9911796707
TMI Blog2014 (12) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... m manufacturers. Further, it is a fact on record that the scrap received was not of the required quality and hence debit notes were issued to the suppliers (dealers) for supply of inferior quality scrap. Besides, the officials of the appellant-firm also corroborated the fact that what was received and used by the appellant was bazaar scrap and not industrially generated scrap. In these circumstances, the appellant could not be held to have satisfied/complied with the requirements of Rule 7(2) of CENVAT Credit Rules 2001/2002. Sub-rule (4) of Rule 7 of CENVAT Credit Rules, 2002 makes it abundantly clear that the onus of proving admissibility of CENVAT credit lies on the person availing the credit. In Besco Ltd. vs. Commissioner of Central Excise [2000 (8) TMI 217 - CEGAT, KOLKATA] the Tribunal dealt with a situation where bazaar scrap was supplied and the same was shown to be purchased from dealers registered with the department who had issued the invoices without actually supplying the material. This Tribunal held that the department cannot be expected to go to the source from where the appellant ought to have procured the bazaar scrap and as long as the department can corrobora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of such bazaar scrap would not arise at all. What the dealers have done is that they have supplied non-CENVATable scrap along with CENVAT documents. Penalty for issuing fake/bogus CENVAT document was provided for in the statute only in 2007. Since in the present case, the period is 2001-02, in the absence of specific provision in law for imposition of penalty for issue of fake/bogus documents, penalties imposed on the dealers and brokers will not sustain. Accordingly, we set aside the penalties imposed on the dealers and brokers. - Appeals Nos.E/1978, 2131, 2189 & 2228 to 2231/2006 - Final Order Nos. A/517-523/2014-WZB/C-II(EB) - Dated:- 14-7-2014 - P R Chandrasekharan and Anil Choudhary, JJ. For the Appellant : Shri Gajendra Jain, Adv., Shri C S Biradar, Adv. and Shri Vinay Sejpal For the Respondent : Shri S G Dewalwar, Addl. Commissioner (AR) JUDGEMENT Per: P R Chandrasekharan: The appeals arise from Order-in-Original No. P-III/BKS/CEX/39/2005-06 dated 27/03/2006 passed by the Commissioner of Central Excise (Adjudication), Pune - III Commissionerate. 2. Vide the impugned order, the learned adjudicating authority has confirmed a demand of CENVA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dealer supplied bazaar scrap using the duty-paying documents on the strength of which the appellant took the credit. The appellant was aware that the scrap received by them was, in fact, bazaar scrap and not industrially generated scrap. The officials of the appellant-firm also confirmed the use of bazaar scrap and the issue of debit notes for supply of inferior quality scrap which also shows that the scrap supplied to the appellant were bazaar scrap and not industrially generated duty paid scrap. 3.3 As regards the scrap procured from M/s. Simandhar Steel Movers (India) Pvt. Ltd., on which CENVAT credit amounting to ₹ 96,96,012/- had been taken, some of the ship breakers, namely, M/s. R.K. Steel Alloys Industries, Pipavav, M/s. Baldev Ship Breakers, Bhavnagar and M/s. Ajay Alloys Casting Pvt. Ltd., Bhavnagar were found to be closed and not in operation for a long time. Further, enquiry conducted with the sales tax authorities at the Bhilad Check Post, through which the trucks carrying scrap from Gujarat has to pass through, revealed that during the years 2001-02 and 2002-03 no consignments carrying iron and steel scrap consigned to M/s. Simandhar Enterprises or M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that, even if the supplier of the inputs was found not to have discharged duty on the goods covered under the invoices issued by him, the recipient cannot be denied CENVAT credit so long as he has taken reasonable care and has taken the credit on the basis of documents accompanying the goods. It is, therefore, the contention that the demand is not sustainable inasmuch as the credit had been taken on goods on which appropriate duty has been paid and therefore, the credit cannot be denied. 4.2 The appellant also assails the confiscation of the goods by the adjudicating authority and the consequent redemption on payment of fine. 4.3 As regards the dealers M/s. Steel India Company, M/s. Mehta Trading Corporation and M/s. Madhuban Trade Steel Pvt. Ltd., it is their contention that they have procured the goods from manufacturers, who generates scrap on which excise duty liability has been discharged and documentary evidences exist for discharge of excise duty by the manufacturers. It is, therefore, submitted that for being a part to any frauds as alleged in the show cause notice as also found in the impugned order, there is no evidence adduced by the Revenue to show that the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (India) Pvt. Ltd. were found to be non-existent. In the light of these evidences, the onus of proving that the scrap which has been received has suffered duty shifts to the appellant who has taken the credit. He also relies on the decision of this Tribunal in the case of Bhagwati Steel Cast Ltd. vs. Commissioner of Central Excise, Nashik 2013 (293) ELT 417 in support of this plea. Therefore, he pleads for upholding the impugned order. 6. We have carefully considered the submissions made by both the sides. 6.1 When the factory premises of the appellant were searched on 12/08/2002, it was found that a large quantity of scrap namely, 706 MTs was available. On examination of the scrap it was found to be bazaar scrap and not industrially generated scrap. The officials of the appellant-firm also admitted that these were, in fact, bazaar scrap on which no excise duty is payable. Yet the appellant was found to have availed CENVAT credit on the said scrap which was reversed by the appellant. Further, there was two trucks carrying bazaar scrap positioned outside the factory which were yet to unload the scrap in the factory premises of the main appellant. When the drivers and cleaners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xistent. If the ship breakers themselves were non-existent at the relevant time, the question of them paying any duty for supply of scrap would not arise at all. Further, as per the enquiry conducted by the Revenue with the Sales Tax authorities at the Bhilad check post, it is clearly evident that during the period 2000-01 to 2002-03, no consignment carrying iron and steel scrap consigned to M/s. Simandhar Enterprises or M/s. Simandhar Steel Movers (India) Pvt. Ltd. had passed through the above check post. In other words; the ship breaking scrap has not been transported from Gujarat to Maharashtra at all. 6.3 Rule 7(2) prescribing the reasonable steps to be taken by the manufacturer taking CENVAT credit reads as follows: (2) The manufacturer or producer taking CENVAT credit on inputs or capital goods shall take all reasonable steps to ensure that the inputs or capital goods in respect of which he has taken the CENVAT credit are goods on which the appropriate duty of excise as indicated in the documents accompanying the goods, has been paid. Explanation.- The manufacturer or producer taking CENVAT credit on inputs or capital goods received by him shall be deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the person who is availing the credit. In the present case, the main appellant has not discharged this liability at all. 6.5 Sub-rule (4) of Rule 7 of CENVAT Credit Rules, 2002 makes it abundantly clear that the onus of proving admissibility of CENVAT credit lies on the person availing the credit. In Besco Ltd. vs. Commissioner of Central Excise [2001 (137) ELT 168 (Tri. Kol)] the Tribunal dealt with a situation where bazaar scrap was supplied and the same was shown to be purchased from dealers registered with the department who had issued the invoices without actually supplying the material. This Tribunal held that the department cannot be expected to go to the source from where the appellant ought to have procured the bazaar scrap and as long as the department can corroborate by evidences to show that mala fide nature of transactions, the same is sufficient. In the present case, from the statement of the brokers, it is evident that what was supplied by the registered dealers were scrap procured from bazaar and not duty paid scrap. Therefore, the onus shifts to the appellant to prove that the scrap purchased is duty paid scrap which the appellant has not discharged at all. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever always the same and it has been laid down that a fact may be regarded as proved for purposes of a civil suit, thought ht evidence may not be considered sufficient for a conviction in a criminal case. BEST says: There is a strong and marked difference as to the effect of evidence in civil and criminal proceedings. In the former a mere preponderance of probability, due regard being had to the burden of proof, is a sufficient basis of decision; but in the latter, especially when the offence charged amounts to treason or felony, a much higher degree of assurance is required. (BEST. S. 95). While civil cases may be proved by a mere preponderance of evidence, in criminal cases the prosecution must prove the charge beyond reasonable doubt. (See Sarkar on Evidence, 15 th Edition, pp. 58-59). In the words of Denning KJ (Bater Vs. B. 1950, 2 All ER 458,459) 'It is true that by our law there is a higher standard of proof in criminal cases then in civil cases, but this is subject to the qualification that there is no absolute standard in either case. In criminal cases the charge must be proved beyond reasonable doubt, but there may be degrees of proof within that standard. So also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned : and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in `Law if Evidence' (12th Edn. Article 320, page 291), the presumption of innocence is, no doubt, presumptio juris : but every day's practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have purchased scrap legitimately and, therefore, they are not required to prove the impossible. The argument of the appellant is not sustainable for the reason that, if the law mandates the appellant to comply with certain requirements, however difficult it might be, it has to be complied by the appellant. Rule 7(4) of the CENVAT Credit Rules, 2002, as it stood at the relevant time, placed the onus to prove the eligibility to avail CENVAT credit on the person taking the credit. Once the Revenue discharges the burden that the particulars declared in the documents on the strength of which credit had been availed are not genuine or are fake, then the onus is on the assessee to prove that they have availed the credit correctly and are entitled for the credit. That onus cannot be countenanced on the ground of hardship or inconvenience. It is also on record that M/s. Simandhar Steel Movers (India) Pvt. Ltd., who was the main dealer from whom the appellant procured the scrap, did not participate in the appeal proceedings at all which also shows that the scrap supplied by them to the appellant is not duty paid. As regards the scrap procured from other dealers, through brokers, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is not eligible to avail the credit of ₹ 1,62,39,751/- as the scrap received by them are not duty paid. Consequently, they are liable to reverse the credit taken along with interest thereon. Since the appellant knew that the scrap received by them were not those covered by the duty paying documents, their intention to avail ineligible credit is clearly established. Consequently they are liable to penalty under Rule 13 of the Rules read with Section 11AC of the Act. (ii) The confiscation of goods valued at ₹ 1,14,98,444/- is set aside and consequently no fine in lieu of confiscation is liable to be paid. (iii) The penalties imposed on M/s. Steel India Company, M/s. Mehta Trading Corporation, M/s. Madhuban Trade Steel Pvt. Ltd., M/s. Al-Karim Scrap Traders Pvt. Ltd. and M/s. Singh Sons, Shri Manoj M Mehta, Director of M/s. Mehta Trading Corporation and Shri Pritesh Jain, Director of M/s. Madhuban Trade Steels Pvt. Ltd. are set aside as there was no provision in the statute for imposition of penalty on them for the various contraventions committed by them at the relevant time. 10. The appeals are disposed of in the above terms. (Pronounced in Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
