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2018 (5) TMI 1512 - AT - Central ExciseRecovery of erroneous refund made - Area Based Exemption - N/N. 56/02-CE - allegation of non-supply of copper scrap by M/s Vikash Traders - issuance of bogus invoices - Held that: - A perusal of chart obtained by VKM through RTI from Punjab Sales Tax Department issued by ICC, Madhopur, reveals that it contains the details of the consignments of copper scrap transported from Delhi to VKM Jammu which passed through the state of Punjab and entered the state of J&K. It also contains the name of the suppliers, date of entry at ICC, Madhopur, bill number and data commodity code, value of the consignment and number of the vehicle. Therefore, merely on the basis of the statements of Shri DK Jain of M/s Vikash Traders, it cannot be inferred that this firm had issued bogus invoices for scrap without any supply - There is no evidence that the TIN Numbers were falsely obtained by the respective suppliers. Moreover, the Department’s allegation that no copper scrap was being received in the factory of VKM is also not compatible with the statement of Shri Shankar Lal Gupta dated 21.01.2009 wherein he had stated that copper scrap received was being returned back under the invoice of copper ingots. Whether the Department’s allegation that there was no manufacturing activity in the factory of VKM is not sustainable or not? - Held that: - the Department does not dispute that there were other machinery also, namely, two hydraulic cylinders, one each blower and chimney, one pusher machine, one EOT Crane, Rails, one air compressor, 26 moulds rails fixed on the ground for movement of moulds, one electronic weighing machine, two winch machines, two hydraulic oil tanks of 12000 Ltr. Capacity and one DG Set of 62.5 KVA capacity. There is no evidence that these machines were not in working order. Moreover, it is seen that while during the period of dispute, there was no power connection, the power requirement was being met by 62.5 KVA DG Set. At the time of officers’ visit to the factory, the total working hours DG Set were 8066.Since the unit had started functioning; sometime in December 2004 it would amount to working of about 12 hours per day. Therefore, the working of the DG Set also is not compatible with the Department’s allegation that there was no manufacturing activity. No inquiry has been conducted with the adjoining units of other manufacturers to prove that the power generated by the DG Set in VKM was being sold to other manufacturers. It is also seen that for running of the DG Set HSD, was being used and there is record of purchase of HSD also which also stands verified by the Department. The allegation against VKM is showing bogus receipt of copper scrap and bogus manufacture and clearances of copper ingots without manufacturing and clearing any goods. This is the allegation which has been upheld against VKM in the impugned order. If this is so, there would be no duty liability against VKM and since VKM have paid the duty and have taken its refund under N/N. 56/02- CE, it amounts to non-payment of duty. Hence, there cannot be any further recovery of duty from there, as refund under N/N. 56/02-CE given to VKM is of the duty which was paid by them, while the same were not required to be paid. Penalty u/r 26 of CER - Held that: - This penalty has been imposed mainly on the ground that these appellants colluded with VKM in helping them either in issuing the bogus invoices, or issuing bogus GRs or actively conniving with VKM in the availment of erroneous refund under Notification No. 56/02-CE. Since we have already held that VKM had duly received copper scrap in their factory and manufactured copper ingots question of grant of erroneous refund does not arise - penalties set aside. Appeal allowed - decided in favor of appellant.
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