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TMI Blog2008 (6) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., the main appellant placed an order with M/s. Ishan Technologies P. Ltd. (ITPL, for short) for 10 MW Slow, speed alternator with AVRS and Voltage Control System. (b) M/s. Manaksia Ltd. received the said system under Invoice No. 2 dt. 12-4-03 issued by ITPL, showing the value of the consignment as Rs. 5,50,00,000/- and the amount of duty paid as Rs. 88 lakhs and based on the said document taken the Cenvat credit of the same amount. (c) According to the investigations by the department the alternator was not manufactured by ITPL and therefore, there was no clearance of the aforesaid capital goods under the invoice issued by ITPL based on which credit of Rs. 88 lakhs was taken. (d) Commissioner, accordingly, confiscated the goods and allowed redemption of the same on payment of fine of Rs. 2 crores; he disallowed credit of Rs. 88 lakhs and ordered recovery of interest on the said amount; imposed penalty of Rs. 88 lakhs on M/s. Manaksia Ltd.; he also imposed penalty of Rs. 10 lakhs on Shri Rajib Lalwani, Vice-President of M/s. Manaksia Ltd. and Rs. 10 lakhs each on ITPL and its director Shri Kiran Bhagwat. 4. The learned advocate appearing for M/s. Manaksia Ltd. and Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s. Manaksia Ltd. and if so whether the goods have been indeed manufactured by them? 8.0 At this stage, it would be appropriate to consider the relevant legal provisions relating to availment of cenvat credit. 8.1 According to Rule 9 of Cenvat Credit Rules 2004 - "the Cenvat credit shall be taken by the manufacturer ....on the basis of any of the following documents namely (a) an invoice issued by (i) a manufacturer for clearance of inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer 8.2 The invoice referred to in this Rule has to be the invoice contemplated under Rule 11 of the Central Excise Rules which reads as follows: Rule 11. Goods to be removed on invoice "(1) No excisable goods shall be removed from a factory or a warehouse except under an invoice signed by the owner of the factory or his authorized agent.............. (2) The invoice shall be serially numbered and shall contain the registration number, name of the consignee, description, classification, time and date of removal, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not been corroborated with evidence. 9.7. ITPL have also not produced any evidence to show that they have indeed procured all the raw material required for manufacture of the alternators said to have been supplied by them. They have also not shown that they have availed any input credit for such inputs received by them. If the goods were manufactured on job work basis through the job workers, they ought to have produced movement document for raw material to the job workers' premises and movement of finished goods from the job workers' premises to ITPL or directly to M/s. Manaksia and no such evidence have been adduced. 9.8 It is also claimed that some fabrication works have been undertaken at the premises of M/s. Manaksia Ltd. The goods are claimed to have been transported through three lorries and the investigation suggest that two of the lorries did not go through the concerned check posts and the goods transported through the third lorry was only pre-fabricated structure valued at about Rs. 3.5 lakhs. 9.9 There are other inconsistencies to the claim that the goods received under the cover of the invoice was manufactured by ITPL. For example, the control panel i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced is tainted by deception. (c) Notwithstanding the nature of commercial transactions between M/s. Manaksia Ltd. and ITPL and the fact of payment of duty by ITPL, the invoice issued by them can not be considered as document eligible for allowing credit. (d) Both M/s Manaksia Ltd. and ITPL are privy to the deception and are liable to penalty. (e) The goods were rightly confiscated, cenvat credit was rightly disallowed. 12. In the light of the findings and taking the entire facts and circumstances into account the appeals are disposed off as follows: (a) The appeal by M/s. Manaksia Limited is partly allowed on the following terms. The order disallowing and recovering credit of Rs. 88 lakhs availed by M/s. Manaksia Limited is upheld. The demand of interest on the above amount is also upheld. The penalty of Rs. 88 lakhs imposed on M/s. Manaksia Limited is also upheld. The redemption fine imposed on the confiscated goods is reduced from Rs. 2 crores to Rs. 20 lakhs. (b) Penalty of Rs. 10 lakhs imposed on ITPL is upheld and their appeal rejected. (c) The penalties imposed on Shri Rajib Lalwani and Shri Kirsan Bhagwat are set aside and their appeals allowed. (Pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctly recorded by ld. Member (Technical), that the issue whether M/s. ITPL are eligible for the benefit in respect of the said goods, by way of return of excise duty on the ground of the same having been manufactured in the specified area, is not the issue before us. As such without going to the fact that as to whether M/s. ITPL has manufactured the goods and are entitle to refund of duty paid on the same or they have got the goods manufactured from some other units on job work basis as claimed by them, I hold that as long as M/s. ITPL has paid the duty on the said goods, M/s. Manaksia Ltd. would be entitled to avail the credit on the same. If at all, Revenue is of the view that the goods have not been actually manufactured by M/s. ITPL in specified area and they are not entitled to refund the duty paid by them, they can always refuse to do so at the time of considering the claim of M/s. ITPL for refund of the duty. Viewing the said dispute from another angle, I find that if M/s. ITPL has not manufactured the goods, they are not liable to pay duty on the same, in which case the same is in any case liable to be returned to them, even if the Revenue's case is accepted. As such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant is based on the documents i.e. invoice which indicates the payment of duty. It is his submission that the goods accompanying the said invoice was received by the appellant and they availed the credit. He submits that the allegation in the show cause notice does not commensurate with the denial of the Cenvat credit. He draws my attention to the various findings of the adjudicating authority and submits that this findings are totally incorrect and submits that there is no dispute as to the payment of the duty by the main supplier i.e. M/s. ITPL. It is his submission that the thrust of the entire case of the revenue is that the said M/s. ITPL is not manufacturer and could not have issued the invoice. 21. He submits draws my attention to the letter of the Superintendent of Taxes, Khanpara Check Post, Assam to indicate that the vehicle numbers which are mentioned in the documents had crossed the check post of the Khanapara Station and were carrying prefabricated structures were of transporter Suraj Road Lines of consignment note No. SRL 6263/ dt. 12-4-2003. He also submits that the M/s. Manaksia Limited has paid the amount of invoice which has been raised by their suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details that should appear on the invoice. On the perusal of the invoice it is seen that the said invoice is issued for "10 MW, Slow Speed Alternator with AVRS and Voltage Control System and also mentions challan number of the supplier". The eligibility of the appellant company to avail the Cenvat credit on the invoice and the capital goods received in the factory premises covered under the provisions of Cenvat Credit Rules, 2002. 25. It is undisputed that the appellant company had received the alternator which was consigned. The provisions of Rule 7 of the Cenvat Credit Rules, 2002, (during the relevant period) reads as under :- "Rule 7 Documents and accounts. - (1) The CENVAT Credit shall be taken by the manufacturer on the basis of any of the following documents, namely (a) an invoice issued by - (i) a manufacturer for clearance of — (I) inputs or capital goods from his factory or from his depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, (II) Inputs or capital goods as such; (ii) an importer; (iii) an importer from his depot or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the purchasers i.e. appellant company has paid for the goods purchased by them. I find that in an identical issue, in the case of Commissioner of Central Excise v. Jyoti Limited, Revenue filed an appeal be fore the Hon'ble High Court of Gujarat. Their Lordships in that case [as reported at 2008 (223) E.L.T. 171 (Guj.)] held as under: "The appellant-revenue has proposed the following three questions: 1. Whether the amount paid in excess by the supplier unit which is to be treated as Deposit can be allowed as Modvat credit to the recipient unit especially when the Modvat Credit Rules permit to avail the credit only on Excise duty paid by the supplier unit. 2. Whether the Tribunal could have allowed the credit of deposit in contravention to the Modvat Credit Rules and Hon'ble High Court's decision in case of M/s. Eltex Rudy Ltd. v. Superintendent of Central Excise [1994] (70) EL.T. 208 (Mad.) (H.C.)] 3. Whether the Tribunal could have traveled beyond the show cause notice by citing the provisions of Rule 57-E which can only be applied at the suppliers end and not to the recipient's end. Heard Ms. Sejal K. Mandavia, learned Additional Standing Counsel on behalf of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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