TMI Blog2014 (1) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of MS Bars, Rounds, SS Flats and SS Products. The assessee is a registered dealer and had procured raw material through M/s MK Steels (P) Ltd. The inputs covered by the invoices raised by M/s MK Steels (P) Ltd. were received by the assessee and were entered in the cenvat credit account. Inputs were used for the manufacture of final products which were cleared against the payment of duty. On enquiry by the Assistant Commissioner, Central Excise Commissionerate, Bolpur, it was found that the original manufacturer of MS Ingots, namely Sarla Ispat (P) Ltd., Durgapur, was non-existent. The assessee availed of the cenvat credit on the strength of invoices which were issued by M/s MK Steels (P) Ltd., which was the first stage dealer. A notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied by him. The only reasonable steps which he can take is to ensure that the supplier is trustworthy, the inputs are in fact received and that the documents, prima facie, appear to be genuine. The fact that the assessee made payment by cheque was held to be a proof of his bona fides. The Commissioner (Appeals) also relied on a circular of the Central Board of Excise Customs (CBEC) dated 15 December 2003 clarifying that cenvat should not be denied to a user-manufacturer as long as bona fide nature of the consignee's transaction is not doubted. Moreover, if the manufacturer-supplier has received payment from the buyer in respect of goods supplied including excise duty, action should be initiated against him under Section 11D and 11DD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. There was no dispute that M/s MK Steels (P) Ltd. was registered as a dealer with the revenue. In these circumstances, it was held that the denial of cenvat credit to the assessee was improper. The order of the Commissioner (Appeals) was, accordingly, upheld by the Tribunal. 5.On behalf of the revenue, reliance has been placed on the provisions of Rule 9 (3) of the Rules of 2004. According to the revenue, the assessee was obliged under Rule 9 (3) to take all 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. In the present case, it was urged that the assessee ought to have ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturer or a purchaser of excisable goods would be deemed to have taken reasonable steps. However, even in a situation where Explanation to Rule 9(3) is not attracted, it would be open to an assessee to establish independently within the meaning of the substantive part of Rule 9 (3) that he had in fact taken reasonable steps. Whether an assessee has in fact taken reasonable steps, is a question of fact. 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, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Vs. Commissioner of Central Excise2, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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