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TMI Blog2018 (3) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant SIL EOU is entitled to Cenvat credit attributable to inputs and input services. CENVAT credit on input services - Held that: - Mr Sajan was under the whole time employment of the appellants, further he was found to be unaware regarding such invoices raised, reveals that the work was done under the relation of employer and employee and not services provided by a separate entity - credit rightly denied - demand of interest upheld. Penalties - Held that: - it is evident that the appellant have made the payment for the invoices disputed for input service and then taken credit. That sparkon was duly registered with the service tax Department - As the appellant had paid the tax and then taken credit, in the interest of Justice, penalties set aside. Appeal allowed in part. - E/86238 - 86240/2015-MUM, E/86239/15 - A/85298-85300/2018 - Dated:- 16-2-2018 - MR. Anil Choudhary, Member (Judicial) Shri Mahesh Raichandani, Advocate, for Appellants Shri S. V. Nair, AR, for Respondent Per: Anil Choudhary The present appeals have been filed by the appellant-assessee against common Order-in-Appeal No.KLH-EXCUS-000-APP-091 to 094-2014-15 dated 23/01/2015 passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/2009 and 26/03/2009 in the name of M/s Shreyas Intermediates Ltd. (EO Unit) for passing on the input service credit of ₹ 18,69,450/-; that similarly, M/s Sparkon have issued invoice No. 1 dated 30/04/2009 for passing on the input service credit of ₹ 6,18,000/-; that in this manner, M/s Sparkon have passed on Cenvat credit of ₹ 24,87,450/- by claiming to have provided services worth ₹ 2.42 crores but in fact they have not provided any services to M/s Shreyas Intermediates Ltd. (EOU) as M/s Sparkon do not have any machinery/infrastructure or work force to provide any service; 4.1 The search at the premises of M/s Sparkon Engineering was carried out on 25/03/2010 in the presence of two independent panchas and Shri P. R. Sajan, Proprietor of M/s Sparkon as well as AGM of M/s SIL. During search, it was noticed that the entire premises consisted of one big open shed and two small sheds; that no machineries were present in the entire premises; that there was no sign of any activity; that no records were found. These facts were also confirmed by Shri P. R. Sajan and Shri Suryaprakash Pandey (Accounts Officer of SIL) during the Panchnama who stated that there we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on; that he purchased two lathe machines, two drill machines, two magnet drill machine,four welding sets, three grinders (AG7), two grinder (AG4), One Bench grinder, and tools, etc; that he also employed 9 skilled labours in M/s Sparkon whose wages were also being financed through M/s Shreyas Intermediates Ltd; that the finance activities of M/s Sparkon were being managed by Shri Suryaprakash Pandey, Account Officer Authorized Signatory of M/s Shreyas Intermediate Ltd; that he is not aware of the Registration formalities of M/s Sparkon, as it was not handled by him, and his role was limited to manufacture of few equipments that were needed to setup M/s SIL-EOU; that as per the directions of M/s SIL-EOU, he manufactured six numbers of Rotation Vacuum Dryers, twelve agitators along with twelve storage tanks, and other equipments required for setting up of the plant of M/s SIL-EOU; that the said goods were cleared by him to M/s SIL-EOU under the documents prepared by Shri Pandey; that he signed the documents as per directions; that commissioning and installation of M/s SIL-EOU plant was completed in 2007; that, he also left the job of maintenance-in-charge of M/s Shreyas in 2007 due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as the functioning of M/s Sparkon was concerned; that he was handling the entire paper work of M/s Sparkon; that M/s Sparkon had obtained the Central Excise Registration No.AZTPS2170HXM001 in the year 2006; that the goods manufactured at M/s Sparkon were being cleared to M/s SIL-EOU under CT3 procedure and regular statutory returns were filed with the Department; that M/s Sparkon had also obtained Service Tax Registration No.AZTPS2170HST001 in the year 2009 for rendering maintenance and repairs services to M/s SIL-EOU and M/s SIL-DTA; that as M/s Sparkon had manufactured various equipments for M/s SIL-EOU, which were cleared under CT3 certificate without payment of any Central Excise duty, therefore there was accumulation of Cenvat credit (taken on steel plates, and other raw materials, used in the manufacture of such equipments supplied to M/s Shreyas), which was used for payment of Service Tax, later. 5.3 During interrogation on 25/03/2010, Shri Surya Prakash Pandey was shown the tax Invoice bearing Sr. No. 1,2,3, all dated 25/03/2009 and Sr. No. 4,5 and 6 all dated 26/03/2009, and one Invoice with Sr. No.1 dated 30/04/2009, raised by M/s Sparkon on M/s SIL-EOU on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signed to M/s Sparkon Engineering but these were not physically delivered at M/s Sparkon Engineering and the same were made available to Shri Sajan at the site of M/s SIL-DTA unit which were utilized for manufacture of Air Heater and Vacuum System for M/s SIL-EOU. 5.6 Shri Puppadiparambil Raju Sajan, Proprietor of M/s Sparkon and AGM of M/s SIL was again interrogated by the DGCEI officers and his statements were recorded on 05/04/2010, under Section 14 of the Central Excise Act, 1944 ( RUD-9 ). In his statements dated 05/04/2010, Shri Sajan interalia stated that after re-joining M/s SIL-EOU in January, 2009, he found that six out of nine skilled workers had left M/s Sparkon and only three were remaining on the roll of M/s Sparkon Engineering; that thereafter, he recruited four more skilled workers and one helper; that the salary of these employees was being paid by M/s SIL which was subsequently debited from the account of M/s Sparkon Engineering; that regarding taxable value of the services reflected in nine invoices raised in the month of March and April 2009, he does not know as these invoices were prepared by Shri Suryaprakash Pandey, Accounts Officer of M/s SIL-EOU and M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the premises of M/s Sparkon Engineering, Mumbai Goa Highway, Boraj, Tal, Khed, Dist, Ratnagiri; that these machines (as mentioned below) are recorded in the asset register of M/s Sparkon Engineering, Ratnagiri for purchase of which, amount was paid by M/s SIL-EOU; 1) Lathe 6'22' 14 Chuck -1 Nos. 2) Rectifier Welding set Aron, are welding set -1 Nos. 3) Transformers welding set 2 phose, 600Amp -3 Nos. 4) Drilling Machine 1' (last) -1 Nos. 5) AG-7 Hand Grinder -2 Nos. 6) AG-2 Hand Grinder -2 Nos. 7) MS cutting set -2 Nos. 8) Hand Drill =1/2 -2 Nos. 9) Shaper 12 slot r' Bed -1 Nos. 10) Power cutting 14 G.W. Dia -2 Nos. That these machineries were not found by the DGCEI officers of Pune during recording of Panchnama on 25/03/2010 drawn at premises of M/s Sparkon Engineering, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 154500 6. 26/03/2009 SIL-DTA Repairs 1000000 100000 2000 1000 103000 7. 26/03/2009 SIL-DTA Repairs 1200000 120000 2400 1200 123600 1. 30/04/2009 SIL 100% EOU Repairs 6000000 600000 12000 6000 618000 2. 28/05/2009 SIL 100% EOU Repairs 1378000 1378000 2756 1378 141934 Shri P. R. Sajan stated that he joined M/s SIL-100% EOU in January, 2009 as Maintenance Manager and had carried out the above referred repair activities in the capacity of AGM of M/s SIL; that he is unable to explain how these Invoices for repairs activities were prepared and what was the basis for preparation of aforesaid Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent existence and merely prepared invoices for the purpose of enabling the appellant to avail credit of the duty/service tax paid. The appellant contested. However, demands came to be confirmed along with interest. Penalties were also imposed. Being aggrieved, the appellant(s) filed appeals before the Commissioner of Central Excise (Appeals). However, the same came to be dismissed vide common impugned order. Hence, these appeals. 7. The Learned Counsel for appellants urges that the impugned order is a non-speaking one. The Commissioner (Appeals) has not considered any of the submissions of the appellant. The case laws cited by the appellant have been ignored. The Commissioner (Appeals) has simply upheld the findings contained in the Order-in-Original. 7.1 In any case, reliance placed on statements of Mr. Sajan (Proprietor of M/s Sparkon) and Mr. Dinesh Sharma (Chairman of the appellant) to show that the appellant and M/s Sparkon are single entity is misplaced. The said statements in no manner establishes the fact that the appellant and M/s Sparkon are one and the same entity. There is no categorical admission. The said statements are ex-culpatory. Hence, as such, no reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be denied to the appellant. 7.5 The appellant(s) submit that the extended period of limitation is not invokable in the present case as there was no suppression of facts with intent to avail irregular credit. The period of dispute in the above show cause notice is January 2008 to December 2010. The show cause notice has been issued on 06/06/2012. Therefore, the entire demand is barred by limitation. At Para-13 of the impugned order thereof, the Learned Commissioner finds that M/s Sparkon is a dummy unit established for unusual financial gains and availing service tax credit and capital goods credit. However, there is no evidence in support of the said finding. The show cause notice does not even state as to what is the omission or commission by the appellants which has led to invocation of extended period of limitation. In absence of such allegation, let alone evidence, the appellants submit that the larger period of limitation cannot be invoked. 7.6 The appellant submits that, department undertook investigation in the year April, 2010. The statements were recorded at the time of investigation. The department was aware about the facts of the present case since April, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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