M/s Rathi TMT Saria (P) Ltd. Versus CGST, Alwar
Central Excise
2018 (11) TMI 298 – CESTAT NEW DELHI – TMI
CESTAT NEW DELHI – AT
Dated:- 2-11-2018
Appeal No. E/51089/2018-DB & E/50538/2018-DB – Final Order No. 53225-53226/2018
Central Excise
Mr. Bijay Kumar, Member (Technical) And Ms. Rachna Gupta, Member (Judicial)
Shri Krishna Kant, Advocate – for the appellant
Shri U. Sengraj, AR – for the respondent
ORDER
Per Bijay Kumar:
The present appeals have been filed in pursuance of order passed by Hon'ble CESTAT vide Final Order No. A/52005-52006/2017-CE(DB) dated 28.2.2017 in Appeal No. E/1534/2011, E/52186/2015-(DB) arising out of Order-in-Original No. 19/2011 dated 22.2.2011 passed by the Commissioner, Central Excise, Jaipur-I. Vide this impugned order, Hon'ble Commissioner has confirmed the demand of Cenvat credit along with interest and also imposed penalty on the appellant.
2. The brief facts of the case are that the appellant is engaged in the manufacture of
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30.12.2008 and their register was retained by the officer. It was alleged by the appellant that the credit was taken for the said amount as the officer of the department forced the factory staff on the date of search i.e. 11.12.2008 to show Nil balance in their RG 23 Part-II against the actual balance of their aforestated amount of Rs. 2,03,42,121/-. In the appeal memorandum, the appellant has raised various allegations against the departmental officers including those of manhandling and illegal confinement of the factory officials, which was brought to the notice of the concerned Central Excise officers as well as the Police complaint was also made to that effect.
3. During the stock taking of the finished goods and input in the factory, it was noticed and for which Panchnama was prepared and handed over to the appellant on 9.1.2009 but without any supporting documents. It is also alleged that the Panchnama of shortage of the inputs/finished goods was done in incorrect way by counti
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tected by the official was without any scientific basis. The appellant had made all the clearances of the goods as per the invoice and the factory was in production till 24.12.2008 and restarted their production on 12.1.2009 and between 12.12.2008 to 24.12.2008, the appellant produced a quantity of 2928.9 MT of MS bar and cleared 5000.100 MT of MS bar during the period 12.12.2008 to 31.12.2008. During the period of 1.1.2009 to the date of restart of unit on 12.1.2009, the appellant cleared 156.110 MT MS bar quantity of 230.320 MT was in balance on the date of restart of production i.e. 12.1.2009 and considering all these figures together there was no shortage of MS bar as on 11.12.2009 as per the appellant submission. The appellant also submitted that till date no show cause notice was issued to the department with regard to allege shortage detected on 11.12.2008 and, therefore, it cannot be held that the appellant are liable to pay Central Excise duty. The appellant further stated tha
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nd appellant counsel to file reply to the show cause cause within four weeks from today. On receipt of reply to the show cause notice, the adjudicating authority will decide the matter and come to a conclusion after following the principles of natural justice. We do not record any observations on the merits of the case and keeping all the issues open after following the due process of law.”
The adjudicating authority has passed the impugned order after hearing the appellant and giving opportunity to the appellant to file the reply in the show cause notice dated 12.1.2010.
5. The appellant has filed the written submissions before the ld. Adjudicating authority :
(i) That they had written a letter dated 5.1.2009 to the Commissioner of Central Excise, Jaipur that officers of Central Excise had taken their RG 23A Part-II register, wherein re-credit of Rs. 2,03,42,121/- was taken by them vide Entry No. 83 dated 30.12.2008 and that this register had been retained by the officers, without
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er which was proper and illegal.
(iv) That they have further received the inputs during 12.12.2008 to 31.12.209 on which the Cevant credit available comes to the extent of Rs. 72,74,421/- was taken and thus the total amount considering the previous balance available during 5.1.2009 to 11.12.2009 makes it Rs. 2,76,16,542/- with them as on 31.12.2008;
(v) That the factory was in production till 24.12.2008 and restarted production again on 12.1.2009. They have cleared and manufactured quantity of 5000.100MT on payment of duty under proper invoice dated 12.12.2008 to 31.12.2008. Further, the fact that whether there was shortage of raw material on 11.12.2008 or not could not have made the ground for issue of demand of Rs. 2,04,74,204/- as another show cause notice has been issued to them for recovery of Cenvat credit of Rs. 24,74,672/- on the alleged shortage of 714.48 MT of MS ingots valued at Rs. 83,57,897/- weighing 1932.05 MT found short during the visit of the officer on 11.12.2008.
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restrained unit further order from transferring or charging the property mentioned in the said order in any way. Another letter C. No. IV(16)Rathi/Tech/2009/1905 dated 21.2.2009 was received by them stating that a memorandum-cum-notice dated 10.2.2009 had been served requiring to pay an amount of Rs. 2,26,28,938/- being the amount payable under Section 11A of the Central Excise Act, 1944 and under clause (ii) of Clause (C) of Section 142(i) of Customs Act, read with Attachment of Property of Defaulters for Recovery of Government Dues Rules, 1995 as made applicable to like matters in the Central Excise matters by virtue of Notification No. 68/63-CE dated 4.5.1963.
(vii) That they were informed by Chief Commissioner of Central Excise, Jaipur has approved the restraining order of their plant and machinery already attached and granted facility to pay arrears in 12 month instalments which they were forced to accept.
(viii) That the Department gave a calculation chart dated 19.11.209 show
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amount debited was issued to them. Commissioner has although stated that the appellant has taken Cenvat credit of Rs. 2,04,74,204/- without receipt of goods and without having any documents and prescribed Cenvat Credit Rules. However, the ld. Adjudicating authority in the impugned order has not disclosed as to how this figure has been arrived by them without receipt of the goods or without having any document prescribed under the Act. The ld. Commissioner while adjudicating the case had ignored the fact that the factory official was forced to debit the said amount in their RG 23A Part-II. The Entry Book of Duty Credit on Capital Goods shows the following remark “Duty debited against evasion detected by the Preventive Team of Central Excise, Bhiwadi and admitted in the statements of Shri Pramod Gupta, authorised signatory of the unit”. Similarly the entry book of duty credit on capital goods carries the remark made on 11.12.2008 “being duty debited against evasion detected by the Preve
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amount debited in their Cenvat credit register i.e. RG 23A Part-II due to alleged shortage of 1932 MT of MS bars found short on 11.12.2008 for which there was no basis. The appellant submitted ER-I on 17.2.2009 stating total turnover as well as duty liability of Rs. 2,26,28,938/- for the month of December, 2008 and that re-credit taken by them was lawful inasmuch as a separate show cause notice had been issued for the alleged shortage and demand confirmed by the Commissioner vide the Order-in-Original No. 26/2013 dated 22.3.2013 which has been set aside by the Hon'ble CESTAT under Order No. 50784-50785/2017 dated 8.2.2017. Assessee also contested the finding of ld. Commissioner in the impugned order that the figure of actual credit available with the appellant was Rs. 72,75,421/- instead of Rs. 2,77,49,625/- to be false and without factual basis. In contention of their support they have relied upon the decision of CCE, Chandigarh Vs. Punjab Products – 1996 (84) ELT 360 (Tri.) holding t
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ntification and with show cause notice is illegal and cannot be excused and must be stopped. It is argued that appellant case was on a similar footing, when the appellant was forced to debit amount by the officer without issue of show cause notice and without quantification of duty alleged to have been evaded. The appellant also submitted upon that the ld. Adjudicating authority failed to appreciate the decision of Hon'ble Madras High Court in the case of Chitra Builders P. Ltd. Vs. Additional Commissioner of C, CE & ST – 2013 (31) STR 515 (Mad.), wherein it was held that no duty could be collected from the assessee without an appropriate assessment order being passed by the authority concerned, and by following the procedure established by law. The ld. Adjudicating authority also failed to follow the decision of Hon'ble Supreme Court in the case of Gokak Patel Bolkart Ltd. Vs. CCE – 1987 (28) ELT 53 (SC) holding that the provisions of Section 11A(1) and (2) makes it clear that issue o
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pugned order stating that the order has been passed as per the remand order of this Hon'ble Tribunal. It is a fact that there was no available credit on the date of visit to the factory by the Central Excise officer i.e. on 11.12.2008 to the extent of Rs. 2,03,42,121/-. Therefore, the authorised representative of the factory agreed to that effect in their deposition before the departmental officer and suo moto debited the amount which was taken without the receipt of material in their factory during the adjudication they have not a copy of the input credit document.
7. We have considered the rival submissions and perused the appeal record. The issue before us is to decide as to what was the actual position of availability of Cenvat credit as on 30.12.2008, that is to say as to whether Rs. 72,75,421/- which was available as on 31.12.2008 in their RG 23A Part-II as alleged in the show cause notice dated 20.1.2010 or Rs. 2,77,49,625/- as per ER-I return for the relevant period filed on 1
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er leaving blank five rows starting from Serial No. 91 to 159 for the period 1.1.2009 to 13.2.2009. This also came out from the statements of the Authorised persons, who was responsible for maintaining the record. During the appeal before us, ld. Advocate could substantiate the facts that the duty paying documents on which the claim has been made for the availability of credit was placed before the adjudicating authority. We reproduce the provisions of relevant Cenvat Credit Rules, 2004 which is as under, for substantiating the requirements of duty paying documents for availing Cenvat credit:
“Rule 3(1) of Cenvat Credit Rules, 2004 provides that a manufacturer of final product shall be allowed to take Cenvat credit of :
(i) The duties of excise specified in the First Schedule to the Central Excise Tariff Act, leviable under the Excise Act:
(ii) to (v) ………………..
(vi) The education cess on excisable goods leviable under Section 91 read with Section 93 of the Finance Act,
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impugned credit is held to be taken wrongly in contravention of the Rules ibid and therefore, the contentions of the assessee made in their reply vide letter dated 28.2.2017 are not tenable.”
8. Thus, the requirement of duty paying documents for availment of Cenvat credit is substantive law. In view of above, we are of the considered opinion that the appellant having not followed the procedure as prescribed above for availment of Cenvat Credit Rules are not entitled for the Cenvat credit to the extent of Rs. 2,04,74,204/-. To that effect, we find that Adjudicating authority has not violated the provisions of Cenvat credit in any way while denying the credit. Ld. Advocate has referred and relied upon the following case laws:
(i) CCE, Chandigarh Vs. Punjab Products – 1996 (84) ELT 360 (Tri.);
(ii) Viskhapatnam Steel Plant Vs. CCE, Visakhapatnam – 2002 (149) ELT 708 (Tri.-Bang.);
(iii) CCE, Hyderabad Vs. Sanghi Polyester – 2004 (169) ELT 128 (Tri.-Bang.);
(iv) CCE, Noida Vs. Flex Ind
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thorised signatory of the appellant has suo moto reversed the credit. Thereafter, the appellant has taken the credit of same with intimation to the department. This cannot be done without following the appropriate procedure under Cenvat Credit Rules, 2004. Having not produced the documents at the strength of which credit was taken by the appellant before the adjudicating authority, we do not find that any ground for allowing such credit to the appellant. Similarly, as the appellant has not wrongly taken the credit of Cenvat credit and but also utilised the same which was not available to them under the Cenvat Credit Rules, the department has rightly issued the show cause notice under the provisions of imposition of interest and confirmed the same after following the adjudication process. Accordingly, we also hold that the same is sustainable.
10. In view of above, we do not find any infirmity in the order passed by the Adjudicating authority and therefore, the appeal filed by the appe
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