Tax Versus M/s. Juhi Alloys Ltd., Anil Kumar Shukla 2014 (1) TMI 1475 - ALLAHABAD HIGH COURT - Similar to the facts of Juhi Alloys Ltd., appellant M/s RSIL have also lead evidence of usage of road permits (under sales tax law) i.e. for transportation of goods. The road permits are pre-authenticated documents issued by the Trade Tax Department and assessee is required to maintain proper records of their usage. The appellant also filed road permit issued by to M/s M. K. Steels Pvt. Ltd for transport of MS Ingots in question. Further, the appellants have lead evidence that payment for the purchase of the input was made by cheque. It was held in the case of Juhi Alloys Ltd that The assessee, was found to have duly acted with all reasonable diligence in its dealings with the first stage dealer, and the credit was allowed - following the same, credit allowed - appeal allowed - decided in favor of Revenue.

Summary

Issues:
1. Disallowance of Cenvat credit to M/s Ram Shiv Industries Ltd., Kanpur.
2. Imposition of penalties on M/s Ram Shiv Industries Ltd., Kanpur and related individuals.
3. Discrepancies in invoices issued by M/s M.K. Steels and M/s Jwala Steels Pvt. Ltd.
4. Legal provisions under Cenvat Credit Rules, 2002 and 2004.
5. Comparison with the judgment in Juhi Alloys Ltd.

Issue 1: Disallowance of Cenvat credit to M/s Ram Shiv Industries Ltd., Kanpur:
The case involved the disallowance of Cenvat credit amounting to ?10,93,074/- to M/s Ram Shiv Industries Ltd., Kanpur under Rule 12 of Cenvat Credit Rules, 2002 and Rule 14 of Cevnat Credit Rules, 2004. The Commissioner of Central Excise & Customs (Appeals), Kanpur confirmed the disallowance, leading to appeals before the Appellate Tribunal CESTAT ALLAHABAD.

Issue 2: Imposition of penalties:
Penalties were imposed on M/s Ram Shiv Industries Ltd., Kanpur under Section 11AC of the Central Excise Act, 1944, read with Rule 13 (2) & 15(2) of the Cenvat Credit Rules, 2002/2004. Additionally, a penalty of ?10 lakhs was imposed on Shri Suraj Prakash, Director of M/s Ram Shiv Industries Ltd., Kanpur, under Rule 26 of the Central Excise Rules, 2002.

Issue 3: Discrepancies in invoices:
Discrepancies were found in the invoices issued by M/s M.K. Steels and M/s Jwala Steels Pvt. Ltd., leading to a show cause notice and subsequent disallowance of Cenvat credit by the Commissioner (Appeals). The issue revolved around the genuineness of the invoices and the verification of the same by M/s Ram Shiv Industries Ltd., Kanpur.

Issue 4: Legal provisions under Cenvat Credit Rules:
The case involved a detailed analysis of legal provisions under Rule 12 of Cenvat Credit Rules, 2002, Rule 14 of Cenvat Credit Rules, 2004, Section 11A and Proviso to Sub-section (1) of Section 11A of the Central Excise Act, 1944, along with interest under Section 11AB. The judgment discussed the obligations of manufacturers under these rules and the consequences of non-compliance.

Issue 5: Comparison with Juhi Alloys Ltd. judgment:
The judgment compared the present case with the Juhi Alloys Ltd. case, focusing on the availing of Cenvat credit based on invoices issued by M/s M. K. Steels Pvt. Ltd., Kolkata. The High Court's observations in Juhi Alloys Ltd. regarding the responsibilities of manufacturers in verifying invoices and the bona fide nature of transactions were considered in the context of the present case.

In conclusion, the Appellate Tribunal allowed the appeals filed by the Revenue, emphasizing similarities between the present case and the Juhi Alloys Ltd. judgment, where the assessee was found to have acted diligently in dealing with the first stage dealer. The ruling in Juhi Alloys Ltd. was deemed applicable to the present case, leading to the allowance of the Revenue's appeals.