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TMI Blog2010 (1) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... request by the learned Advocate Shri Gaurav Aggarwal seeking adjournment of some of the appeals listed today in respect of A.R. Castings (P) Ltd., L.R. Alloys (P) Ltd., Raghav Alloys (P) Ltd., Spark Steel Sales, Bassi Alloys (P) Ltd., Jagat Metals (P) Ltd., Narain & Co. and Punjab Steels. In view of the order proposed to be passed, in other cases, these appeals are also being disposed off. 2.2 The respondents in Appeals No. E/3116/07, E/3118/07 E/3120/07, E/3122/07 E/3123/07, E/3124/07, E/3125/07 E/3127/07, E/3128/07, E/3129/07, E/3131/07, E/3133/07, E/3135/07 E/3136/07, E/3138/07, E/3140/07 are importers who imported heavy melting scrap under concessional rate of duty. These importers were registered under Section 6 of the Central Excise Act read with Rule 9 of Central Excise Rules as dealers with a view to pass on Cenvat credit as first stage dealers. 2.3 The respondents in rest of the Appeals No. E/3117/07, E/3119/07, E/3121/07, E/3126/07, E/3130/07, E/3132/07, E/3134/07, E/3137/07, E/3139/07, E/3141/07, E/3142 to 3144/07 are manufacturers of iron and steel products who have claimed to have received the inputs from the above mentioned registered dealers. 3.1 The facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied to the manufacturers. He submits that it is a case of wide spread fraud involving diversion of the imported goods and therefore, the documents based on which the manufacturers have taken credit are not proper documents enabling the manufacturers to take credit. Under these circumstances, the orders of the original authority in confirming demand of duty and imposition of penalties on the importers-registered dealers and manufacturers are justified and therefore, the order of the Commissioner (Appeals) should be set aside and the orders of the original authority should be restored. 4.2 The Learned SDR relies on the following decisions: (i) Ranjeev Alloys Limited v. CA Chandigarh - 2009 (236) E.L.T. 124 (Tri-Del.) (ii) Kamal Castings and others v. C.C.F., Chandigarh - Final Order No. 799-828/2009-EX., dated 16-9-09 (iii) Shri Vinod Kumar Gupta v. C.C.E., Chandigarh - Final Order No. 829/09 - Ex. dated 16-9-09 [2010(252) E.L.T. 157 (Tribunal)] (iv) Shri Hari Steel Industries v. C.C.E.., BBSR-II - 2003 (160) E.L.T. 161 (Tri.-Kolkata) (v) Mahesh C. Kadakia v. CC. & Cus., Nasik - 2007 (217) E.L.T. 223 (Tri. Mumbai) (vi) R,K. induction Industries P. Ltd. v. C.C.E., Jaipur - 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, they have received the goods from the registered dealers who are in existence and paid for the goods through banking channels. Therefore, the demand on the findings of irregular availment of Cenvat credit and imposition of penalties are not justified. On behalf of the manufacturers also, prayer was made that the matter may be remanded to the original authority as was done in similar cases. 6.1 I have carefully considered the submissions from both sides and perused the records. The registered dealers were actually importers of melting scrap who imported the said inputs under concessional rate of duty in terms of Notification No. 17/2001-Cus., dated 1-3-2001. As importers they had obligations to fulfil the conditions under Notification No. 17/2001-Cus., dated 1-3-2001 which reads as under: 18. "If, - (a) the importer furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, that such imported goods will be used for the purpose spedtied and in the event of his failure to comply with this condition, he shall be liable to pay, to respect of such quantity of the said goods as is not proved to have been so used, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s - 2010 (249) E.L.T. 462 (Tri.-Del.) and the relevant portions are reproduced below: 9 1 The registered dealers thus have specific roles and obligations in the context of Cenvat Scheme The role of the dealers thus include procurement of duty paid inputs along with duty paying documents, maintaining accounts of receipt and storage and disposal of the inputs; while selling the goods to second stage dealers/or manufacturers issue cenvat invoices to pass on proportionate credit to the buyers relating to the goods sold to them. The role of the second stage dealers is similar; while selling the goods by second stage dealers to manufacturers, they are required to issue cenvat invoices to pass on proportionate credit to the buyers relating to the goods sold to them. 9.3 The dealers were not registered with excise authorities to deal in cenvatable invoices but to deal in duty paid excisable goods and, in the process, to issue cenvatable invoices while selling the said duty paid goods. The dealers are required to buy duty paid goods from the manufacturer along with duty paying documents and take credit. When the registered dealer issues invoices enabling the buyer to take credit, it goes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferred through the dealers. (d) The registered dealers have clearly dealt with the duty paid goods on which credit has been taken by the ultimate users. The action of the registered dealers in having diverted the said goods, have rendered the said goods liable for confiscation. Having diverted the goods and having taken credit and having passed on the credit, the registered dealers have by their action rendered the goods so diverted liable for confiscation; they have also rendered themselves liable for penal action. (e) The documents issued by these dealers/manufacturers without supply of goods are clearly invalid documents and no credit can be passed through such documents and no such credit can be taken by the recipients. (f) United Chain Industries and Kay Iron Works, having availed the credit in respect of inputs namely, HR coils and CR coils and having utilised the same towards payment of duty on capital goods, the credit so taken being irregular the same is recoverable from them along with interest. They are also liable for penalty under sub-rule (2) of Rule 13 of the CENVAT Credit Rules, 2001/2002, under sub-rule (2) of Rule 15 of the CENVAT Credit Rules, 2004, read wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e documents, it was for the respondents to prove that the dealers supplied the impugned inputs and that the manufacturers received them. 7.1 Commissioner (Appeals) has dealt with the 29 appeals before him by a very cryptic order with the following findings: "7. 1 have examined the records including the appellants submissions made at the time of personal hearing. The Department's allegation is that the manufacturers had availed the Cenvat Credit on the basis of the in voices only without actual receipt of the inputs as the vehicles Nos. reflected in those invoices are those of Auto Cycles, Scooters, Jeep and Nos. not even allotted to any vehicle and that those vehicles were not capable of transporting such heavy quantity of HMS, so the transaction is only on papers made by the Registered Dealers to facilitate the manufacturers to avail the Cenvat Credit fraudulently. The Department's allegation is based upon the verification of the vehicle in question caused from the concerned DTO/RTO. The appellant contended that the transporter generally use fake number plate to avoid taxes leviable and that mentioning of wrong vehicle numbers on the invoices issued by the registered dealers did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stered dealers to pass on to the credit which is based on factual verification that the goods mentioned as per invoices have indeed been delivered by them to the manufacturers. The claims made by the dealers form the basis for the availability of credit to the manufacturers and the issues are fully interlinked. 7.4 The learned Advocates for the respondents request for remand of the matters for fresh consideration. In the interest of justice and to enable them to produce evidence, if any in this regard, the request on behalf of the respondents for remand of the matters is also justified. In view of the above, the respondents deserve to be given an opportunity to show that they have fulfilled their obligations as registered dealers in passing on the credit and their obligation as manufacturers to take credit. 8. To enable the same, the orders of the Commissioner (Appeals) and the orders of the original authority are set aside and the matters remanded to original authority for fresh consideration in the light of above observations. The respondents are directed to make written submissions if any, along with evidence within 45 days from the date of receipt of this order. 9. The origi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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