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TMI Blog2018 (5) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... are allowed. - E/858, 859, 860 & 889/2007 - Final Order No. 61978-61981/2018 - Dated:- 26-3-2018 - Mr. Ashok Jindal, Member (Judicial) Versus Mr Devender Singh, Member (Technical) Sh. Krati Somani, Advocate - for the appellant Sh. Satyapal, AR - for the respondent ORDER Per: Ashok Jindal The appellants are in appeal against the impugned order for confirming the demand of duty alongwith interest by denying cenvat credit on inputs namely HR Sheets and imposing penalty on all the appellants. 2. The brief facts of the case are that the main appellant is engaged in the manufacturing of motor vehicles parts during the course of manufacturing, they procured inputs such as HR sheets/strips. The appellant placed the purchase order on their supplier namely M/s Hero Cycles Ltd. for supply of HR Sheets. It is admitted that the appellant has received HR Sheets/strips in their factory but in the invoices issued by M/s Hero Cycles Ltd. description of goods is written as CRC sheets, therefore, the Revenue is of the view that as description of goods in the invoice not as per the purchase order. Accordingly, it is alleged that the appellant has procured only invoices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st that the appellants took cenvat credit. During the course of investigation, it was found that in the invoices, the description of the goods is not as per purchase order or the goods received by the appellants in their factory, therefore, it was alleged that the appellants have contravened Rule 7(1)(a) of Cenvat Credit Rules, 2004. The show cause notice was issued which was adjudicated and demand has been confirmed along with interest and equivalent amount of penalty. The said order was challenged before the Commissioner (Appeals) who confirmed the order of the adjudicating authority. Therefore, the appellants are in appeal before this Tribunal. And this Tribunal observed as under: 6. On careful consideration of the submissions made by both sides, I find that the short issue involved in this case is whether in the facts and circumstances of the case, the appellants are entitled to take cenvat credit on the strength of invoices where the goods described as CR sheets instead of HR sheets or not? It is an admitted fact that the appellants have placed a purchase order for HR Sheets and physically received HR sheets in their factory which have been used by them in the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any. (Dictated and pronounced in the open court) Ashok Jindal Member (Judicial) Per: Devender Singh, Member (T) 8. Having gone through the order of Ld. Member (Judicial), I record separate order. 9. I find that the case was detected during the visit of the officers of the Department when the officers examined their computerized cenvat records. It was found that on receipt of inputs, Material Receipt Report (MRR) of the inputs was being prepared by the appellant. Scrutiny of the said MRR's with the corresponding duty paying documents revealed that the inputs actually received by the appellants are HRC Sheets/strips whereas accompanying documents showed the goods to be CRC Sheets/Strips. The goods were found to be accounted in their raw material register, namely RG-23A Part-I II, Annexure-57AE and private records as HRC Sheets and strips. The above said discrepancy was noted only in respect of sheets of thickness 3.5 mm, 4.0 mm, 5.0 mm and 6.0 mm received from M/s Hero Cycles (CR Division) and M/s J.D Sons Steel Pvt. Ltd. The Commissioner has documented 5 such invoices in Paragraph 35.1 of his order. 10. In his statement dt. 07.04.2005, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r examining the purchase orders, the Commissioner has given finding that 3 purchase orders were CR sheets and one for HR sheets. He has rightly raised the question that when the party only used HR sheets for manufacture of their products, the placing of orders for CR sheets is completely baffling. I find force in the argument of the Ld. Commissioner that if the appellants had placed the order for CR sheets but got HR sheets, still they neither lodged any protest with the supplier for sending different material or, if the material was as ordered, to change the nomenclature. Hence, I agree with the contention of the Commissioner that it is not logically acceptable, that the party ordered for supply of CR Sheet by mistake, when they required HR Sheet only, as in one of their purchase orders, they have placed order for HR Sheets as well. The contention of the appellant is also unacceptable for the reason that the Depot In-charge of M/s Hero Cycle has categorically stated that they did not manufacture HR Sheets/Strips and all the goods manufactured at their Ludhiana Unit and received at Gurgaon depot on stock transfer basis and supplied by the M/s Auto Max were CR Sheets/Strips as menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y requires HR sheets, it arranged the same from some other source for its manufacturing activity as right from receipt till consumption the accounting of HR sheets is mentioned. (v) the party took credit on the strength of the invoice supplied by the supplier describing goods as CR sheets. (vi) the party entered into this modus operandi as they know that they cannot avail credit on HR sheets procured from other sources without a duty paying document. Hence, the inescapable conclusion is that the inputs against which the credit has been taken i.e. CR sheets/strips have not been received in the factory and not used in the manufacture of their excisable final products, making the cenvat credit on such inputs clearly inadmissible. Thus, the appellants have not been able to discharge the burden placed on them under Rule 9(5) of the Cenvat Credit Rules, 2004. 14.4 I also find that both the suppliers are involved in the entire modus operandi as brought out by the Ld. Commissioner in para 36.1, para 36.2, para 36.4 and para 36.4.1 of the adjudication order. The Commissioner has rightly given the relief in respect of 8 out of 15 invoices of M/s J D Sons as they are for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 386 dated 27.2.2004. Further he clarified that HROP stated for hot rolled oil pickled. He further submits that according to the supplier, who undertook the process of pickling and skin passing on the material which can also be considered as CR coil, however such goods remain HR coil as no substantial reduction or rolling was done to the material during skin pass. Further, during investigation, no technical opinion was taken from the metallurgist to verify whether the goods which are stated in the cenvat accounts and which are stated in the invoices are one and the same. 20. Having considered rival contentions and on perusal of the record, I do not find any investigation to have been conducted in respect of procuring of inputs for manufacture of final product on which duty was collected by Revenue. I also find that there was no investigation from the transporter and also in respect of payment made to the supplier. Therefore, I do not find the allegation in the show cause notice that the inputs on which Cenvat credit was availed was not received in the factory to be sustainable. It is settled in the law that for taking Cenvat credit on the inputs, the inputs should be received i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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