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TMI Blog2019 (2) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices issued by dealers under which only non-duty paid goods were received by AVCL in the guise of duty paid inputs like MS Ingots, MS Angles, MS Ingots (rejected) etc., the officers visited the factory premises of AVCL. On verification of the concerned lab test report and lab register maintained by AVCL, it was found that the material received was shown as MS Scrap against the description mentioned in cenvated invoices as MS Ingots (rejected), MS Angles (rejected), Centre Disk etc. Officers noticed there was difference between the description shown in cenvat.ed invoices and goods actually received. Statements were recorded and after investigation, it appeared AVCL had availed Cenvat credit from the dealers fraudulently as there was difference in description of goods in invoices than that actually received by them. It was also found that the dealer M/s. Alagappa and Co., [hereinafter referred to as 'A & C'] connived with AVCL and issued cenvated invoices for different description of goods. Thus, show-cause notice was issued for the period Jan.'04 to Feb.'07 against AVCL for alleging fraudulent availment of credit and against A & C for conniving in such act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 25 and Rs. 50,00,000/- under Rule 26 of Cenvat Credit Rules, 2002. The same was upheld by Commissioner (Appeals). Hence these appeals. 3. The learned counsel Shri J. Shankar Raman and the learned Consultant Shri M. Saravanan appeared and argued on behalf of the appellants. 3.1 On behalf of AVCL, the learned counsel Shri J. Shankar Raman submitted that the show-cause notice alleged that the materials received by the appellants are non-duty paid goods, which is without any basis or any evidence. This allegation is mere presumption of the department as the appellants have been making payments to supplier of raw material by way of cheque only, which includes the Central Excise duty. If the appellants had received nonduty paid goods, they would not have paid excise duty to the registered dealers, who supplied the goods. 3.2 There was no necessity for the appellants to buy non-duty paid goods in the guise of duty paid goods. The appellants are very particular about the quality of the raw material and, therefore, a sample would be tested before taking the scrap inside the factory. The departmental officers have examined the lab test registers maintained by the appellants and have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but rejected Centre Disk and not prime material. It is known as MS Scrap in the commercial parlance When the dealer supplies the goods to the appellants, he has to necessarily indicate the goods as Centre Disk in the cenvated documents as is described in the invoices issued to him by the manufacturer. However, in commercial parlance, they are nothing but scrap and hence there is variation in describing them in the invoices/delivery challans. 3.9 That since the appellant was mainly exporting finished products and there being sufficient balance of unutilized Cenvat Credit, the allegation that the appellants, AVCL, has fraudulently availed credit by suppression of facts with intention to evade payment of duty is without any factual basis. 3.10 The learned consultant Shri Saravanan argued on behalf of A & C, which can be summarized as under:- It is submitted by him that the authorities below have imposed penalty upon A & C as well as Shri T.K. Sundaram, alleging that they have connived with AVCL to facilitate AVCL in availing wrongful credit. That AVCL is a Central Excise registered dealer and has supplied only duty paid goods to AVCL. Though, it is alleged that A & C had abetted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences establishing the probability of fraudulent availement of Cenvat Credit and, therefore, the confirmation of demand, interest and penalties imposed are legal and proper. 5. Heard both sides. 6. The allegation is that the appellants AVCL received non-duty paid MS Scrap without any valid cenvated documents from registered dealers and fraudulently availed Cenvat Credit. It is also the allegation of department that the description of goods shown in the invoices differs from the description of goods supplied by the manufacturers to the registered dealer. The foremost defence put forward by the counsel for AVCL is that this appellant is engaged in export of finished products and, therefore, there is no requirement of availing Cenvat credit fraudulently as they would not be able to use the credit. They have sufficient balance of unutilized credit. Further, it is also pointed out by him that since the finished goods are being exported, the appellants maintained a particular standard for inputs received. The goods received were subject to lab test and only such quantity which passed the test were used for manufacture. They have been placing purchase orders for inputs describing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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