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TMI Blog2023 (5) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... tured by M/s. AESPL and that the entire transactions by the Appellant with M/s. AESPL were on paper only. It is a well settled law that the adjudicating authority cannot go beyond the scope of the show cause notice as has been laid down by the Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS, MUMBAI VERSUS TOYO ENGINEERING INDIA LIMITED [ 2006 (8) TMI 184 - SUPREME COURT ] and in the case of THE COMMISSIONER OF CENTRAL EXCISE, BHUBANESWAR-I VERSUS M/S. CHAMPDANY INDUSTRIES LIMITED [ 2009 (9) TMI 7 - SUPREME COURT ]. In these judgments it has been laid down that the department cannot travel beyond the scope of show cause notice and that the Revenue cannot argue the case which has not been made out in the show cause notice. The whole case of the department that the transactions with M/s. AESPL were fake transactions and the Appellant took credit without receipt of the capital goods or non-receipt of the goods clearly falls down. In the show cause notice it was alleged that the Appellant had utterly failed to verify the antecedents of the supplier manufacturer for the purpose of availing of Cenvat credit. This would mean that the goods were actually received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d allowed the appeal of the Appellant. 2. That aggrieved by the aforestated order, the Revenue had preferred an appeal before the Hon ble Calcutta High Court, which has remanded the matter back to the Tribunal for afresh consideration on merits and in accordance with law. The matter has been remanded back by the Hon ble High Court primarily for the reason that the Tribunal has not examined the various grounds urged by the Appellant and by the department. It has been held by the Hon ble High Court that the Tribunal could not have straightway followed its earlier order dated 25-10-2019. In such circumstances, it goes without saying that the Tribunal has to record reasons as to how the decision would cover the case before it. In other words the Hon ble High Court has observed that the order of the Tribunal is a non-speaking order. 3. That the Commissioner of Central Excise, Bolpur vide Order-in-Original No. 115/Commr/Bol/2009 dated 31-12-2009 had confirmed duty demand of Rs. 3,07,48,020/- and had imposed equal amount of penalty. A separate penalty of Rs. 50,000/- was imposed under Rule 13(1) of Cenvat Credit Rules, 2002. The period involved is from May 2003 to June 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons attended the summon proceedings. One of them, Shri Raju Hazra, Baltikuri, Naskarpara, Howrah who in his statement dated 19-09-2006 stated that he did neither get any job order from the said M/s. AESPL nor had any business relation or financial transaction with the said M/s. AESPL. The other purported job workers, Sri J.P. Gupta also made identical submission in his statement dated 10-10-2006. 8. That on 30-06-2008 a team of Central Excise officer of Anti Evasion Unit visited the factory premises of the Appellant and conducted search and subsequently recorded two statements of Shri Niranjan Gourisaria, Senior General Manager of the Appellant dated 21-08-2008 and 28-11-2008 as well as statement of Shri Umesh Rai, Project Manager of the Appellant dated 28-11-2008. 9. That on the basis of various evidences a show cause notice dated 04-12-2008 was issued to the Appellant wherein it was alleged that the entire transaction was conducted with M/s. AESPL was on paper only with an ulterior motive of availing wrong and irregular Cenvat credit without accompaniment of any physical material said to be manufactured by the said M/s. AESPL. It was alleged that the Appellant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echanical appliances such as (i) Drum type separator (ii) vibrating screen (iii) coal crusher (iv) Mill Roll table its equipments etc had been classified under 84791900 or 8479.19 as per invoices. But as per Central Excise Tariff Act 1985 as amended there was no Tariff sub Heading No. 84791900. The sub heading 84791000 reads Machinery for public works, buildings or the like . Further in the photographs cited by the Appellant were very large operative instruments with label of M/s. AESPL. On close observation it happened that the instruments were very large in size and were fabricated within the factory premises by plates, angles, channels etc. But in the invoices, he found that there was no evidence that these plates, angles etc were carried to the factory, nor there was evidence that the part of such machines were carried in piecemeal manner and assembled at site. He found that in the invoices there were descriptions of complete machines or machinery appliances sent to the Appellant in Nos. or in sets. Further he also found that in the contracts submitted by the Appellant he did not find any such contract for assembly of machines at site. Further, the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The plant and machinery on the strength of 199 invoices were duly received by them, the same were duly entered into in their statutory records, the payment for the said purchases were made through banking channels and the said plant and machinery was duly installed in their factory. In this regard, he took us through copies of the quotations, purchase orders, challans, invoices, ledger accounts, bank statements and ER-1 returns of the disputed period in support of the aforementioned submission. (ii) That M/s. AESPL was duly registered with the Central Excise department for manufacturing of excisable goods. Though there was an allegation in the show cause notice and finding in the Order-in-Original that Central Excise registration of M/s. AESPL was terminated on 10-08-2007 vide Order-in-Original but the same was set aside by the Commissioner (Appeals) on 2210-2008. The period of dispute in the present case is May 2003 to June 2008. In this regard, he submitted that in the first place the said termination on 10-08-2007 was at the fag end of the period in question. Secondly, this fact was not known to the Appellant as M/s. AESPL was duly mentioning the central excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 21-06-2008 to 2806-2008 they had received 28 consignments of different parts of plant and machinery and two consignments were received on 30-06-2008. According to him non-inspection and non-verification of the plant and machinery clearly falsifies all the allegations and findings that no plant and machinery was received from M/s. AESPL. (vi) That during the course of investigation the officers had recorded two statements of Shri Niranjan Gourisaria, Senior General Manager of the Appellant dated 21-08-2008 and 28-11-2008. In both of these statements Shri Niranjan Gourisariawas simply shown the various invoices on the basis of which they had availed the cenvat credit issued by M/s. AESPL and also a detailed chart of all the invoices under which the Appellant had received various capital goods. He was simply asked to explain what necessary steps did he take to ensure the identity and address of the supplier i.e. M/s. AESPL as stipulated vide Rule 7(2) of Cenvat Credit Rules, 2002 / Rule 9(3) of Cenvat Credit Rules, 2004. His answer was that he did not dealt with the purchase of the capital goods. It was Mr. Umesh Rai (Project Manager) who was looking after the purchase of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have allowed them to clear any further consignments. But the department never objected to their clearance of capital goods on payment of appropriate central excise duty. On the contrary the department was duly accepting the payment of central excise duty by M/s. AESPL during the period in question which itself is sufficient to falsify the case set up by the department against the Appellant. (ix) That, the capital goods were duly accompanied by the Tax Invoice-cum-Excise Invoice on which vehicle number on which these capital goods were transported was duly mentioned on the said Tax Invoice-cum-Excise Invoice. No inquiry at all was conducted either from the owners of the vehicles or its drivers to prove that these capital goods were not transported to the premises of the Appellant. (x) That once the department had collected appropriate central excise duty from M/s. AESPL at the time of clearance of the capital goods they cannot subsequently turn around and say that the said payment cannot be construed as duty of excise or that the said payment of duty by M/s. AESPL was fictitious and fabricated. (xi) That the whole case of the department clearly stands falsified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whenever the goods were cleared from the factory of M/s. AESPL. The said party was issuing one tax invoice-cum excise invoice for a particular consignment. He showed us the cases where though there was one tax invoice but it covered three different consignments. For example tax invoice dated 26-122003 was a consolidated invoice which was for three consignments whereas it contained the details of three vehicles whereas three excise invoices were issued for each of the consignment which was a coal crusher part. A perusal of various documents such as quotations, purchase orders, challans and invoices would duly prove that the capital goods or its parts were in a fully finished condition. (xiv) That the Appellant in its written submissions filed at the time of personal hearing in para 1(i) had taken a specific stand before the Ld. Commissioner that the said capital goods had been installed in their plant and almost all of them exist and still in use in their factory in the manufacture of dutiable final products. However, the Ld. Commissioner even at the adjudication stage could have got the said facts verified before passing the adjudicating order. In any event he has not reb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in existence in the factory of the Appellant. The Tribunal in the case of Sunvik Steels Ltd has allowed the appeal of the assessee in respect of goods supplied by the same supplier. In the said judgment reliance was also placed on the judgement rendered by the Hon ble High Court of Allahabad in the case of C.Ex., Cus. Service Tax Vs. Juhi Alloys Ltd : 2014 (302) ELT 487 (All.). Similarly in this judgment reliance was also placed on the law laid down by the Jharkhand High Court in Commissioner of C. Ex., East Singhbhum v. Tata Motors Ltd. - 2013 (294) E.L.T. 394 (Jhar.). It has been contended by the Ld. Counsel that the Final Order No. 77032/2019 dated 25-102019 in respect of M/s. Jai Balaji Industries Limited was never challenged by the department before the Hon ble High Court. (xix) The Ld Counsel drew our attention to the two judgments wherein the same supplier had supplied the capital goods situated in different Commissionerates. In the case of Sunvik Steels Ltd. Vs. CCE, Bangalore reported at 2012 (276) ELT 518 the party therein had availed cenvat credit on capital goods on the basis of invoices issued by the same supplier i.e. M/s. AESPL, Kolkata. This Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said central excise duty has been accepted by the department. (xxii) That the Appellant was erroneously called upon to give answer to the allegations which were basically levelled against M/s. AESPL without making them the party to the present proceedings. (xxiii) That on 30-06-2008 a team of Central Excise officer of Anti Evasion Unit visited the factory premises of the Appellant and no discrepancy was found at the end of the Appellant that they had erroneously availed the cenvat credit. Even in the show cause notice no such evidence has been brought on record that they did not receive the capital goods from M/s. AESPL or did not install the same. (xxiv) The Ld. Counsel specifically relied upon para 9.1 of Final Order No. 75105/2022 dated 22-02-2022 in the Appellant s own case which was rendered in the case of M/s. Saha Industries wherein it has been laid down by this Tribunal that it was not deciding the case of M/s. Saha Industries. In this case the Tribunal was concerned with the issue as to whether when a supplier was duly registered with the Central Excise department and had paid Central excise duty on the capital goods and cleared the same from his factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 225 (Tri-Del) (iii) Indo Asian Fusegear Ltd. Vs. CCE Noida - (338) ELT 611 (Tri-Del) (xxvii) That the capital goods received by the Appellant from M/s. AESPL were duly shown in the statutory records of the Appellant. There is no finding by the Adjudicating Authority that the statutory records which were maintained by the Appellant were incorrect or false in any manner. In this regard, Ld. Counsel placed reliance upon the law laid down by the Hon ble Supreme Court in the case of Gian Chand Brothers Vs. Rattan Lal Singh reported at MANU/SC/0015/2013. (xxviii) That, it is also a well settled law that the recipient of inputs or capital goods is duly entitled to avail the benefit of duty paid by the supplier manufacturer as shown in the Tax Invoice of the supplier unit. The same cannot be contested or challenged by the officer in-charge of recipient unit. In this regard, Ld. Counsel placed reliance on the law laid down by the Hon ble Supreme Court in the case of Commissioner of Central Excise Customs Vs. MDS Switchgear Ltd reported at 2008 (229) ELT 485 (S.C.). (xxix) That, the demand of duty is barred by time as held by the Hon ble Gujarat High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise invoice and the Appellant knowingly availed the Cenvat credit on such invoices. (iv) That all the invoices were fake and on the strength of such fake invoices the Appellant took cenvat credit. This fact was all along within the knowledge of the Appellant. Since such fact was not disclosed before the department, hence there was suppression, fraud and willful mis-statement with the intention to evade payment of duty. Therefore, the longer period was rightly invoked. He, therefore, prayed for dismissal of the appeal. 16. That the matter was heard on 28-02-2023 when Ld. AR was asked to file written submissions which he has filed on 17-04-2023. The said written submissions more or less contain the same submissions which Ld. AR had made during the arguments. 17. We have heard both the sides and carefully perused the records of the appeal. 18. We find that majority of the evidences which have been relied upon against the Appellant relates to the activities of M/s. AESPL. During the course of hearing we had asked the Ld. AR to point out any discrepancy of any kind with regard to the present Appellant in availing the cenvat credit on various capital goods on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the Anti Evasion Unit did not inspect the said plant and machinery and find out whether the same were lying installed in the factory premises of the Appellant or not. The factum of receipt of capital goods from M/s. AESPL would have also been evident from the statutory records of the Appellant when the officers had visited their unit on 30-06-2008. It cannot be denied that the prime reason for the visit of officers of HQ Anti Evasion Unit of Bolpur Commissionerate on 30-06-2008 was only to verify as to whether the Appellant had received various capital goods vide 199 invoices from M/s. AESPL during the disputed period. Therefore, it was highly obligatory on the part of the investigating officers to have verified the installation of the capital goods received during the disputed period from M/s. AESPL. They were also required to make a verification report after making inspection of each and every capital goods received from M/s. AESPL. No reason is forth coming in the show cause notice and there is no finding in the Order-in-Original as to why the officers did not verify and inspect the installation of various capital goods on 30-06-2008. It appears that even no panchnam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the present case is on a higher pedestal as the capital goods received from M/s. AESPL were duly installed in the factory of the Appellant and were being used in the manufacture of finished goods. The department has not brought any evidence on record that the Appellant did not receive various capital goods from M/s. AESPL and was not using the same in the manufacture of finished goods. 21. That the Ld. AR has heavily relied upon Chartered Engineer s report dated 19-04-2017 on which it was opined that factory of M/s. AESPL was not capable of manufacturing such large machineries and did not have requisite manufacturing infrastructures. We may state here that we are not deciding the case of M/s. AESPL. In the present case we are concerned with the issue as to whether when a supplier was duly registered with the Central excise department and had paid central excise duty on the capital goods and cleared the same from his factory and whether cenvat credit on the same can be denied to the recipient unit. We have already taken note of the findings of the Ld. Commissioner rendered in para 3.16 of his order wherein he has held that the capital goods were duly received by the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s impliedly accepted that during the period when central excise registration of M/s. AESPL was in operation they had validly issued the cenvat invoices meaning thereby that they had supplied the capital goods along with the central excise invoices. We take note that the period involved in this case is from 20-05-2003 to 30-06-2008. In between there was no receipt of capital goods by the Appellant from M/s. AESPL during the financial years 2004-05 and 2007-08. Their objection seems to be only in respect of the invoices which were issued by M/s. AESPL post 10-08-2007 till 30-06-2008. In this regard we find that there is absolutely no evidence on record to show that the Appellant was aware that the central excise registration of M/s. AESPL was terminated on 10-08-2007, as the Appellant was receiving the capital goods from M/s. AESPL from 20-05-2003 onwards and all the invoices were showing the central excise registration no. and the fact of payment of duty by the said supplier. Their practice of supplying the capital goods right from 20-05-2003 was uniform. Therefore the Appellant had no reason to suspect that the central excise registration of M/s. AESPL was terminated on 10-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to the Appellant. Further two statements of Shri Niranjan Gourisaria, Senior General Manager of the Appellant dated 21-08-2008 and 28-11-2008 as well as statement of Shri Umesh Rai, Project Manager of the Appellant dated 28-11-2008 were recorded by the department. Nowhere they have stated in their respective statements that the capital goods were not received from M/s. AESPL. The Appellant in para 1(i) of their written submissions filed at the time of personal hearing had contended that the said capital goods had been installed in their plant and almost all existed and still in use in their factory in the manufacture of dutiable final products. This stand of the Appellant has not been rebutted or controvered by the adjudicating authority. We have held in the earlier portion of the order that this fact was required to be investigated by the department at the investigation stage itself. Keeping in view of all these submissions we are of the firm view that there is no material on record to show that M/s. AESPL did not supply capital goods to the Appellant as alleged in the show cause notice and held in the impugned order. 25. That in the earlier proceedings as well as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w which the Tribunal has taken is consistent with the judgment of the Jharkhand High Court in Commissioner of C. Ex., East Singhbhum v. Tata Motors Ltd. - 2013 (294) E.L.T. 394 (Jhar.), where it was held as follows :- ... Once a buyer of inputs receives invoices of excisable items, unless factually it is established to the contrary, it will be presumed that when payments have been made in respect of those inputs on the basis of invoices, the buyer is entitled to assume that the excise duty has been/will be paid by the supplier on 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. 8. The judgment of the Division Bench of the Himachal Pradesh High Court inA.B. Tools Limited v. Commissioner of Central Excise - 2010 (256) E.L.T. 382 (H.P.), on which reliance has been placed by the revenue, does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AESPL did not have capacity to manufacture the finished goods stands totally falsified. 27. The Ld. Counsel has relied upon another final Order No. 75105/2022 which relates to the present Appellant. That apart from M/s. AESPL the Appellant had also purchased capital goods from one M/s. Saha Industries which was also located near the unit of M/s. AESPL. In that case also identical proceedings were drawn against the Appellant. Vide the aforementioned final order this Tribunal inter alia has rendered the following findings:- (i) That the Commissioner in para 7.13 of his order has held that though the capital goods were received by the Appellant but the same were not manufactured by M/s. Saha Industries. But nowhere it was observed that the Appellant therein had actually received the said goods from some alternate source. Therefore, the whole case of the department that the transactions with M/s. Saha Industries were fake transactions and the Appellant took credit without receipt of the capital goods or non-receipt of the goods clearly falls down. (ii) It has been held that onus of proof that the Appellant received the capital goods from some other source was squar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel has brought to our notice that this order was passed on 22-02-2022 i.e. more than one year back and according to their knowledge the department has not challenged the said final order before the Hon ble High Court. 29. The Ld. Counsel has contended that while setting aside the orders of the adjudicating authority in Final Order Nos. 77032/2019 dated 25-10-2019 and 75105/2022 dated 22-02-2022 this Tribunal had placed reliance on the judgment rendered by the Hon ble Allahabad High Court in the case of Juhi Alloys Ltd Vs. CCE, reported in 2014 (302) ELT 487 (All.). According to him the facts involved in the case of Juhi Alloys Ltd are that the party had procured raw materials from one M.K. Steels (P) Ltd. The said inputs were used for the manufacture of final products which were cleared against the payment of duty. The said M/s. M.K. Steels (P) Ltd in turn had purchased the MS Ingots from M/s. SarlaIspat (P) Ltd which was found to be non-existent. In the first place the Commissioner (Appeals) had allowed the appeal of the party therein. The said order of the Commissioners (Appeals) was challenged before the Tribunal by the department. The Tribunal dismissed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred by time or not. In the present case the period involved is from 20-052003 to 30-06-2008 and the show cause notice was issued on 04-122008. The majority of the duty demand is under the extended period of limitation. We find that the Tribunal in para 9.10 of their final order No. 75105/2022 dated 22-02-2022 held that where the credit was availed on the basis of invoices of a manufacturer who was duly registered with the department but could not be found subsequently it could not be said that the credit was availed on the basis of forged documents. It has been held that even if the original document was issued by the supplier of the inputs even by practicing fraud, a holder for valuable consideration unless shown to be a party to a fraud could not be proceeded with by taking aid of a larger period of limitation as indicated in Section 11A(1) of the Act. We hold that even in the present case even if the goods were not actually manufactured by M/s. AESPL the fact remained that the same were duly received by the Appellant and M/s. AESPL have duly discharged the central excise duty on the same. In such a case extended period of limitation could not be invoked against the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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