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TMI Blog2024 (11) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been received in the factory of manufacture and should have been used in or in relation to the manufacture of the final products and (b) the services should have been received by the manufacturer and should have been used in or in relation to the manufacture of the final products. There are no reason to disbelieve the appellant s contention of having produced the relevant records for verification, merely because the Divisional Assistant Commissioner who has otherwise conducted the verification of records as instructed has, instead of forwarding all the records and registers, chosen to forward only the screen shots of the GRNs, which documents would readily form a point of reference for the goods details of which were verified - had the learned adjudicating authority harboured any doubt that the Divisional Assistant Commissioner has not carried out the verification report as instructed, it was incumbent upon the learned adjudicating authority to have sought clarification, and if necessary, directed that the verification be done as instructed. The burden of proof of admissibility of cenvat credit in respect of the goods and services by reflecting the requisite details in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative ORDER Per AJAYAN T.V. 1. The appellant has preferred this appeal being aggrieved by the impugned order in original by which the adjudicating authority has demanded the cenvat credit availed and utilised by them during the period from July 2009 to December 2013, terming it as ineligible availment and invoking the extended period of limitation. The learned adjudicating authority has also imposed penalty equivalent to the demand and directed payment of interest at appropriate rates. 2. The facts germane to the dispute, succinctly, is that the appellant is engaged in manufacture of industrial valves and spares for valves falling under Chapter 84 of the first schedule to the Central Excise Tariff Act, 1985 and is registered with the department. 3. During the course of audit of their accounts by the internal audit wing of the jurisdictional Commissionerate, it was noticed that, in certain cases, the appellant had taken cenvat credit on the basis of the documents that were issued in the name of M/s. Xomax Sanmar Limited wherein the address of the consignee / buyer/recipient was mentioned as 89/1, Vadugapatti Village, Viralimalai and the ECC No. (Central Excise Registration No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariff Act, 1985. The Appellant has availed the cenvat credit in respect of the excise duty paid on inputs and capital goods and service tax paid on input services. ii) The Department issued a show cause notice No.32/2014 dated 31.07.2014 proposing to deny cenvat credit together interest and penalty for the period July 2009 to December 2013. The allegation in the show cause notice is that the invoice contained the address of another person. iii) The appellant filed a detailed reply and informed the adjudicating authority that the factory of the appellant is located at Vadugampatti Village, Viralimalai and in the same premises there are two units. The appellant herein i.e M/s. Xomox Sanmar Ltd. Unit 2 (Pacific Valve Division) is engaged in the manufacture of globe valves, check valves, gate vales and spares. That the appellant has raised purchase order and materials were also received by the appellant and that the vendors inadvertently raised invoices in the name of Unit 1 of Xomox Division. iv) The appellant produced all the documents to prove that the materials were received by appellant and accounted as stock in their books and utilised for manufacture. v) The adjudicating authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing decisions: a) Modiline Travel Services Pvt Ltd. V s CST - No.51666/2023 dt.2012.2023, CESTAT, New Delhi Final Order b) A.K. Engineers Vs Commissioner of C.Ex.ST Cus., Bangalore-II (2017) 349 ELT 180 (Tri-Bang) c)Bharat Sanchar Nigam Ltd-(2024) 24 Centax 131 The learned counsel prayed that the appeal may be allowed. 7. Per contra, the learned authorized representative Shri Anoop Singh strenuously opposed the contentions of the learned counsel for the appellant and made submissions, that are briefly summarized as follows: i. As per the provisions of Rule 3(1) of the Cenvat Credit Rules, 2004 a manufacturer of final product is allowed to take cenvat credit on inputs, capital goods and input services only if the following conditions are satisfied: a. The inputs should be received in the factory of the manufacturer of the final products, i.e. in the factory of the manufacture of excisable goods that are manufactured from inputs. b. The inputs should be used in the manufacture of final products. c. The inputs should not be goods having no relationship whatsoever with the manufacture of final products. d. The capital goods should be used in the factory of the manufacture of final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details submitted by the appellant in their returns it is not possible for the scrutinizing officer to determine the eligibility of the cenvat credit which was disclosed in their return based on self assessment. v. That in the era of self-assessment the onus of taking legitimate credit has been passed on to the assessee and therefore adjudicating authority has held that the appellant has deliberately withheld and suppressed material facts with intent to avail ineligible credit and thereby to evade payment of duty and the extended period of limitation is rightly invoked. vi. That the case laws cited by the learned counsel for the appellant are distinguishable and have been rendered in different facts and circumstances. 8. We have heard both sides and perused the records. The issues that arise for determination are whether in the given facts and circumstances, the appellant is eligible to avail credit on the invoices that are addressed to unit I of the appellant, the availment of which is alleged to be in contravention of the provisions of Rule 3(1) and Rule 9(1) of the Cenvat Credit Rules 2004; given also the verification report submitted by the jurisdictional Divisional Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erification. In respect of Sl. No. 1 to 17, 19 to 22, 24 to 27, 30 to 33, 35 to 192, 194 to 203, 205 to 248, 252 to 257, the invoices were addressed to Unit II, the goods were received and utilized in Un II as per GRN submitted by them for verification. In respect of Sl. No. 18, 193, 278 to 499, they submitted GRN copies addressed to Unit II but no invoices submitted for verification . 10. The learned adjudicating authority has also gone on to state that along with the above report, the jurisdictional Assistant Commissioner has forwarded copies of the following documents: i. In respect of goods, screen shots of GRN titled as Display Material Document taken from their computerized system to show the accounting of the receipt of the goods in the assessee unit. ii. In respect of services, screen shots taken from their computerized accounts showing the availment of service tax credit by the assessee unit. 11. We notice that the learned adjudicating authority, in his findings at para 12 of the impugned Order in Original, holds that the cardinal principal of Cenvat Credit Rules 2004 is that when there are any typographical errors in the invoices or any mistakes committed by the sellers i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments, (a) print outs of the GRN taken from their computerised accounts in proof that the goods were received in their factory and (b) print out taken from their computerised account in proof that they had taken service tax credit in respect of such services. The learned adjudicating authority then goes on to hold that from the documents produced by the appellant during the course of verification he finds that they have produced evidences in the form of computer printouts taken from their computerised accounts in proof of having accounted for the receipt of the goods in question in their books of accounts, however, no documentary evidence of any sort has been produced by them in proof that the subject goods/services were used by them in or in relation to the manufacture of their products and the report received does not throw light as to how it was concluded that the goods covered in the case have been actually utilised/consumed in the manufacture of dutiable excisable goods. 14. Undoubtedly, the finding of the learned adjudicating authority that when there are any typographical errors in the invoices or any mistakes committed by the sellers in the preparation of the invoices, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t submitted by the Divisional Assistant Commissioner as corroboration of production of such documentary evidence. Therefore, when the report submitted by the jurisdictional Divisional Assistant Commissioner, pursuant to the directions of the learned adjudicating authority to conduct verification, categorically asserts that upon verification, it is found that the goods were received and utilised in Unit II as per GRN submitted by them for verification, and also that, upon verification, it is found that the services were received and also credit was availed as per the statement submitted during that particular period by the appellant; there is no reason to disbelieve that the said officer has not verified the receipt and utilization of the goods and services from the relevant documents including GR documents, inward-outward registers, input stock account registers etc to the extent it has been stated as verified in his report. On the contrary, we are of the view that it would be farfetched to think that the jurisdictional Divisional Assistant Commissioner, when tasked with the responsibility of submitting a verification report and after being specifically instructed as to the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the substantive benefit of cenvat credit, which even the learned adjudicating authority has otherwise found as not to be denied for mistakes in the invoices. 19. We also observe from the records that the averment of the appellant that both Unit I and Unit II of the appellant are located at Vadugappatti Village, Viralimalai adjacently and in the same campus, remains uncontroverted. It has been the consistent stand of the appellant that the final products of the two units are different and the inputs used in Unit I and Unit II are totally different. Under these circumstances, their averment that some of the vendors who supplied the inputs have inadvertently mentioned the address of the Unit I in the invoices for supply of goods to Unit II is an entirely plausible explanation. The learned adjudicating authority has also recorded that in respect of all such inputs that inadvertently mentioned the address of Unit I, to substantiate their contention that purchase orders were only placed by Unit II, copies of specimen purchase orders were also produced by the appellant during personal hearing. The learned adjudicating authority has also no cavil on the availment of credit on invoices th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs, the said onus remains undischarged by the Department. 22. We also find that the learned adjudicating authority has grossly erred in holding that the burden of establishing the eligibility of admissibility of the credit on the invoices involves establishing the fact that no credit of such invoices was availed by the other unit which also belong to the same company. We find that neither was any such allegation/apprehension expressed in the show cause notice nor was the appellant asked to establish the burden of proof regarding the eligibility of credit on the invoices that are the subject matter of the show cause notice in the aforesaid manner as now recorded by the learned adjudicating authority in the impugned Order in Original as the acceptable method of discharge of the burden of proof regarding admissibility of cenvat credit. It is a settled principle of law that the assessee is required to meet only the allegations in the show cause notice and that the department cannot go beyond the allegations raised in the show cause notice. In Commissioner of C. Ex, Bhubaneswar-I v. Champadany Industries Ltd, reported in 2009 (241) ELT 481 (SC), the Honourable Supreme Court in para 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification conducted by the Internal audit unit and in the era of self-assessment the onus of taking legitimate credit has been passed on to the assessee. The learned adjudicating authority therefore finds that the appellant has deliberately withheld and suppressed material facts with intent to avail ineligible credit and thereby to evade payment of duty and that the extended period of limitation is rightly invoked. 26. At this juncture, it would be apposite to notice the decision of a coordinate bench of the tribunal in Accurate Chemical Industries v CCE, Noida, reported in 2014 (300) ELT 451 (Tri Del), wherein it was held as under: 7.1 Though with effect from 1-10-1996, self-assessment has been introduced and the monthly ER-1 return filed by an assessee are not required to be assessed by the Range Superintendent (RO), in terms of the following instructions issued by the Central Board of Excise Customs (CBEC) not only every ER-1 return filed by an assessee is required to be scrutinized by the RO for correctness of rate of duty applied to the goods cleared, arithmetical accuracy of duties/amounts dues and payable; Cenvat credit availment, valuation etc., this scrutiny must be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 1989 (40) E.L.T. 276 (S.C.); Padmini Products v. Collector reported in 1989 (43) E.L.T. 195 (S.C.); Pushpam Pharmaceuticals v. CCE reported in 1995 (78) E.L.T. 401 (S.C.); Anand Nishikawa Co. Ltd. v. CCE, Meerut reported in 2005 (188) E.L.T. 149 (S.C.); Continental Foundation Jt. Venture v. CCE, Chandigarh reported in 2007 (216) E.L.T. 177 (S.C.) has held that something positive other than mere inaction or nonpayment of duty is required for invoking extended period under proviso to Section 11A(1) and that suppression means failure to disclose full information with intent to evade the payment of duty and mere omission to give certain information is not suppression of fact unless it is deliberate with intention to evade the payment of duty. The above condition for invoking extended period prescribed in these judgments is not satisfied in this case. 27. In our view, allowing the assessee to self-assess the tax is a mere facility extended to the assessee. That in no way detracts or dilutes the statutory responsibility of the jurisdictional central excise officers to ensure correctness of the assessment and duty payments made, which duty payments would include, not only the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r monthly returns, it cannot be said that there was any positive act of suppression on misstatement on their part. As such, we are of the view that Commissioner (Appeals) has rightly held a part of the demands as barred by limitation. 30. We are of the view that when the returns prescribed provide only for information of consolidated availment of cenvat credit to be furnished, it would be all the more reason for a jurisdictional central excise officer entrusted with the duty to safe guard Government Revenue by verifying and scrutinizing the information being furnished in the returns by the assessee, to be diligent and inquire into the details of such cenvat credit taken and utilized within the mandated period prescribed for such scrutiny as laid down in the Department circulars and instructions in order to ensure correctness of the assessment and ensure complete remittance of the requisite duty. In the instant case, the extended period sought to be invoked is from July 2009 and even before the audit officers visited the appellant s factory, there was ample opportunity for the jurisdictional central excise officers to carry out their mandated responsibility and detect any irregulari ..... 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