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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 ..... rs to pass on the credit. If the goods are not proved to have been delivered by the dealers to the manufacturers, the invoices issued by the dealers could not be treated as valid documents for passing on the credit.- Appeal is allowed - E/3116-3144/2007-SM(BR) - 125-153/20 (BR)(PB) - Dated:- 7-1-2010 - Shri M. Veeraiyan, Member (T) REPRESENTED BY: Shri S.N. Srivastava, SDR, for the Appellant. S/Shri Saurabh Kapoor, Vikrant Kackria and Manish Saharan, Advocates, for the Respondent. [Oral]. - All these appeals by the Department arise out of a common order in appeal No. 370-398/CE/CHD/07 dated 12-9-2007 passed by the Commissioner (Appeals), Chartdigarh. 2.1 Heard the learned SDR for the Department. Heard the learned Advocate Shri Vikrant Kackria, who represented for Punjab Steel Forging Agro Industries, Krishna Alloys (P) Ltd., Rajeev Alloys Ltd., K.L. Alloys Ltd., Nabha Steels Ltd. and Pushpanjali Steel Alloys Ltd. Heard the learned Advocate Shri Saurabh Kapoor who represented for Spark Steel Sales, Shiv Shankar Iron Steel Trading Co., Rajeev Alloys Ltd. Also heard the Company Secretary Shri Atul Gupta and Shri Manish Saharan, Advocate who represented for Twenty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h findings, the original authority ordered recovery of duty equivalent to the credit availed by the manufacturers; authority also imposed penalty on the manufacturers equal to the credit wrongly availed and utilised by them; the original authority also imposed varying amounts as penalties on the registered dealers. 3.2 On appeals by the importer-registered dealers and the manufacturers, the Commissioner (Appeals) set aside the orders of the original authorities as above. As a result, the Department is in appeal. 4.1 Learned SDR reiterating the grounds of appeal draws my attention that the registered dealers have imported the impugned inputs under concessional rate of duty in terms of Notification No. 17/2001-Cus., dated 1-3-2001. The end-use certificates by the Central Excise authorities were, prima fade, based only on records and not based on actual verification. The importers-dealers have not offered explanation as to how the goods could have been transported by non- transport vehicles. Further, some of the vehicle numbers on the documents were numbers which have not been allotted by the transport authorities. Under these circumstances, the dealers have not discharged the bur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed dealers have not supplied the goods as per invoices is erroneous and therefore, the Commissioner (Appeals)'s order setting aside the penalties on them should be upheld. Learned Advocate seeks for remanding the matter, if need be, so that evidence can be produced by them before the original authorities. 5.2 Learned Advocate Shri Vikrant Kackria and Shri Atul Gutpa on behalf of manufacturers made the following submissions They have received materials from the registered dealers and only the registered dealers arranged for transport. It was not expected of them to verify the correctness of the vehicle numbers in each case when they have received goods. They have made payments through banking channels for the goods received by them. They have utilised the goods received under the invoices by them for manufacture and the credit taken has been utilised for paying duty on the finished goods. In fact, they have got end-use certificates duly given by the jurisdictional Central Excise authorities. Even after the commencement of investigations about alleged fake vehicle numbers, the jurisdictional Central Excise authorities have issued end-use certificates. The show cause notices has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the manufacturers. The burden to prove that the importers-Registered dealers have fulfilled the condition under the exemption Notification is on them. 6.2 It is a strange case where a large number of vehicles shown to have been used for transport of huge quantity of melting scrap in the range of 10 to 12 MTs. per trip contained vehicle numbers of two wheelers/three wheelers, passenger cars, jeeps etc. which obviously could not transport such huge quantity of materials. In some cases, the claimed vehicle numbers have not even been allotted by the concerned authorities to any vehicles It was claimed that the dealers have arranged the transports. On behalf of the registered dealers, it was claimed that the persons availing the services of vehicles for transportation of goods were not expected to verify the correctness of vehicle numbers. It was also claimed that the discrepancies could be mischief of the transport companies and the transporters. 6 3 The dealers, who are permitted to pass on credit under the Cenvat Scheme are registered under Rule 9 of Central Excise Rules read with Section 6 of the Central Excise Act. The obligation of the registered dealers have been consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second stage dealers, situation is identical as in the case of the first stage dealers except that they have shown purchase from first stage dealers the duty paid goods. Possession of the goods is no doubt a must for the purpose of transporting. However, possession is not a must for dealing otherwise in the goods like purchase or sales. (c) There is also a clear obligation on the part of any registered dealers who have purchased the excisable goods and taken credit and passed on the credit to the manufacturer of final products not to act in any way which is prejudicial to utilisation of the input for the intended purpose. There is also a continuing obligation to account for the goods on which the credit was taken and passed on. The goods have moved in an undisclosed direction and financial transactions have been fraudulently made to avail and utilise ineligible credit. There is a clear obligation on the part of any manufacturer who has received the excisable goods and taken credit to utilise the same for the intended purpose. Thus, the obligation is on the manufacturer/registered dealer to account for the goods on which the credit has been taken and that the said obligati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o actually transported or per sons who arranged the transport vehicles, and from the manner of payment of freight i.e., if paid by cheque and other like evidences. 6.5 The eligibility for taking of credit by the manufacturers on the basis of documents issued by the dealers is necessarily dependent upon the eligibility of the dealers to pass on the credit. If the goods are not proved to have been delivered by the dealers to the manufacturers, the invoices issued by the dealers could not be treated as valid documents for passing on the credit. In other words, if it was held that the dealers were not eligible to pass on the credit, in view of serious defects in the documents, the question of manufacturers taking credit based on such ineligible documents will not arise. The burden to prove that the documents under which credit taken are valid documents is shifted to the manufacturers after major discrepancies have been brought out by the Department. 6.6 The submissions on behalf of the Registered Dealer that the Department has not revealed as to who had purchased the allegedly diverted materials and why a person would make a payment or receive payment without cor responding sale/pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussed evidence had allowed the Cenvat credit in such transaction. Therefore, following the ratio of the above decision in the cited case, I set aside the orders appealed against. 7.2 The Commissioner (Appeals) has not dealt with the obligations the registered dealers in relation to passing on the credit and those of the manufacturing in relation to taking the credit. He has not discussed as to how the facts of these cases are identical the facts of case he relied up on. The department is relying up on several decisions which have been rendered after passing of the order by the original authority. The original authority has not given his finding on some of the issues raised now, like the end-use certificates relied upon by the respondents. On behalf of the respondents, prayer has been made that they should be given another opportunity to prove that the dealers have indeed supplied the impugned inputs to the manufacturers and that the latter have received them and used them in the manufacture. 7.3 The manufacturers shall be eligible to take credit only when they have received duty paid goods under cover of invoices which are prescribed for the said purpose. The eligibility of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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