TMI Blog2013 (3) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... very few samples would be tested. From the records of the Lab, the Officers could not find any case where only one or two sample were tested. One or two samples should have been the case in respect of Invoices relating to S.S. Rods/pipes/bright bars, etc. We note that appellant has chosen to keep silent on this allegation in the show cause notice. - goods covered by the impugned invoices have not been received in the factory of manufacturer - Such a thing cannot happen without active connivance of appellant and undoubtedly is a case of fraudulent availment of credit. We therefore reject this contention of the appellant and hold that extended period is rightly invoked. Sub-rule (1) of Rule 13 is applicable to any person while sub-rule (2) of Rule 13 which is applicable to manufacturer alone. The term any person would include appellant Shri Deepak W. Ashtikar, who was a senior officer of M/s. FACOR and responsible for the purchase of scrap and therefore, dealt with the scrap. He has admitted that sometime scrap received may be different that in the invoice. As a senior officer in the organization, such a thing can be permitted by him only if he has active connivance in the fraud. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the scrap as mentioned in the MRV/Central Excise invoice vis-a-vis. the actual scrap was at variance. The details have been listed out in the show cause notice as also Para 4 of the impugned order. In respect of certain heaps the variance in the description was glaring/very-very different e.g. in respect of MRV Nos. 1476, 1412 and 1084 the goods actually available were assorted mixed scrap while the description in the MRV/invoice was S.S. Bright Bar Rejected (in respect of MRV No. 1476) and SS Rods/Bars Rejected (in respect of MRV Nos. 1412 and 1084). Obviously, invoice did not speak of mixed/assorted scrap. Similarly in respect of MRV Nos. 1454, 1421, 1446, 1463 and 731 goods physically available were assorted mixed scrap while the description in the MRV/Central Excise invoices was SS Sec. Deft. Pipes here again, invoices did not speak mixed or assorted scrap . In respect of other heaps the description in the MRV/Central Excise invoices and goods physically available were at variance but both were broadly in the category of scrap. It was also observed that out of the 26 heaps, in respect of all the eight cases wherein the variation in the description was glaring invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n against the appellant. The learned Advocate also argued that the department has not proved that the scrap received by them is non-duty paid. Ld. Advocate also argued that in the show cause notice the word rejected has been omitted to give the impression that the invoices are for the prime quality goods. The other contention of the learned Advocate is that even if it is assumed that the scrap is bazaar scrap, department has not proved that the scrap is non-duty paid. If the scrap is imported countervailing duty is chargeable and therefore, the scrap has to be considered as duty paid. They further argued that department can at the most demand duty in respect of the invoices relating to the goods (covered by MRV/invoices) found during search operation on 23-9-2003 which has already been reversed by them. The demand cannot be extended in respect of all invoices. The learned Advocate argued that there is no reason to extrapolate the demand to past period and deny credit on all consignments with the description SS Rods/Bright Bars Rejected/SS Defective pipes , etc. In support of their contention they quoted the following case law. (i) The State of Kerala v. C. Velukutty - 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Commissioner (AR) on the other hand argued that nobody would use the stainless steel pipes secondary/defective as scrap as such pipe can be used for the normal purpose after suitable cutting. Similarly bright bars defective would normally be rectified for the defect before clearance by the manufacturer of such bars. Alternatively, such goods can be used in application which does not require stringent specifications. In any case, the price of such goods is much higher than the stainless/metal scrap and it will not make any economic sense to purchase such goods, melt and thereafter, manufacture stainless steel billets instead of using scrap. From the invoices, it could be seen that the unit rate of such items is even higher than the unit rate of the final product of M/s. Facor. Therefore, it does not make any commercial sense to use such goods as inputs. As far as extrapolation is concerned, the learned Additional Commissioner (AR) argued that this is not a case of extrapolation at all because the demand is not in respect of all the invoices of scrap used by appellant, scrap supplied by all the suppliers. The demand has been confined to the goods supplied by M/s. ISC and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the inputs to the Central Excise who had a right to visit the factory and inspect the goods on which credit was being taken. Manufacturers were expected to keep the goods for the prescribed period for inspection of the Central Excise Staff. In order to further facilitate the trade, and put more trust on the trade system of inspection was dispensed. Manufacturers were allowed to take the credit on the basis of Invoices. Obviously, the system has put more trust in the manufacturer and it is expected that they would avail the Cenvat credit and follow the Rules scrupulously. 10. Rule 4(1) and Rule 7 the Cenvat Credit Rules, 2002 are as under : Rule 4. Conditions for allowing Cenvat credit - The Cenvat credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer : Provided that in respect of final products falling under Chapter 61 or 62 of the First Schedule to the Tariff Act, the Cenvat credit of duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who gets such final products manufactured on his account on job work subject to the condition that such inputs are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice. (e) Omitted vide Notification No. 12/2004-C.E. (N.T.), dated 9-7-2004. (1A) Cenvat credit under Rule 3 shall not be denied on the grounds that any of the documents mentioned in sub-rule (1) does not contain all the particulars required to be contained therein under these rules, if such document contains details of payment of duty, description of the goods, assessable value, name and address of the factory or warehouse : Provided that the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the factory of a manufacturer intending to take Cenvat credit is satisfied that duty due on the inputs has been paid and such inputs have actually been used or are to be used in the manufacture of final products, and such Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise shall record the reasons for not denying the credit in each case. (2) The manufacturer or producer taking Cenvat credit on inputs or capital goods shall take all reasonable steps to ensure that the inputs or capital goods in respect of which he has taken the Cenvat credit are goods on which the appropriate du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in that financial year as if for the expression month , the expression quarter was substituted. (Emphasis supplied) We note from the above rules, that credit can be taken on the basis of Invoice after the inputs covered by such Invoice is received. It is important that goods described/covered by the invoices are only received by the manufacturer. 11. In this case, in pursuance of intelligence, appellant s manufacturing unit/offices, etc., were visited on 23-9-2003. During the visit out of 26 heaps of scrap available in respect of 8 heaps corresponding MRV/Excise Invoices described the goods as S.S. Rods/Bars rejected S.S secondary/defective pipe and S.S. Bright Bar rejected. The actual material found in all the 8 heaps was assorted mixed scrap . The appellant s contention is that the defective pipes or rejected rods/bars or rejected bright bars are nothing but scrap. At the outset, we note that during the visit no such defective pipes or rejected rods/bars or rejected bright bars were found. What was found was assorted mixed scrap . Such assorted mixed scrap did not contain the goods described in the invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. We agree with learned Additional Commissioner (AR) s argument that Mr. Milind Tijare, Manager, Chemical Laboratory, Quality Control Department is a qualified person, and was working with the appellant for last 17 years at the time of recording the statement. He definitely understands different types of scrap, finished products and other materials related to the Industry. In his statement Shri Tijare has very clearly stated that the goods available were valves, sink, drums, etc., as against description of S.S bright bars in the MRV/Invoice. He has also stated that on many occasions the physical description of S.S. scrap verified by him did not tally with the description mentioned on the MRV. He has also stated that he is concerned with the Technical parameters of the goods received, and therefore he has not brought the discrepancy in the description mentioned on the bills to the notice of anybody. In fact on being asked whether they have received at any time items like S.S bars/Rods/Bright bars/S.S plates/CR Coils, he stated that they have received the S.S plates as scrap on certain occasions, they have not received S.S bars/Rods bright bars CR Coils at their factory at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has chosen to keep silent on this allegation in the show cause notice. 15. In view of preceding paras, we have not hesitation in holding that goods covered by the impugned invoices have not been received in the factory of manufacturer. 16. Coming to the contention of the appellant that the demand cannot be extended in respect of the past Invoices, we find that the demand has not been made in respect of all the invoices of the scrap. The demand has been limited to the invoices of M/s. International Steel Corporation (ISC) and that also has been limited to such Invoices where description of the goods are S.S. rods/pipes bright bars, etc. We therefore, hold that department has not extrapolated the demand. In fact, the demand has been restricted to the type of discrepancies notices during visit and proved by other evidences such as statements, testing record commercial possibilities, etc. During the argument the learned Advocate for the appellant has quoted catena of judgments. We have gone through these judgments. Facts in all these cases are totally different and not comparable with present case. In the case of The State of Kerala v. C. Velukutty - 1966 (17) STC 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 (232) E.L.T. 112 (Tri.-Bang.), Tribunal took the view that undervaluation of few clearances cannot be applied to all clearance of assessees - evidence of undervaluation, has to be available for each removal-demand cannot be confirmed when there is probability that in all cases assessees may not be guilty of some transgression. However, extrapolation is justified if reliable pattern shows beyond doubt a probability that some level of undervaluation was there in respect of all clearance. We are of the view, in this case, investigation have proved beyond doubt that goods covered by the invoices on which demand has been raised never reached the factory. Thus the case law only support the Revenue s case. In the case of Commissioner of C. Ex. v. Ganesh Agro Steel Industries reported in 2012 (275) E.L.T. 470 (Tri.-Mumbai), there was no confessional statement of employee or transporters. In this case, the Manager of the Chemical Lab has clearly stated that in the past they never received S.S. Rods/Pipes/Bright bars, etc., and such goods were also not found during the visit though as per invoices, such goods should have been. Similarly, in case of C. Base Computronics v. CCE reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for confiscation which are absent in this case. We note that appellant Shri Deepak W. Ashtikar, Senior Manager Purchase of M/s. FACOR at the relevant time in his statement dated 19-1-2004 has stated that his job responsibilities includes overall supervision of purchase department and is responsible for the procurement of engineering spares, refractories, raw materials and scrap. Shri Ashtikar also agreed with that part of the statement of Shri Arifbhai Adhiya, Prop, of M/s. ISC that on some occasions they may have received S.S. melting scrap other than the one described in the suppliers C. Ex. invoice. He has also agreed to similar part of the statement of Shri S.K. Panigrahi, Asst. G.M. (Finance). Rule 13 of Cenvat Credit Rules, 2001/2002 reads as : Rule 13. Confiscation and penalty. - (1) If any person, takes Cenvat credit in respect of inputs or capital goods, wrongly or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the document accompanying the inputs or capital goods specified in rule 7, or contravenes any of the provisions of these rules in respect of any inputs or capital goods, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of M/s. Facor or M/s. ISC or the third appellant themselves indicate in any way the connivance or the knowledge on the part of third appellant. Both the statements of Mr. Chirag Shah, Director of the Company indicates only that they were financing the purchase of Scrap by M/s. Facor not only from M/s. ISC but also from the other two scrap supplier against whom nothing adverse has been found. The investigation does not bring out anything which would indicate that third appellant were aware that the goods covered by the said invoices were not being supplied to M/s. Facor and instead Bajari scrap was being supplied. The only point made by the adjudicating authority or in the show cause notice is that at times payments made were not exactly the same as indicated in the invoice. An item like scrap whenever sold can have some variation in the final payment settlement based upon the quantity or the contents. Appellant s contention has been they are making the payment to the suppliers of scrap as per the advice of M/s. Facor. They were not part of the purchase process. Since their role was of a financier, they were not going into the details of scrap, transportation and test reports ..... X X X X Extracts X X X X X X X X Extracts X X X X
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