Ramesh Nair ORDER
Ramesh Nair, Member (J)
1. The present three appeals have been filed by M/s. Esbee Techno cast, M/s. Raj Engineers and M/s. Aegis Steel having arisen out of common issue and common Order-in-appeal dated 22.03.2018 passed by Commissioner (Appeals), Ahmedabad and hence are taken up together for disposal. The brief facts of the case are that the Appellant are engaged in manufacture of Alloy Steel Castings falling under chapter 84. They were issued show cause notices that they have availed credit on the basis of forged invoices issued by M/s. H.B. Metals. That the dealer has supplied SS Coils, M.S. Flats, SS Patta/Patti etc. where the description of goods in invoice are SS Circle, MS Rounds & Bars, M/s. Flats and Pipes falling under chapter 72 which are not their inputs. The statement of directors/authorized signatories of Appellant Units were relied upon that they did not receive the goods as described in invoice and the same cannot be used as input. It was also alleged that on scrutiny of corresponding purchase invoice of M/s. H.B. Metals, the same were not found to be available with the dealer which shows that the invoice were forged. It was proposed to deny the credit availed by the Appellant and to impose penalty. The demands were confirmed by the adjudicating authority and were upheld by the Learned Appellate Commissioner. Aggrieved, the Appellants have filed present appeals.
2. Ld. Counsel Shri Rahul Gajera appearing for M/s. Essbee Techno Cast Pvt. Ltd. and Raj Engineers and M/s. Aegis Steel Cast submits that the Appellants were engaged in manufacturing of Alloy Steel Castings and availing credit of duty paid on inputs viz. MS & SS Steel Scrap, SS Cold Rolled Pattas & Pattis in cut form etc. which was received in their factory and used in manufacture of final products. The dealer M/s. H.B. Metal from whom the goods were purchased is registered dealer. The scrap of M.S. & S.S. was purchased on invoice and the payments were made by way of cheque/banking channel against invoice raised by the dealer. They had placed order for scrap of MS and SS Scrap and received the goods in their factory under the cover of proper invoice. The same were used in manufacturing of the final product by melting. The goods were duly recorded in books and statutory records. There is no evidence that the Appellants have connived with the dealer for purpose of availing any undue or excess benefit of cenvat credit. He submits that the denial of credit on ground that the purchase invoice of dealer were not found cannot be a ground to deny them credit. He relies upon Hon'ble High Court judgment in case of Juhi Alloys Ltd. MANU/UP/0061/2014 : 2014 (302) ELT 487 (ALL.)
3. Shri S.K. Shukla, Learned Authorized Representative appearing for the revenue reiterates the findings of the impugned order and submits that the cenvat credit is not admissible.
4. Heard both the sides and perused the case records. I find that the credit has been denied to the Appellants on the ground that the Appellant purchased Scrap of S.S./M.S. whereas the invoices were issued for SS Circle, MS Rounds & Bars, MS Flats and Pipes falling under chapter 72 which are not their inputs. That in case of some invoices the back purchase invoice of consignor dealer were not found. The show cause notice also relied upon statements of Authorized signatory/directors of Appellant Unit that the goods were not received. We find that the Appellants have shown purchase of goods in their statutory records and account books and the transactions stands recorded therein. Further no dispute has been raised about the transportation of said goods to the Appellant Units. The Appellant has also shown production of goods from the purchased goods and it stands recorded in books of accounts as well as statutory records. No evidence of falsification of statutory or accounts is on record. Also there is no dispute about the consumption of impugned material and clearance of finished goods manufactured. Even if it is assumed that the dealer's records does not show the purchase of impugned goods, but the fact remains that the Appellant's record are showing receipt of goods. Only on the basis of statements, the cenvat cannot be denied when the records are not held to be untrue or falsified. My views are based upon judgment of Hon'ble High Court of Allahabad in case of JUHI ALLOYS LTD. MANU/UP/0061/2014 : 2014 (302) E.L.T. 487 (All.), the Hon'ble High Court wherein the Hon'ble High Court held as under:
7. In the present case, both the Commissioner (Appeals) and the Tribunal have given cogent reasons to indicate that the assessee had taken reasonable steps to ensure that the inputs in respect of which he has taken the Cenvat credit are goods on which the appropriate duty of excise, as indicated in the documents accompanying the goods, has been paid. Admittedly, in the present case, the assessee was a bona fide purchaser of the goods for a price which included the duty element and payment was made by cheque. The assessee had received the inputs which were entered in the statutory records maintained by the assessee. The goods were demonstrated to have travelled to the premises of the assessee under the cover of Form 31 issued by the Trade Tax Department, and the ledger account as well as the statutory records establish the receipt of the goods. In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer. The assessee, in the present case, was found to have duly acted with all reasonable diligence in its dealings with the first stage dealer.
The view 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 in A.B. Tools Limited v. Commissioner of Central Excise - MANU/HP/0325/2008 : 2010 (256) E.L.T. 382 (H.P.), on which reliance has been placed by the revenue, does not indicate that any contrary view of the law has been taken.
9. Ultimately, the issue in each case is whether, within the meaning of Rule 9(3) of the Rules of 2004, the assessee has taken reasonable steps to ensure that the inputs in respect of which he has taken Cenvat credit were goods on which appropriate duty of excise was paid. Once it is demonstrated that reasonable steps had been taken, which is a question of fact in each case, it would be contrary to the Rules to cast an impossible or impractical burden on the assessee.
4.1. In case of JYOTI INDUSTRIES MANU/CE/1009/2015 : 2016 (343) E.L.T. 690 (Tri.-Del.), the tribunal held as under:
"7. In this case the denial of Cenvat credit is based on the statement of M/s. Gupta Enterprises that they have not supplied the goods and only issued the invoices. On verification of the transporting vehicle which was found to be either non-existent or not capable of the transportation of the goods. But no corroborative evidence have been produced by the Revenue from where the appellant procured the goods, if goods were supplied to the appellant along with invoices. No stock taking was done at the end of the appellant. Therefore, without any supportive evidence Cenvat credit merely on the statement of M/s. Gupta and on the allegation of transporting vehicle cannot transport such goods, Cenvat credit cannot be denied. Therefore, I hold that appellant has correctly taken Cenvat credit."
5. I find that there are no investigations to the effect that the Appellant purchased goods from elsewhere to the extent of quantity of goods allegedly not received by them. Also there is no evidence to show that the consideration paid for the Appellant's purchase and through banking channels towards alleged fictitious purchase and cash was received back by the Appellants. As per the facts and circumstances as discussed above, the revenue could not establish the fraudulent availment of cenvat credit beyond doubt. I thus set aside the impugned orders and allow the appeals with consequential reliefs, if any.
(Pronounced in the open court on 13.12.2019)
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