Ramesh Nair DECISION
Ramesh Nair, Member (J)
1. The brief facts of the case are that M/s. Vipul Copper Pvt. Ltd. are engaged in the manufacture of Copper Rods/Wires etc. They were availing of the benefit of Cenvat credit facility. The intelligence was gathered by DGCEI officers and necessary investigation has been initiated against the appellant. As per the allegation of the Revenue, investigation revealed that Appellant were using non-duty paid scrap for manufacture of their final products and in order to avail cenvat credit, obtaining duty paid invoices of raw material. Since the duty paid raw material as shown in the duty paying documents were not physically received in their factory for being used by them in or in relation to manufacture of finished goods, the Cenvat Credit, in such cases where inputs were actually not received and not used in the manufacture of final products and only duty paying documents were being received, was not admissible to them. Searches were carried out by the Officers at the factory premises as well as business premises of the appellant and certain documents were withdrawn for further investigation. The scrutiny of such records/documents reveal that Appellant had availed the Cenvat Credit mainly on the strength of invoices of M/s. Pranav and M/s. Omkar, the registered dealers, who have shown purchase of copper ingots from Jammu based units as well as copper ingots/wire/wire rod scrap, etc. purchased from various registered dealers from Delhi. The investigation by DGCEI revealed that such imported consignment of copper never reached the dealers of Gujarat and Daman and credit was availed by them on the strength of only bills of entry/invoices and bogus LRs were prepared while the goods were sold in or around Delhi only. It therefore, appeared that M/s. Pranav and M/s. Onkar did not receive the goods and they have issued only invoices to Appellant and other units to enable them to avail cenvat credit.
1.1. The investigation was carried out with respect to the vehicles mentioned in the input invoices used for transporting the goods from transporters/check posts/RTO. The documents recovered from M/s. Singhal Road Carriers were scrutinized and it was found that said transporter was transporting goods other than copper form New Delhi to Ahmedabad and such other goods were entered in their delivery registers recovered from their Ahmedabad branch office. On the same date and for the same truck, M/s. Singhal Road Carriers issued another LR for transportation of copper ingots/wire bars to the manufacturers of articles of copper of Gujrat, Daman or Silvassa. The vehicles actually transported other goods and hence the stamps of the checkpost of Commercial Tax department were affixed on the transport documents. The investigations were also carried out with the RTO Check posts and the information furnished by the Joint Director of Transport, Gujrat state was examined vis--vis the details of the transportation appearing in the LRs of the transporters from Delhi to Nadiad. Such scrutiny revealed that in some cases only vehicles were found to have entered Gujrat. The statements of transporters and their staff were recorded. The statements of concerned persons of M/s. Singhal Road Carriers brought out the facts that they issued only LRs and did not transport copper. On the basis of these facts and evidence gathered, it was alleged that the appellant had availed the credit fraudulently without receipt of inputs. Accordingly, the SCN was issued which was culminated in the adjudication order whereby the demand of Cenvat credit along with interest and penalty was confirmed and a penalty under Rule 26 of Central Excise Rules, 2002 was also imposed on the Co-Noticees. Being aggrieved, Appellants filed appeals before the Commissioner (Appeals), who has dismissed the same vide impugned Order-In-Appeal No. AHMN-EXCUS-002-APP-07 to 10-19-20 dtd. 10.06.2019. Hence, appellants filed these appeals before the Tribunal.
2. Shri. Paresh Sheth & Shri S.J. Vyas, Learned Counsel appearing on behalf of the appellants submits that the main dispute is in relation to registered dealers. The dealers have purchased the material, supplied to Appellant from various parties located at Delhi. The entire case of the department is that the transportation of material from Delhi to Nadiad was doubtful/not probable in view of various evidences such as statements of transporter and data of RTO/Checkpost etc. The investigation is only confined to transportation of inputs from Delhi to Nadiad. There is no dispute, investigation or allegation that the goods did not travel between Nadiad where the registered dealers is situated, and Ahmedabad, the factory of the Appellant. Clearly in the impugned matter this movement has never been examined or doubted. The Appellant's purchase and receipt is obviously from the registered dealer. It is not the case of the department that the goods though purchased from registered dealer, were directly consigned to the Appellant by the supplier from Delhi. Thus, the allegation/finding that the material did not travel from manufacturer -supplier at Delhi to registered dealer at Nadiad cannot in any way conclude that the appellant manufacturer has not received the inputs form registered dealer at Nadiad.
2.1. He also submits that during the investigation, the appellant shown the Octroi receipt for payment of octroi duty on transportation of goods from Nadiad to Ahmedabad. During the material period, Octroi was leviable on goods entering the city limit of Ahmedabad and the same was duly paid. This conclusive evidence has shown movement and receipt of goods from Nadiad to the appellant factory. Apart from octroi receipt, the copies of invoices and ledger account for payment of goods against the invoices are also on record. The accounting of input and statutory record i.e. RG23A Part I account as well as in private stock ledger of the Appellant is also on record. The Appellant had in fact received and utilized the inputs for manufacture of finished goods.
2.2. He argued that under Central Excise Act and Cenvat Credit Rules, the Appellant is required to have proper duty paying documents as well as proper accounting of the material. Both these conditions are satisfied in the present case.
2.3. He further submits that during the investigation statement of director of Appellant company was recorded wherein he nowhere admitted the non receipts of goods in the factory. The investigation is biased and not reliable. The positive evidence were not examined and relied upon. The impugned order therefore not tenable. He placed reliance on the following decisions.
• Malerkotla Steels & Alloys Pvt. Ltd. Vs. CCE 2008 (229) ELT 067
• Commissioner Vs. Shakti Roll Cold Strips Pvt. Ltd. 2007(80) RLT 267
• CCE Vs. Neepaz Steels Indian-MANU/CE/8487/2007 : 2007 (213) ELT 100
3. Shri R.P. Parekh, Superintendent (AR) appearing on behalf of the revenue reiterates the finding of the impugned order.
4.1. On careful considerations of the arguments advanced by both the sides and perusal of the case records, I find that the issue involved in the present appeals is whether appellant are eligible to Cenvat credit on the basis of invoices of dealers which are claimed to have been received along with inputs. I find that officers visited the appellant's factory on the basis of information that the appellant availed the Cenvat credit on invoices, without actual receipt of the goods. However revenue did not find any shortage/excess of inputs or finished goods in factory of Appellant. Officers also seized records/documents related to the receipt of the goods and availment of cenvat credit. The Revenue could not bring any evidence from the Appellant's factory by which it can be shown that the goods covered under the invoices were not received by them. I find that in the entire investigation the evidences which were relied upon are related to transporters/RTO check post. On the basis of such third party evidences revenue alleged that goods were not received by the appellant in their factory. Contrary to these evidences the fact that the appellant have recorded the receipt of the goods in their cenvat account, the purchase of the goods under the invoices in question were booked in books of account and raw material receipt account, the said purchased goods also shown for use in manufacturing of dutiable finished goods. The payment against the said invoices were made through cheques, even the payment of transportation was also made by cheques. When the statutory records maintained by them do not disclose absence of receipt of inputs in the factory and there is no cogent evidence of disposal of the same goods elsewhere the credit cannot be denied. It is also not the case of the department that the appellant have procured some unaccounted inputs to cover up the quantity of input shown in the invoices. There is no allegation by the department regarding the financial flow back that against the invoices for which the payments were made through cheque, any cash payment was received by the appellant. With all these undisputed facts, merely on the basis of the transporter records and RTO check-post reports, it cannot be concluded that the inputs were not received by the appellant. In the absence of any evidence to the contrary, I find that the denial of Cenvat credit on the basis of the investigations conducted at the third party end cannot be adopted as the sole basis for denial of credit.
4.2. I also find that in Cenvat Credit Rules 2004 some minimum precaution was prescribed to ascertain the bona fide on the part of consignor of input i.e. under Rule 4 and Rule 9 of Cenvat Credit Rules 2004. I note in the above rules, it is provided that credit can be taken on the basis of invoices after the inputs covered by such invoice is received. It is important that goods covered by the invoices are received by the manufacturer in their factory. In the facts of the present case I find that the appellant have received the goods on duty paying documents and recorded the receipt of the goods in their raw material account and cenvat account i.e. RG-23A-Pt. I and Pt. II and the said disputed inputs used in manufacture of dutiable goods. The appellant also recorded the receipts and consumption of said goods in the factory. The purchases of the goods under the invoices in question were booked in books of account. The payment against the said invoices were made through cheques. On the above statutory compliance, the Appellant correctly availed the cenvat credit. Further, the department nowhere raised any dispute on the said records. Thus the contention of the department that appellant have availed cenvat credit without receipt of goods (raw material) is not tenable. Further, as the Appellant have discharged the Central Excise duty on the final product manufactured out of the alleged raw material, if the department is of the opinion that the alleged goods was not received by the appellant then it is the onus on the department to prove that any other alternative raw material was used in the final products, department has failed to do so.
4.3. I also observe that Tribunal in case of M/s. Lloyds Metal Engg. Co. v. CCE, Mumbai, MANU/CM/1125/2003 : 2004 (175) E.L.T. 132 (Tri.-Mumbai) has held that burden to prove non-receipt of the inputs is required to be discharged by Revenue by sufficient evidence. Where disputed consignments are entered in RG-23A Part I and Part II in chronological order, the allegations of non-receipt of the inputs cannot be upheld.
4.4. Further my above findings find support from the Tribunal's order in case of M/s. Ajay Industrial Corporation v. CCE, Delhi-2009 (237) E.L.T. 175 (Tri.-Del.) as also from the Tribunal's decision in case of M/s. Shree Jagdamba Castings (P) Ltd. v. CCE, Bhopal, 2006 (206) E.L.T. 695 (Tri.- Del.). It has been held in said judgments that the credit availed on the basis of invoices issued by the registered dealer, cannot be denied on the ground that the transporters have admitted the fact of non-transportation of the goods and the addresses of truck owners were found to be fake. Similarly, in the case of M/s. Malerkotla Steels & Alloys Pvt. Ltd. v. CCE, Ludhiana, 2008 (229) E.L.T. 607 (Tri.-Delhi), it was held that a manufacturer cannot be denied the credit on the ground that registered dealer had not received the inputs.
5. Accordingly, I hold that the allegation of the Revenue that the appellant have not received the inputs made against the appellant are not sustainable and thus, the impugned orders are liable to be set aside.
6. Accordingly, I set aside the impugned orders and allow all the appeals filed by the appellants with consequential reliefs, in accordance with law.
(Pronounced in the open court on 17.08.2022)
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