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TMI Blog2011 (1) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... from copper ingots) by their job workers who had directly received the said copper ingots on these invoices from M/s. VKMW on behalf of the appellant. Further it has also been admitted in the impugned order that the appellant had discharged its contractual liability by making payment of these invoices through banking channel by cheques. Neither the show cause notice alleges any other source of procurement of the said copper ingots, received under these invoices nor the impugned order found any other source of procurement of such copper ingots. The provisions governing the availment of the credit envisages that the assessee availing the credit should ensure that the inputs should have suffered duty at the hands of the manufacturer and the inputs covered under the invoices have been received and the same have been utilized in the manufacture of their final goods. Appellant therefore, cannot be asked to go beyond the duty payment document in his hand. The appellant had checked the authenticity of the invoice issued by the manufacture and the latter is registered with the Central Excise. Thus, I find that the appellant have taken due care while procuring the duty paid inputs. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 30-12-2006 Total 1056968 12139 2.2 The above allegation were levelled against the appellant in view of an investigation carried out by the Directorate General of Central Excise Intelligence, New Delhi (hereinafter referred to as DGCEI for the sake of brevity) against M/s. VKMW alleged supplier of the goods to the appellant. During the course of investigation it came to notice that M/s. VKMW, the supplier of goods (copper ingots) to the appellant had no manufacturing facility at their declared factory premises and were engaged in issuing fraudulent invoices to their customers showing fictitious production of cooper ingots in their unit, hence the goods said to consigned on their invoices to their customers/buyers were actually not covered by such invoices i.e. the goods covered by these invoices were not actually manufactured by M/s. VKMW and only the invoices showing bogus clearance of finished goods had been issued, therefore no Cenvat credit was admissible on theses invoices. Accordingly a show cause notice vide F. No. 171/DGCEI/INT/88/2006/49-66, dated 5-1-20010 was issued to M/s. VKMW by the DGCEI, New Delhi. 2.2 During the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Section 38A of Central Excise Act, 1944 along with interest on the said Cenvat credit of Rs. 10,69,107/- chargeable from the appellant under Section 11AB of the Central Excise Act, 1944 read with Rule 14 of Cenvat Credit Rules, 2004; and (ii) Imposed a penalty of Rs. 10,69,107/- on the party (appellant) under Section 11AC of the Central Excise Act, 1944 read with Rule 15 of the Cenvat Credit Rules, 2004. 2.4 The adjudicating authority, while confirming the demand and imposing penalty on the appellant as above held that the appellant had availed the Cenvat credit on the strength of invoices issued by M/s. VKMW fraudulently without consigning the goods under the cover of said invoices and had not taken reasonable steps prior to taking the credit and were fully aware that the cenvatable invoices were fake. Hence, the present appeals by the appellants. 3. Grounds of Appeal : Feeling aggrieved with the impugned order the appellant preferred this appeal on the following grounds : 3.1 That the appellant is aggrieved by the allegation purported in the show cause notice that they have availed inadmissible Cenvat credit of Rs. 10,69,107/ on assumption that M/s. VKMW showed fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y premises along with the Director Mr. Bimal Sharma it was found that the factory was engaged in the manufacturing and sale of power cords, connectors, PVC wires, etc. The desired documents as demanded by the Central Excise Officers were shown on the spot by the party. The statement of Sh. Bimal Sharma was recorded on the spot wherein he stated that their unit is working since 2003, he is looking after the procurement of materials, marketing and production that they are purchasing copper from M/s. VKMW from 3-11-2005 to 16-11-2006, he has not visited the factory of M/s. VKMW, his interaction was held in his office with the Prop Sh. Sushil Kumar of M/s. VKMW; they place orders on telephone, they send materials directly to the job workers M/s. V.P. Relators. M/s. J.V. Industries and M/s. Bharat Wires for conversion of wires on challans; that all the payments were made through cheques for all the consignments; that they stopped taking material from M/s. VKMW because other suppliers offered them best prices; that M/s. VKMW paid all the freights; their rates settled with them for delivery at job workers place; that they have no written contract/agreement with M/s. VKMW; telephone Nos. o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture of insulated copper wires, cords which again had been duly recorded in the statutory production records of the appellants and had been cleared on the strength of invoice issued by the appellants under Rule 11 of CCR, 2002 and on payment of appropriated duty leviable thereon. As such the receipt of inputs its consumption in the manufacture of final products and its removal on payment of duty is not in dispute by the investigating Central Excise Offices at any stage. 3.7 That the Form 38 issued and duly signed by the U.P. Trade Tax Department at the Border Check Post was a primary evidence of entry of goods under cover of documents along with Bullties into Delhi/Uttar Pradesh. Form 38 being submitted to the Trade Tax Department along with returns for assessment and before that the receipt of goods under the cover of Form 38 along with invoices and Bullties is not subject to question. 3.8 That it is also on record that the appellant had made the payment through Cheques on payees account for the purchase of the inputs in question Consequently the aforesaid facts conclusively go into proof that the inputs have been purchased through cheques, had been received in the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) E.L.T. (J159) (S.C.). 3.14 That the provisions of Rule 13 of Cenvat Credit Rules, 2002 Rule 15 of Cenvat Credit Rules, 2004 were not applicable against the appellants inasmuch as inputs had been received by the appellants by following the procedures laid down in law which is not disputed by the Department. The finished goods made thereon had been cleared on payment of duty as evident from the central excise duty paying documents and RT-12 (ER-1) Returns. The Department did not dispute the authentically of the said documents in their various Central Excise and AGCR audits also. It is submitted that it is amply clear from various evidences that appellant party received goods accompanied with duty paying documents supported by Form 38 which had crossed the Trade Tax Border and the said inputs were utilized in the manufacture of the finished goods. Hence there is no scope to deny Cenvat credit to appellant or to impose penalty on them. It is further submitted that the Department has initiated proceedings on the basis of lack of corroborative documents and statements, therefore the same cannot be relied upon. There is no order and/or evidence placed by the Revenue that the duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearances of finished goods. Thus M/s. VKMW issued invoices fraudulently to their buyers/customers and the appellant is one of their buyer under the jurisdiction of the Central Excise Commissionerate, Noida, who has purchased copper ingots from M/s. VKMW against the invoices as detailed above. Consequent upon the investigation carried out by the DGCEI, it has been alleged that the appellant took Cenvat credit on the basis of the invoices issued in respect of the said bogus clearances. Thus the allegations levelled upon the appellant are based on the allegations alleged upon M/s. VKMW, in the show cause notice to them, based on the outcome of the investigations carried out by DGCEI. 5.5 From the impugned order, I notice that under para 5.6 it has been held that the evidence on record indicates that the appellant was really engaged in the manufacturing activities and for the manufacture of the finished goods they needed copper rod/copper wire. Therefore, it cannot be said that copper rod/copper wire had not ever been received in their factory. The evidence brought on record shows that the copper rod/copper wire were received by them from their (the appellant s) job workers after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise. Thus, I find that the appellant have taken due care while procuring the duty paid inputs. Therefore, the Cenvat credit may not be disallowed on such inputs i.e. copper ingots received against these invoices simply on the ground that the goods were not the same. Thus, and impugned order is devoid of merit and the same is not sustainable. 5.7 I further place reliance on the following case laws which support the above decision : (i) 2008 (232) E.L.T. 497 (Tri.-Ahmd.) - M/s. Manaksia Ltd. v. C.C.E., Rajkot as long as amount of duty as indicated in the duty paying document has been paid and as long inputs/capital goods which are indicated in the document are received by the assessee Cenvat credit cannot be denied. (ii) 2008 (226) E.L.T. 583 (Tri.-Del.) - C.C.E, Chandigarh v. Hitkari Industries Ltd. - Credit availed based on invoices by registered dealer alleged as without receipt of goods - Payment made to supplier by cheques/drafts indicating bona fide nature of transaction - Onus discharged by respondent - Impugned orders upheld. 5.8 Para 5 of the Board Circular 766/82/2003-CX., dated 15-12-2003, on the issue of availment of credit by the user-manufacture, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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