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TMI Blog2018 (12) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible in respect of goods used in the factory of the manufacturer of final product. It is not in dispute that the HR/CR sheets are inputs, which are required in the fabrication of body in the appellant’s factory. The credit also have been availed on the basis of invoices for which the payments have been made through proper Banking Channels. The investigation undertaken at the supplier’s end, has not brought on record any solid evidence to establish that the inputs were never received in the appellants’ factory. It is nobody’s case that any part of the inputs have been diverted clandestinely outside without use in the factory for manufacture. In view of the above, it cannot be concluded that the appellant has irregularly availed credit on inputs without use of the same in the manufacture. Two invoices for a total quantity of about 76 MT - Held that:- The credit for the same has since been reversed inasmuch as the material has been received/returned. Revenue is not justified in ordering reversal of cenvat credit - appeal allowed - decided in favor of appellant. - Ex. Appeal Nos.124,149,152,166/09 & 78230,78231/18 - FO/A/77081-77086/2018 - Dated:- 4-12-2018 - SHRI P.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials indicated in the records of the appellants was more than the quantity of materials indicated in the drawing of Tata Motors. By adopting the drawing of Tata Motors as a reference, the Departmental Officers proceeded to work out the excess inputs claimed to have been used by the appellant in the manufacture during the period 2002-03, 2003-04, 2004-05 2005-06. On this basis, it was concluded that on the total quantity of 1685.696 MT of materials, cenvat credit was availed in excess. 2.3 Further investigation undertaken by the Department was focused on the various suppliers of inputs based on whose invoices, the cenvat credits were availed with a view to establish that 1685 MT of inputs were physically not received in the factory. It was noticed that the several suppliers, i.e. M/s Chinar Steel Segment Centre, M/s PPG Steel Pvt. Ltd., M/s Garg Steel Traders and M/s ASL Enterprises, had supplied HR/CR coils as well as sheets. Since the appellant did not have facility for cutting such coils into sheet forms, it was alleged that the goods in coil form were never received in the appellant s factory and as such the cenvat credit availed on the basis of invoices on coils were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted by the Departmental Officers on 02.03.2006, had not considered the stock of materials lying in process in different parts of shop floor. This has resulted in incorrect estimation of the quantum of materials consumed. The Departmental officers had also not taken into account the closing balance of stock at year-end on the basis of value of goods shown in the balance sheets. Further, they have ignored the weight difference in different models. They have also not taken into account the process loss that invariably results in the process of fabrication. Such process loss of 10% to 12% will be required to be allowed in determining the quantum of materials consumed. (iv) A part of the raw materials were also used within the factory for undertaking repair and maintenance of machines installed in the factory. The cenvat credit cannot be denied for such use captively within the factory. (v) The appellant assessee had made payment through Banking Channel for the entire raw materials received and for all the invoices listed in the Annexure to the show-cause notice. In view of the above, it is not fair to allege that the raw materials were not received in the appellant s factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 002. He specifically pointed out that the provisions for imposition of penalty on other facilitating taking the credit without actual supply of materials, was inserted only w.e.f. 01.03.2007 by inserting sub-rule (2) of Rule 26 of Central Excise Rules, 2002. Accordingly, he submitted that the adjudicating authority was not legally empowered to impose the said penalties. He also relied on the following decisions: (a) CCEx., Chandigarh I Vs. Mini Steel Traders: 2014 (309) ELT 404 (P H) ; (b) CCEx., S.Tax, Chandigarh I Vs. Asim Enterprises: 2015 (328) 658 (Tri.-Del.) ; (c) Steel Tubes of India Ltd. Vs. CCEx., Indore: 2007 (217) ELT 506 (Tri.-LB) ; (d) Sahu Refrigeration Industries Ltd. Vs. CCEx., S.Tax, Delhi I : 2015 (330) ELT 587 (Tri.-Del.) ; (e) Piyush Engineering Works Vs. CCEx., Rajkot : 2009 (240) ELT 700 (Tri.-Ahmd.). 6. The ld.D.R. for the Revenue, justified the impugned order. He specifically made the following arguments : (i) The demand for reversal of cenvat credit was made on the basis of detailed investigation conducted by the Department after noticing the fact that the appellant-assesses had availed credit on the basis of two invoices on 02.03.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.2 On the basis of prima-facie conclusion as above, the investigations were further conducted to establish the non-receipt of the materials in respect of some of the invoices based on which the cenvat credit were availed. The investigation highlighted some of the apparent discrepancies including the following : (i) Some of the invoices were of HR/CR Coils in addition to sheets. It was found that the appellants did not have facility of cutting such huge HT/CR Coils in their factory. Since no documentary evidence was found indicating cutting of such coils into sheets on job work basis by sending coils outside the factory, it was concluded that the goods in the form of such coils were never received and such cenvat credit were irregular. (ii) In a few cases, trucks were found to have not crossed the Purulia Check Post in West Bengal and it was presumed that such goods were never received by the appellants in the factory at Jamshedpur. (iii) The investigation further proceeded towards dealers. Some of the dealers indicated in their statements that they did not pay the freight charges in respect of materials sent to the appellant s factory. Since no details of freight paym ..... 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