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TMI Blog2018 (5) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... o obtained the invoices from M/s. AIP Industries copper nickel alloys ingots and M/s. Jay Shree Enterprises, Hisar a first stage dealer, obtained invoices from M/s. AIP Industries for nickel plates. M/s. Jay Shree Enterprises supplied nickel plates to the M/s. Ridhi Sidhi Alloys Pvt. Ltd. who further manufactured goods and supplied to the M/s. JSL on payment of duty. As M/s. API Industries is not having manufacturing capacity to manufacture the goods in question, therefore, the show cause notices were issued to the appellants on the ground that as M/s. API Industries is not having manufacturing facility of the impugned goods, therefore M/s. National Udyog and M/s. Ridhi Sidhi Alloys Pvt. Ltd. have not received the goods against the duty paying document issued by the M/s. API Industries, consequently, the goods received by the appellants have not suffered the duty, therefore M/s. JSL is not entitle to avail Cenvat Credit on the goods supplied by M/s. National Udyog or M/s. Ridhi Sidhi Alloys Pvt. Ltd. On the basis of the said show cause notice, the adjudication took place and Cenvat Credit was denied to M/s. JSL. Consequently, the penalty on M/s. National Udyog and M/s. Ridhi Sidhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries were initiated and order was passed against M/s. AIP Industries to deny the Cenvat Credit to them on input used in manufacture of their final product and the said order has attained finality by this Tribunal vide Final Order No.57281 dt. 12.08.2013 which has been affirmed by the Hon'ble High Court of Punjab & Haryana vide order dt. 10.12.2014, therefore, the impugned order is required to be upheld and the appeals filed by the appellants are to be dismissed. 6. Heard both the sides and considering the submissions. 7. We find that in this case facts on receipt of the goods by M/s. JSL against duty paying documents by M/s. National Udyog and M/s. Ridhi Sidhi Alloys Pvt. Ltd. are not dispute. It is also not in dispute that the appellants have not made the payment of those goods. In fact M/s. JSL payment of these goods through account payee cheques. It is also facts on record that on verification by the authorities, it was found that M/s. JSL have in fact received the goods supplied by M/s. National Udyog and M/s. Ridhi Sidhi Alloys Pvt. Ltd. On the basis of above admitted facts, the issue arose before us whether in these circumstances Cenvat Credit can be denied to the M/s. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant No. they have not been commented upon in the Order-in-Original neither there is any rebuttal. Therefore, the existences of these documents and the transaction conducted under them have to be accepted Thus, it cannot be said that the appellant No.1 did not received any goods from appellant No. 2. Further, the show cause notice has alleged fraud and invoked extended period for demand In the entire proceedings no evidence whatsoever has been brought on record about the fact that appellant nos.1 and appellant nos. 2 have ever connived and that either of them had any knowledge about the alleged fact that M/s. AIP Industries did not have any manufacturing facilities of nickel plates, the goods which are subject matter of the proceedings. Therefore, extended period in this case not justified. The period involved in this case is August 2006 to October 2006 whereas the show cause notice has been issued on 07.09.2011, the entire demand being beyond a period of one year is therefore, not sustainable." 8. I do agree with the observation made by the Ld. Commissioner (A) as the respondent has made all the payments through account payee cheque to the first stage dealer who has accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted that the respondent received inputs and entered the same in their records. The said inputs were further used by them in the manufacture of their final product, which were cleared by them on payment of duty. It is also a part of the record that the goods travelled from the dealer premises to the respondents premises under the cover of form 31 of UP Trade Tax department This fact is sufficient to prove the physical entries of the inputs in the assesses premises. Further, the ledger account and RG 23A records maintained by the assessee also proves the receipt of the goods. Further, the payment of the said inputs stand made by the recipient through cheque. 8. In terms of the provisions of Rule 7(4) of Cenvat Credit Rules, 2002 and Rule 9(5) of Cenvat Credit Rules, 2004, a manufacturer is required to check the particulars as mentioned in the invoice issued by the first stage dealer and he should be familiar with him. As rightly observed by Commissioner (Appeals), it is not only possible 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the excisable inputs. The buyer will be therefore entitled to claim Modvat credit on the said assumption, It would be most unreasonable and unrealistic to expect the buyer of such inputs to go and verify the accounts of the supplier or to find out from the department of Central Excise whether actually duty has been paid on the inputs by the supplier. No business can be carried out like this, and the law does not expect the impossible." As the Hon'ble High Court has held that the assessee is required to take reasonable steps to ensure that the input in respect of which Cenvat Credit is taken the same are duty paid or not? In this case also, we find that the goods which have been received by M/s. JSL are against the duty paying documents issued by M/s. National Udyog and M/s. Ridhi Sidhi Alloys Pvt. Ltd. As M/s. JSL is bona-fide purchaser of the goods against the price of the said goods along with duty, in that circumstances, the Cenvat Credit cannot be denied to M/s. JSL. In these circumstances, we hold that the Cenvat Credit cannot be denied to the M/s. JSL against the invoices issued by M/s. National Udyog or M/s. Ridhi Sidhi Alloys Pvt. Ltd. 9. We further observed that in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to Cenvat credit availed in respect of invoices issued by M/s. National Udyog. My findings in relation to the goods purportedly received from M/s. National Udyog Limited are as below:- 17. As has been observed by the Ld. Commissioner in his order the evidence in relation to the M/s. National Udyog Limited is brought out in the para 38,39 and 40, which are reproduced below: "38. In the light of the facts contained in the said order dated 0211.2010 that M/s. AIP Industries, Ludhiana did not at all have the facility to manufacture above goods except enamelled copper wire, the department took follow up action with the help of Deputy Commissioner, Central Excise, Ropar for conducting the enquiry with Balongi Sales Tax Barrier Office against the supply of goods received by M/s. National Udyog, Hissar from M/s. AIP Industries, Ludhiana. The documents (vide details at Para-3 of SCN) so obtained from M/s. National Udyog, Hissar indicating the details of invoices of M/s. AIP Industries. Description of goods, Qty.in MT, Vehicle numbers, concerned Transporter - M/s. Amirtsar Ludhiana Transport Co., Plot No.182, Transport Nagar, Ludhiana, and GR No. and date were sent. I find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries, Ludhiana did not have the facility to manufacture copper nickel alloys ingots. Further verification of invoice No., GR No., date, truck no. as well as transport operator, details of which were obtained from M/s. National Udyog themselves, showed that there was no record of the vehicles passing through ETO, ICC, Balongi Post on the dates of GRs. The verification done from the transport operator M/s. Amirtsar Ludhiana Transport Co. has also revealed that they never sent any consignment to Hissar and categorically stated that the GRs in their name were fake and bogus. Following extract of the statement dt.21.9.2011 of Sh. Malkit Singh, Partner of M/s. Amirtsar Ludhiana Transporter Co. is very relevant: "M/s. The Amritsar Ludhiana Transport Co., Ludhiana had two partners and they started and they started work of transportation of goods carried from Ludhiana to Amritsar and Amritsar to Ludhiana in the year 2004 and closed down their transportation of goods carried from Ludhiana to Amritsar and Amritsar to Ludhiana in the year 2004 and closed down their business after 5-6 months. Further after going through the GRs he stated that those are fake as they had already closed their bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case the show cause notice is issued by ADG of DGCEI. He is competent to issue such a notice. The Id. Advocate's contention that if the authorities allege that the inputs were not received in the factory it is also obligatory on them to establish as to what happened to the duty paid inputs purchased and how the appellant could have produced the final products without the inputs is not tenable. In our opinion the above issues are extraneous and therefore the department is not required to deal with them. It is enough if the fact of non-receipt is established to deny Modvat credit under Rule 57G. The Id. Advocate relied on the case of Indian Polypipes & Ors. v. CCE, Kol.I [2003 (157) E.L.T. 652 (T) 2003 (89) ECC 249 (Tri.)]. We have perused this decision the facts. In that case are completely different from the present one. We do not consider that the ratio of the decision applies in the present case. Similarly the decision in the case of Swastik Tin Works v. CCE, Kanpur [1986 (25) E.L.T. 798 (T)] also does not lay down any ratio which supports the appellant's case. We observe that the department raised a presumption against the appellants by establishing that the input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is that they had received the goods from M/s. National Udyog Limited and the payments were made through banking channels. As brought out above, GR forms and transport documents were clearly bogus as the trucks bearing those numbers never went to Hissar and as per ETO, ICC, Balongi Post, they never crossed commercial check post. 21. The appellant have also relied upon the case of CCE Vs. Juhi Alloys Ltd. - 2013 (296) ELT 533 (Tri.-DeI.). In the said case, there was evidence that the goods travelled from dealer's premises to the respondent premises under cover of Form 31 of UP Trade Tax Department. On the contrary in the present case, there is verification report from ETO, ICC, Balongi Post (Mohali), Punjab Sales Barrier that the said goods on the date of GR and near about the date did not pass through ETO, ICC, Balongi Post and these transactions were not recorded on ICC Balongi. Hence, the goods did not travel to the first stage dealer and the transport documents were bogus and fake. Hence, the facts being different, the ratio of that judgement cannot be applied in this case. The appellant have also relied upon the case law of Nidhi Metal Auto Components Pvt. Ltd. Vs. CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Rule 26 (2) are applicable and M/s. National Udyog, Shri Ram Kishan Gupta and Shri Jagdish Jindal are liable to be penalized for their role in facilitating M/s. JSL Stainless in fraudulent availment of Cenvat credit. Accordingly, for the period after 1.3.2007, penalty of Rs. 50 lakh is imposed on M/s. National Udyog, penalty of Rs. 10 lakh on Shri Ram Kishan Gupta and penalty or Rs. 3 lakh on Shri Jagdish Jindal under Rule 26 (2) of Cenvat Credit Rules, 2002. 25. The appeals are disposed of in above terms. (Devender Singh) Member (Technical) DIFFERENCE OF OPINION As there is divergent views of the Members of this Tribunal, therefore the matter may be placed before the Hon'ble President to appoint third Member to resolve the following issue; (a) Whether in the facts and circumstance of the case and evidences placed on record, Member (Judicial) is correct in holding that the appellant namely M/s. JSL Stainless Limited has correctly taken Cenvat credit on the invoices issued by M/s. National Udyog and therefore, proceedings against the appellant are not sustainable; OR Whether, in the facts and circumstances of the case and evidences placed on record, the Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival submissions and on perusal of the record, I find that the show cause notice is silent on the investigation in respect of the documents on the basis of which the appellant have availed Cenvat credit which was sought to be denied by Revenue, and that Revenue have not carried out any investigation regarding the goods which were transported from M/s National Udyog Limited to the appellant. The show cause notice is silent on the name of the manufacturer who supplied the said goods to the first stage dealer which were intern received by the appellant. The said show cause notice only discussed about the transaction between M/s. AIP Industries Limited and M/s. National Udyog. M/s. National Udyog is first stage dealer and any first stage dealer is not required to receive the goods only from one manufacturer. The National Udyog being a first stage dealer was therefore, eligible to purchase duty paid goods from any manufacturer. Had there been any investigation establishing that the inputs on which Cenvat credit was availed, as entered in the invoices issued by the first stage dealer, were the same goods which were involved in the investigation about the transaction between M/s AIP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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