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TMI Blog2025 (4) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Central Excise, Jammu. 2. Briefly stated the facts of the case care that the Appellant No.1, is a manufacturer of insecticides, pesticides, etc. and were availing exemption under Notification No. 56/2002-CE dated 14/11/2002; they were availing of the refund of the amount of duty payable on "value addition by way of self- credit; refunds were duly ratified by the Assistant Commissioner and Orders passed to this effect in terms of para 2C (e) of the notification; refunds so earned were subsequently used for payment of duty on goods manufactured and cleared. A search of the premises of the Appellant was conducted on 1/10/2013; it was found that one Shri Naresh Kumar, who was working as Senior Manager (Quality Control), was maintaining daily production data on his laptop and sending email/monthly statement to the Head Office; the production data maintained by him was not tallying with the RG-1 figures; Certain quantity of raw material claimed to have been supplied by two registered dealers i.e. Crystal Crop Protection Private Limited, at SCO 104- 105 & SCO 36-37, New Grain Market, Ludhiana were not received by the appellant and Credit was wrongfully availed. 2.1. On conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous refund is not sustainable in law as held by this Bench in Crystal Corporation Production Lad-2018 (11) TMI 612-CESTAT-Chandigarh which was up held by the Hon'ble J&K High Court in CEA No. 186/2019. He further submits that Section 11A does not apply to recovery of refunds allowed under notification No. 56/2002-CE as these are not refunds under section 11B as held by this Bench in the case of M/S Ravi Crop Science 2023 (1) TMI 1298-Cestat Chandigarh; amount of Rs. 3, 43, 70, 711 paid, is not a duty as per Department; hence, Section 11A does not apply. He further relies on * VEE EI CEE Industries and Vinod Aggarwal Partner 2018 (9) TMI 21-Cestat -Chandigarh. * Shree Nath Industries 2018(5) TMI 195-CESTAT- Chandigarh * Omax Autos Limited 2023 (9) TMI 452-Cestat Chandigarh. * Sudarshan Consolidated Limited 2019 (4) TMI 2121- Cestat Chandigarh. * V.S. Industries and Smt. Sangitha Garg and Partner Shri Vinod Kumar Garg Partner 2023 (9) TMI 64 CESTAT Chandigarh. 5. Learned Counsel submits further that when the demand of recovery of the so-called erroneous refund of Rs. 3, 43, 10, 711 is not sustainable, the demand of short payment of excise duty arising from the use o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record by the department as evidenced by the finding of the Commissioner has recorded that there are numerous inconsistencies in the verification reports; No worthwhile evidence was brought on record to prove that the raw material in respect of 61 invoices was not received; in stead commissioner proceeds to conclude that the raw material in respect of 61 invoices was not received, despite the explanation given for each of the 61 invoices; Commissioner confirmed the allegation on extraneous observations not mentioned in the show cause notice; adjudicating authority is not permitted to travel beyond the grounds take in the show cause notice. He submits that unless the allegation of wrong availment of Cenvat credit is supported by corroborative evidence, credit cannot be denied as held in M/s Arya Alloys Private Limited & Romy Bansal, Director & Raj Kumar Bansal, Director (Former) & Amit Gupta 2020 (3) TMI 148 CESTAT- New Delhi and Synergy Steels Pvt Ltd 2019 (5) TMI 1628 CESTAT- New Delhi following the judgment of Jharkhand High Court in the case of Tata Motors 2010(9)TMI 949-Jharkhand High Court. 7. Learned Counsel submits in addition that even if Department's contention is ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand of duty and Cenvat credit has no legal basis * Commissioner has not dealt with the Appellant's written submissions but simply restated the allegations raised in the SCN; thus, findings regarding the demand of Rs. 2. 80, 46, 329 and Cenvat credit of Rs. 1, 66, 81, 196 have no credibility and deserve to be simply rejected: * No penalty is imposable, under Rule 26 Central Excise Rules, 2002, on Mr Mohit Goel Firstly as he did not deal with the goods; Penalties cannot be imposed on dealers as they artificial persons; Rule 26 provides for penalty on natural persons only. 8. Learned Counsel relies, in support of his arguments as above, on the following cases. (i). Huber group India Pvt Ltd and Shri Suresh Nair 2023 (1) TMI 688-CESTAT-AHD. (ii). Yamuna Machine Works Pvt Ltd 2013 (298) ELT 86 (T) (iii). JV Strips Ltd 2013 (294) ELT 33 (T) (iv) MK Jain 2013 (291) ELT 217 (T) (v) Prabhat Roto pack Pvt Ltd 2013 (292) ELT 107 (T) (vi). Apple Sponge and Power Limited 2018 (362) ELT 894 (Tri. - Mumbai) 9. Learned Authorized Representative for the Revenue reiterates the findings of the impugned order and submits point-wise reply on the grounds and arguments taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended period has rightly been invoked. * It is incorrect to say that no CENVAT credit is recoverable; the adjudicating authority held that due to inconclusiveness of the verification caused by the Department as well as lack of substantial evidence submitted by the appellant, it has been established that appellant no.1 has not received any raw material against the disputed 61 invoices; therefore, credit availed is recoverable. * Review of the orders sanctioned refund is not required as the same were passed on the basis of bogus documents submitted by the appellants and as held in the cases of Candid Enterprises - 2001 (130) ELT 404 (SC); Jain Shudh Vanaspati Ltd. - 1996 (86) ELT 460 (SC) and Grasim Industries Ltd. - 2011 (271) ELT 164 fraud nullifies everything, fraud established unravels and that Section 11A empowers the Department to recover erroneously granted refund. * Penalties have been correctly availed as the concerned companies and the individuals involved themselves in fraud; Hon'ble Punjab & Haryana High Court in the cases of M/s M. S Steels - 2014 (309) ELT 241 (P&H) and Vee Kay Enterprises - 2011 (266) ELT 436 (P&H). 10. Heard both sides and perused the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r shall be eligible to take credit of the balance amount. 12. In terms of Para 2C(e), in case the Assistant Commissioner finds that some amount of credit has been irregularly taken information to that extent is required to be given to the assesses, who within five days of receipt of such information shall make good the excess credit taken. In the instant case, it is not forthcoming as to whether such notice/ information was given to the appellants. Understandably, no such information was given to the appellants and a show cause notice under the provisions of Section 11A of the Act has been given to recover the irregular credit taken in terms of Para 2C(g) of the Notification. We find, as submitted by the learned Authorized Representative for the Revenue, that though Section 11A provides for recovery of "erroneous refund", the procedure prescribed under the Notification required to be followed in the instant case. Only after following the provisions of Para 2C(e) of the Notification, show cause notice, to recover the refund erroneously availed by way of self-credit was erroneous, under Section 11A, can be issued. Moreover, we are of the considered opinion that when the statute prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 14.11.2002; since these orders have not been reviewed by the Commissioner, the demand raised to recover the alleged „erroneous refund‟ is not sustainable in law. He relies on this Bench‟s decision in the case of Crystal Corporation Production Ltd. (supra) which was upheld by the jurisdictional High Court of J & K. We find that this Bench held as follows in the said case: 8. On consideration of the submissions made by both the sides, following legal issues arises: (a) whether without challenging the assessment of refund claim, can Revenue issue show cause notice under Section 11AC of the Act or not? (b) In a case where no duty is payable by the appellant and the appellant have taken self-credit of the same whether the provisions of Section 11AC of the Act are applicable or not and; (c) whether Cenvat credit can be denied on the basis of the test report of inputs or not. Issue No. 1 (a) Whether without challenging the assessment of refund claim, can Revenue issue show cause notice under Section 11AC of the Act or not? We find that in the case of CCE, Shillong Vs. Jellapore Tea Estate reported in 2011 (268) ELT 14(Gau), the Hon'ble High Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 35-E of the Act. For reasons best known to the Commissioner of Central Excise, Shillong no action was taken to have the order of the Assistant Commissioner revised or set aside. Having failed to avail of the statutory remedy available under the Act, the Revenue sought to circumvent the law (as it were) by taking recourse to Section 11A of the Act. In our opinion, this was clearly impermissible inasmuch as what is required to be done in a manner prescribed by law, ought to be done in that manner only or not at all. 14 Insofar as the present case is concerned, the prescription of law required that the order of the Assistant Commissioner passed on 29-4-2002 could be challenged only by resorting to Section 35- E of the Act. The Revenue could not initiate collateral proceedings to set aside the order dated 30-4-2002 by resorting to the enabling power under Section 11A of the Act." We find that in the case in hand also self-credit of refund taken by the appellant have been sanctioned by the authorities below, therefore, without challenging the same, the show cause notice cannot be issued to the appellant under Section 11AC of the Act in terms of the decision of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt-paid or erroneously refunded by reason of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act and the rules made thereunder with an intent to evade payment of duty by such person or his agent etc. The sine quo non for invoking the proviso is to demonstrate by reference to material on record that the assessee had claimed and has been paid erroneous refund of the excise duty by reason of fraud, collusion or any willful misstatement or suppression of facts or contravention of any provisions of the Act and the rules framed thereunder and that this fraud, collusion, wilful misstatement or suppression of facts etc., is made with an intention to evade payment of duty by the assessee or his agent. 13. We have gone through the entire record, but could not find an iota of material on record which would suggest that the assessee-the respondent herein had, at any time, suppressed any material facts or made any wilful misstatement as is attributed to it by the Adjudicating Authority in the Order In Original passed for recovery of purported erroneous refund. Rather, it has come on record that the respondent had fairly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und cannot be launched by the Adjudicating Authority. Unless the orders of sanctioning refund passed by the Adjudicating Authority are reversed in appeal or revision under the Act, Section 11 cannot be invoked by terming such sanctioned refund of excise duty as 'erroneous refund' by holding collateral proceedings under section 11A of the Act. Any duty, which is paid /refunded to the assessee after holding formal proceedings and passing speaking orders in favour of the assessee, cannot be termed as 'erroneous refund'. The revenue, if it is of the opinion that the Adjudicating Authority has made an erroneous refund in favour of assessee to which it was not otherwise eligible, can avail the remedy of filing appeal or revision under the Act. So long as the orders stand as having attained finality, the same cannot be tampered with by the Adjudicating Authority by launching collateral proceedings purportedly under Section 11A of the Act. 16. The judgment of the Hon'ble Supreme Court in the cases of Priya Blue Industries Pvt. Ltd., 2004 (172) ELT 145 (SC) and Flock India Pvt. Ltd., 2000 (12) ELT 285 (SC), relied upon by the CESTAT are ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ‟ so as to initiate recovery proceedings as per the provisions of Para 2C(g) of the Notification and/or section 11A of the Central Excise Act,1944. In view of the above discussion, ratio of the cases discussed and the other cases relied upon by the appellant, we are of the considered opinion that the issue raised at (ii) Para 10 above, is resolved in favour of the appellants. 18. Coming to the issues at (iii) and (iv) raised at para 10 above, we find that the Revenue alleges that the appellant has shown excess production by fudging the records and have availed credit fabricating the records without actually receiving the raw material. Revenue bases the allegation, of showing excess production, on certain records in the form of production reports sent by Shri Naresh Kumar, Senior Manager (Quality Control), to their Head office and Emails and other documents recovered. Regarding wrongful availment of Credit, revenue relies on enquiries conducted with the Taxation department of the states of Punjab and J&K. In their defence, learned counsel for the appellants submits that Notification No. 56/2002- applies only to goods manufactured and cleared and not to bogus clearances; there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmits that unless the allegation of wrong availment of Cenvat credit is supported by corroborative evidence, credit cannot be denied. 20. We find that there is force in the contention of the appellants. We find that a minimum level of investigation is not carried out by the department. Surprisingly, investigating a case of alleged excess show of production and clearance & wrongful availment of Cenvat Credit, no stock taking, actual or estimated, of raw materials and the final products was undertaken. Shortage/excess of raw material could have established the revenue‟s case at least to some extent. In respect of the alleged excess production, no investigation at the buyers‟ end, to establish that they are non-existent or did not receive any material, was conducted. It was not enquired as to how the financial transactions took place and if records were manipulated. We find that no corroborative evidence to substantiate shri Naresh Kumar‟s statement has been put forth; appellants were not allowed to cross examine on the grounds that he did not retract his statement. Learned Commissioner did not examine Shri Naresh Kumar in terms of Section 9D of central Excise Act 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per RUD-19 of the Show Cause Notice, 17 consignments were received from within Punjab hence their entry at any Information Collection Centre (ICC) of Punjab was not required and remaining 12 consignments were imported from outside of Punjab, therefore, border entries were required in respect of these consignments. However, on comparing with the data supplied by Excise and Taxation Department of Punjab, these 12 consignments could not be verified (emphasis supplied). Accordingly, I observe that out of total impugned 61 consignments, 37 consignments were verified by the Assistant Commissioner (Preventive) and 24 consignments still remained unverified. 4.6 1. further observe that subsequently the noticee submitted additional documents for verification of 24 consignments that had still remained unverified. These documents were again sent for verification to the Assistant Commissioner (Preventive), Central Excise Commissionerate, Jammu who submitted his final verification report vide letter dated 05/08/2015. As per the said verification report dated 05/08/2015, entries in respect of only 7 GRs have remained unverified as these entries were not found in the database of Punjab Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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