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TMI Blog2017 (4) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... of their usage. The appellant also filed copy of road permit issued by M/s KE to -M/s M. K. Steels Pvt. Ltd for transport of MS Ingots in question. Further, the appellants have lead evidence that payment for the purchase of input was made by cheque - the appeal filed by M/S JRW and its Authorized Signatory, Harpinder Singh is allowed. Facts are similar to the case of Commissioner of Customs, Central Excise & Service Tax Versus Juhi Alloys Ltd. [2014 (1) TMI 1475 - ALLAHABAD HIGH COURT], where it was held that The goods were demonstrated to have travelled to the premises of the assessee under the cover of Form 31 issued by the Trade Tax Department, and the ledger account as well as the statutory records establish the receipt of the goods. In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer. Penalty on Mr. Neeraj Agarwal & Authorized Signatory - M/s Kartikey Enterprises - Held that: - they have been party to the fraud in passing the illegitimate Cenvat credit in collusion with the said Mr. Mukesh Agarwal and the three trading firms, namely; M/s M. K. Steels, M/s U.K. Ispat & M/s Shree Hanuman Trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the appellant - M/s Jagdish Rolling Works, Kanpur (M/s JRW for short) during the period 2003-04 to 2005-06. Shri Harpinder Singh Chhatwal - Authorized Signatory of M/s Jagdish Rolling Works, Kanpur, M/s Kartikeya Enterprises, Kanpur, Proprietor - Smt. Shalini Agarwal, and Mr. Neeraj Agarwal, husband of Smt. Shalini Agarwal was the Authorized Signatory of the said M/s Kartikeya Enterprises, Kanpur, (M/s KE for short). The said M/s KE was engaged in trading of Iron Steel, including Cenvatable goods. M/s KE had purchased such goods like M. S. Ingots, etc. from different parties and sold the same to different parties including M/s JRW. M/s KE had purchased substantial quantity of M. S. Ingots from other traders, (registered with the Central Excise Department), namely; M/s M.K. Steals, M/s U.K. Ispat M/s Shree Hanuman Trading Company. All these three traders had their business premises, at Kolkata/Howrah. 4. An intelligence regarding evasion of Cenvat/duty and improper taking of credit by appellant - M/s JRW M/s KE were received by the Department. Thereafter, inspection was conducted at the factory premises of M/s JRW in which the final product was found short by 45. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cash withdrawal was done at places like Ranchi, Jamshedpur, etc. This raised serious doubt about the credibility of the transaction carried out by the said three traders. Further enquiry was made with the transporter. The transporter was summoned for enquiry about the transport of goods as detailed in sale invoices of the M/s M. K. Steel, Kolkata showing sale of inputs to M/s KE. One Shri Jamuna Prasad Pandey appeared before the Central Excise Authority, was owner of vehicle No.UP78 AN-8589, was asked to file requisite details in view of invoice No.32 dated 29 th May, 2005 of M/s M. K. Steel, Kolkata showing sale of ingots to M/s KE, Kanpur Shri Jamuna Prasad Pandey stated that since there was no permit for West Bengal in respect of the said truck, hence he had not transported any goods from West Bengal. That most of the transporters could not be served notice and it appeared that the said transporters were probably fake. 6. Further enquiry was made at M/s KE, Kanpur. Mr. Neeraj Agarwal - Authorized Signatory of M/s KE, Kanpur stated that he was in agreement with the statements given on various dates by Shri Sunil Kumar Gupta to the extent, is related to M/s KE. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply the ingots through different channels to Shri Neeraj Agarwal and such consignments were supported by fake/inappropriate invoices of these three trading firms at Kolkata/Howrah. Further appellant - M/s KE failed to submit the documents such as Behati which could have shown that the goods in question did cross the territory of intervening state such as Jharkhand/Bihar. 8. It appeared to Revenue pursuant to the examination of documents recovered and enquiries made as well as statements recorded that appellant M/s JRW had colluded with appellant - M/s KE and other traders to procure the Ingots under the garb of fake duty paying documents of dubious trading firms. The entire affairs of M/s JRW for purchase of Ingot was managed by Mr. Neeraj Agarwal in collusion with Mr. Mukul Aggarwal. Appellant Mr. Neeraj Agarwal - Authorized Signatory of M/s KE managed and controlled the entire affairs including the purchase of M/s KE under the fake invoices from the said three dubious trading firms. It also appeared to Revenue that appellant - M/s JRW was very much aware of the fake nature of invoices issued by the three traders at Kolkata/ Howrah. Further M/s KE M/s JRW did not make any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re are two basic things prescribed for taking and passing of credit - (i) The goods should be duty paid and (ii) the duty paid goods should be received in the factors premises. In the instant case, the first condition that goods should be duty paid is absent and in absence of the first condition there is no question of fulfillment of the second condition. The credit cannot be allowed for the goods against which no duty has been paid. Further, as per Rule 7 (2) Rule 7 (4) of Cenvat Credit Rules, 2002 read with Rule 9(3) 9(5) of Cenvat Credit Rules, 2004, which require that a manufacturer taking Cenvat credit on inputs, shall take all reasonable steps to ensure inputs in respect of which he has taken the credit are goods on which the appropriate duty of Excise indicated in the documents accompanying the goods have been paid. Further as per explanation - the manufacturer or producer taking Cenvat credit on inputs received by him shall be deemed to have taken reasonable steps if they satisfy themselves about the identity and address of the manufacturer or supplier as the case may be, issuing the documents specified in Rule 7 evidencing the payment of excise duty - (i) from his pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E and others. Penalties were also confirmed on these appellants and others. 10. Being aggrieved the appellant had preferred appeal before Ida Commissioner (Appeals) who vide the impugned OIA had been pleased to reject the appeal. Observing that after going through the evidences, documents, etc. and the statements of different persons, it is clear that the goods were not duty paid. The goods were never purchased from the persons/ manufacturers as mentioned in the invoices of the dealers. The invoices were fake and issued only to pass illegal Cenvat credit. Further, the appellant - M/s JRW have not discharged the onus under the scheme of the Act the Rules at the time of taking credit. More importantly appellant - M/s JRW was aware about the activities and part and parcel of the conspiracy. Accordingly, the order of the Additional Commissioner was confirmed. 11. Being aggrieved, the appellants herein have preferred appeal before this Tribunal on the grounds that they were aware that the appellant -M/s Karthikeya Enterprises was duly registered dealer with the Department and regularly filing their returns. M/s JRW also aware that M/s M K Steels is a registered dealer. M/s KE ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicated in the documents accompanying the goods, has been paid. Admittedly in the present case, the assessee was a bona-fide purchaser of the goods for a price which included the duty element and payment was made by cheque. The assessee had received the inputs which were entered in the statutory records maintained by the assessee. The goods were demonstrated to have travelled to the premises of the assessee under the cover of Form 31 issued by the Trade Tax Department, and the ledger account as well as the statutory records establish the receipt of the goods. In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer. The assessee in the present case was found to have duly acted with all reasonable diligence in its dealings with the first stage dealer. Accordingly, following the ruling of Hon'ble High Court, this Tribunal allowed the appeal of M/s Premier Ispat Ltd. 12. The Id. counsel for the appellant states that the facts herein are squarely covered by the said decision of this Tribunal and also the ruling of Hon'ble High Court, in the case of Juhi Alloys Ltd. (supra) and accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee which resulted in an order of adjudication confirming the demand of duty under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A(1) of Central Excise Act, 1944. A personal penalty was imposed on the Director of the assessee/company as well as the Authorized Signatory. In appeal, the Commissioner (Appeals), Central Excise, Kanpur held that in terms of the provisions of Rule 7 (4) of the Cenvat Credit Rules, 2002 read with Rules 9(5) of the Cenvat Credit Rules, 2004, a manufacturer is required to check the particulars mentioned in the invoices issued by the first stage dealer. During the course of hearing before the Commissioner (Appeals), the assessee submitted, inter-alia Form 31 (road permit) issued by the Uttar Pradesh Trade Tax Department, the ledger account evidencing payments by cheques made to M/s M. K. Steels Ltd., and Form RG 23-A, Part-II. It was held that the assessee had received goods against the invoices of M/s M. K. Steels At. Ltd., for which payment z-as made cheque and the manufactured goods were cleared against payment of Central Excise duty. Commissioner (Appeals) also held that transaction on the part of the assessee was bona-fide and a buyer ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not only impossible but impractical also for an assessee to further check the records maintained by the first stage dealer and to verify correctness of the same. It is sufficient if the assessee buys the goods from first stage dealer whose status he has checked and verified. There is not dispute in the present case that M/s M. R. Steels Pvt. Ltd. was registered as a dealer with the Revenue and the invoices issued by him reflected his registration number. As such, I fully agree with the finding of the Appellate Authority that denial of credit to the respondent manufacturing unit on the ground that first stage dealer has fraudulently received the goods is neither proper nor justified. Reliance by the Appellate Authority on various Tribunal's decision is proper. 15. Having considered the rival contentions, in the facts of the present case, also, I find that it is not disputed by the Revenue that appellant - M/s JRW did receive the inputs. What is disputed is that the invoices, accompanying the inputs and the Cenvat showed therein is doubtful and/or fraudulent. Similar to the facts of Juhi Alloys Ltd., I find that appellant - M/s JRW have also lead evidence of usage of road ..... X X X X Extracts X X X X X X X X Extracts X X X X
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