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TMI Blog2016 (10) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... med to have supplied HR/CR coils to M/s SAIPL, Ludhiana under Central Excise invoices on the basis of which Cenvat Credit has been taken by M/s SAIPL and similarly M/s Rajeev Steels and Golden Steel are the registered dealers who claim to have supplied HR/CR coils to M/s SAIPL, Gurgaon. 1.2 On 19.05.2006, on receipt of an information that M/s SAIPL are taking Cenvat Credit on the basis of invoices for HR/CR coils claimed to have been received by them, without actually receiving any such goods, while actually they were purchasing HR strips from unregistered dealers without any invoices, the factory premises of M/s SAIPL at Ludhiana and Gurgaon were searched in the course of which a number of documents and records were recovered, which being relevant for enquiry were resumed. During search, the physical stock of the raw material was also checked and it was found that in M/s SAIPL unit at Ludhiana, there was shortage of 82.235 MT of HR/CR sheets as compared to the stock shown in the statutory record and cenvat credit involved on this quantity was3,62,447/-. This shortage was admitted and cenvat credit was reversed on that day itself. The officers also seized certain records including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial, that such bogus invoices had been obtained through M/s Salig Ram Manik Chand and that they are ready to reverse Cenvat Credit amounting to Rs. 37,74,000/- availed on the basis of such bogus invoices. Though the proprietors of M/s Krishna Agro and M/s Allied Agro claimed that they have supplied HR/CR coils to M/s SAIPL, they could not produce any bilties or GRs in support of this claim. M/s SAIPL reversed the Cenvat Credit amounting to 37,74,000/- on 19-05.2006. 1.3 On examination of the entries in the diary regarding dispatch. Sale of scrap and finished goods, it appeared that there were no Central Excise invoices in respect of those clearances. 1.4 As regards Gurgaon unit of M/s SAIPL, it was found that while this unit had taken Cenvat Credit on the basis of the invoices for HR/CR coils issued by M/s Golden Steel Co, And Rajeev Steel, Faridabad, on enquiry with the store keeper and Sh. Bir Singh yadav, works Manager of the unit, it was found that only the HR/CR sheets had been received, not coils, as there was no facility for slitting of the coils in the factory. On enquiry with M/s Golden Steel Co. as well as M/s Rajeev Steel, the proprietors of these suppliers disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules, 2002; (h) Recovery of Cenvat Credit amounting to Rs. 17.60.447/- from Gurgaon unit of M/s SAIPL alleged to have been taken on the basis of invoices of HR/CR coils, without receiving such goods; alongwith interest on the same at the applicable rate and appropriation of an amount of Rs. 7,00,000/- lakhs already paid by M/s SAIPL towards this demand; (i) Imposition of penalty on M/s SAIPL, Gurgaon under Rule 15 of Cenvat Credit Rules, 2004 read with section 11AC of the Central Excise Act for fraudulently taking the wrong Cenvat Credit amounting to Rs. 17,60,447/-; and (j) Imposition of penalty on M/s Rajeev Steel and M/s Golden Steel Co., Faridabad under Rule 25 of Central Excise Rules, 2002. 1.7 The above show cause notice was adjudicated by the Commissioner Central Excise, Ludhiana vide Order-in-Original dated 15.05.2009 by which- (i) Cenvat Credit demand of Rs. 50,23,955/- was confirmed alongwith interest against M/s SAIPL, Ludhiana and Cenvat Credit demand of Rs. 17,60,447/- alongwith interest was confirmed against M/s SAIPL, Gurgaon and amounts of Rs. 37,74,000/-. and Rs. 7,00,000/- already reversed/paid towards these demands were ordered to be appropriated; (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned period, there has been production 1577.708 MT of scrap as per RG-1 register and there is no allegation any quantity of scrap produced has been shown in the RG-1 register being removed without payment of duty. He further submits that the appellant has cleared 1560.095 MTs of scrap on payment of duty during the impugned period. The Revenue has not produced any positive evidence that given quantity have been manufactured and removed without payment of duty. When a quantity higher than a quantity of 1577.708 Mts which is shown manufactured as pr RG1 register could not be generated during the course of manufacture of auto components then the allegations of clandestine removal without payment of duty is not sustainable. He further submits that if the allegation is taken to be correct then there should be production of 2370.951 MT of scrap be produced in the factory of the appellant to manufacture of such scrap, there should be such quantity of raw material and finished goods to be manufactured during the period the same is considered then the allegation is proved wrongly. He further submits that in the ideal situation is taken then the maximum scrap can be generated only 161 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectly sent to the job worker for cutting into HR sheets. These sheets received by the appellant used in the manufacture of their final product. The appellant has produced job work challan and paid for job work to the job worker on the issuance of invoices. These facts have not been disputed by the Revenue during the course of adjudication and supplier of the HR coils has given statement that they have supplied the HR coils to the appellants. In that circumstance, the credit cannot be denied to the appellant. He, therefore, submits that the impugned order is to be set aside and the appeal be allowed. 7. On the other hand, learned AR supported the impugned order and submitted that the demand on account of clearance of scrap is based on the entries made in the diaries of the security supervisor and also confirmed by Shri Amajit Singh Bajaj (a major buyer of scrap). He submits that the material received was HR/CR sheets from various suppliers without any bill and for availing the credit on the invoices procured form M/s.Allied Agro, Allied Steel and Krishna Agron It is admitted were not having the facility to cut HR/CR coils/sheets at their unit Ludhiana/Gurgaon obviously it is not u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. As contended by the appellant that they are not capable of to manufacture such huge quantity of scrap has been certified by the chartered engineer and no evidence of procurement of excess inputs and clearance of excess finished goods is on record. In these circumstances, the demand on account of clandestine clearance of scrap is not sustainable, therefore the same is set aside. Issue No.2 11. Denial of credit on the allegation that the appellant has received the invoices and not inputs. To allege that such allegation, the sole ground is appellant has procured HR/CR coil having no facility to manufacture the same in their factory, therefore, they have not received such quantity of scrap. We have seen that total 80 invoices are in dispute and out of this in 6 invoices the description shown as CR sheets and in 40 invoices the description is HR coils slitted and 34 invoices, the description shown as HR coiln. It is evident from the list only against invoices 34 invoices, the appellant has received HR/CR coils. With regard to these, the appellant has taken the defence that these HR/CR coil has been sent to job work for cutting/slitting. The job charges have been paid and the good ..... X X X X Extracts X X X X X X X X Extracts X X X X
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