2018 (8) TMI 547 – CESTAT CHENNAI – TMI – CENVAT Credit – the allegation is that UAL failed to take reasonable steps to ensure that inputs in respect of which they had taken CENVAT credit were the goods on which appropriate duty of excise as indicated in the documents accompanying the goods have been paid – Held that:- There is no allegation that the supplier / dealers are not registered. It is also indicated that these dealers have received various types of scrap from manufacturers and at the same time, they have also purchase local scrap in cash – There is nothing in the statement of P. Kumaresan to support any allegation that the samples tested by him were found to be different from that invoiced. It is also not the case that the department had intercepted some of the raw materials supplied, taken samples thereof, got them tested and proved that what was received was not what was invoiced.
–
The department has not sufficiently proved its case. The allegations in the show cause
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
in the guise of secondary MS angles, MS ingots, End Cut, HR sheets, centre disc etc. From the investigations carried out, it appeared to the department that there were variations between the description of goods received and furnished in the respective dealers invoices. Statements were recorded from the suppliers / dealers namely M/s. Algappa & Co. (herein after referred to as Alagappa), M/s. Sri Amman Steel, M/s. Vijay Kamal Traders, M/s. Guru Raghavendra & Co. and Shri P. Kumaresan, Lab In-charge of UAL. A show cause notice dated 23.1.2009 was issued to UAL and the aforesaid four supplier / dealers inter alia proposing recovery from UAL of allegedly ineligible CENVAT credit availed to the tune of ₹ 10,65,577/- with interest thereon and imposition of penalty under Rule 15 of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. The show cause notice also proposed imposition of penalties on Alagappa, M/s. Amman Steel, M/s. Vijay Kamal Traders under
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
inted out that items like centre disc, end-cut plates, bulk broken plates etc. received from M/s. Wheels India Ltd. and M/s. Axles India Ltd. were only supplied to UAL. However, during the cross-examination, he has retracted his say which he had made on 11.11.2008 in respect of MS ingots, MS angles were also retraced. None of the other persons whose statements were relied on turned up for cross-examination. 2.2 The ld. counsel submits that there is no dispute about receipt of raw materials in the factory or about utilization of such inputs in the manufacture. 3. On the other hand, ld. AR draws our attention to para 58 of the order of the original authority where the original authority has found that UAL has received non-duty paid MS scrap under the cover of CENVAT invoice from dealers in the guise of MS ingots, MS angles, HR plates, HR sheets etc. and therefore wrongly availed CENVAT credit. He also points out that all these aspects were admitted in the statement given by the suppliers
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
based on CENVAT invoices received from the dealers who issued invoices mentioning therein different description of goods. These are the only two allegations that are spotlighted in the show cause notice. To support these allegations, we find from Annexure – II to the notice in page 77 of the paper book, that the relied upon documents are CENVAT availed invoices of various dealers and statements of those from dealers and statement of lab in charge of UAL. 5.1 From the facts on record, there is no allegation that the supplier / dealers are not registered. It is also indicated that these dealers have received various types of scrap from manufacturers and at the same time, they have also purchase local scrap in cash. The allegation by the department is that the scrap that they supply to UAL was not one which was sourced from the manufacturers and that there was a difference in the description and the raw material actually supplied. The entire edifices for such allegations are the statement
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
f, got them tested and proved that what was received was not what was invoiced. 5.2 The case law in Mukand Ltd. (supra) relied by ld. AR concerns a situation where the description of material on invoice does not match with the description of inputs found on visual inspection. However, from the facts in the present appeal no evidence for such modus operandi has been adduced by the department and only the statements referred above. 5.3 In Steel India Company (supra), the allegation was that credit was availed on receipt of bazaar scrap describing them as industrially generated scrap. The department had extended the investigation right upto the suppliers of the scrap and had found that the purported ship breaking units were non-existent. There is no such investigation forthcoming in this particular case. 5.4 In the event, we find that the department has not sufficiently proved its case. The allegations in the show cause notice are not supported by any solid evidence but only statements. H
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =