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M/s. Dhakad Metal Corporation and M/s. Bhavna Metal Company Versus Commissioner of Central Excise & S.T., Daman

2015 (8) TMI 146 - CESTAT AHMEDABAD

Disallowance of CENVAT Credit - non-receipt of material - allegation that supplier has no manufacturing facility - principle of natural justice - cross examination not allowed - extended period of limitation - levy of penalty - Held that:- It is beyond comprehension that a man will get invoices without inputs and separately acquire inputs clandestinely from other sources to manufacture his goods. There is no whisper about M/s. Dhakad Metal Corporation to be indulging in clandestine removal of fi .....

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y the Revenue should be extended to the appellant and in the absence of such cross-examination extended, the statements of such persons can not be relied upon as evidence. - appellant M/s. Dhakad Metal Corporation can not be held to have any malafide intention to take wrong credit and extended period of demand cannot be invoked in the present case against them. In this case, the demand is for the period 2005-06 whereas the show cause notice was issued on 20.02.2009. As the extended period is not .....

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hat it is not brought out by the Revenue that at the time of issuing cenvatable invoices registered dealer did not receive inputs alongwith duty paying documents. The fact of duty being paid by M/s. Prasun Ferro Alloys & Metal Casting Pvt. Limited has not been denied by the Revenue. Though later investigations done by the department does raise a strong suspicion of not receiving the inputs but the same is not corroborated by any independent evidence, except few statements. - In the absence of cr .....

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, under which the first appellate authority has upheld the Order-in-Original dated 30.8.2010 passed by the adjudicating authority has confirmed demand by disallowing CENVAT credit of ₹ 17,96,732/- under Rule 14 of Cenvat Credit Rules, 2004, alongwith interest, against M/s. Dhakad Metal Corporation and also imposing equivalent amount of penalty on the appellant M/s. Dhakad Metal Corporation. A penalty of ₹ 8 Lakh was imposed upon a registered dealer M/s. Bhavna Metal Company under Rul .....

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out by the officers of DGCEI against M/s. Prasun Ferro Alloys & Metal Casting Pvt. Limited revealed that this manufacturer who obtained Central Excise registration was not having any plant and machinery for the manufacture of Copper Rods/ Brass rods/ Copper ingots. M/s. Prasun Ferro Alloys & Metal Casting Pvt. Limited also did not receive any inputs on which CENVAT credit was availed and manufacture was shown only on paper as per the Revenue. That only invoices were alleged to be prepar .....

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tion and M/s. Bhavna Metal Company were either Auto Rickshaw or transport registration numbers were not existing and that such vehicles never crossed RTO check post at Bhilad. It was the case of the learned Advocate that M/s. Dhakad Metal Corporation actually received the inputs alongwith duty paying documents issued by registered dealer M/s. Bhavna Metal Company. That as per the statement of registered dealer, the documents alongwith goods were sent to M/s. Dhakad Metal Corporation and at the t .....

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ived inputs as well as finished goods, therefore, extended period can not be invoked against his clients and recipient of goods who took credit on the basis of documents issued by the registered dealer and alongwith inputs mentioned in the invoices. That at the time of receipt of documents/inputs in his client s premises his client is not required to go into the details of original manufacturer from which the registered dealer has obtained the goods. Learned Advocate also relied upon the case la .....

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s. Dhakad Metal Corporation and argued that statements of authorised persons of M/s. Prasun Ferro Alloys & Metal Casting Pvt. Limited have been recorded during investigation. That as per these statements no manufacturing activity was undertaken by M/s. Prasun Ferro Alloys & Metal Casting Pvt. Limited, therefore, inputs on which credit is taken and distributed is not admissible according to Revenue. It was his case that cross-examination of the persons belonging to M/s. Prasun Ferro Alloy .....

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dence that his client M/s. Bhavna Metal Company has received inputs from any other source as no cash transaction has been brought into light by the investigation. 4. Learned Advocate appearing on behalf of M/s. Dhakad Metal Corporation also furnished Xerox copies of invoices under which inputs were received, which was available before the lower authorities. It was his case that vehicle numbers on the documents are mentioned and that at the time of receipt of the goods, the vehicle numbers mentio .....

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kti Steel Rolling Mills vs. CCE, Chandigarh - [2014 (304) ELT 109 (Tri. Del.)] (e) Nidhi Metal Auto Components Pvt. Limited vs. CCE Delhi - 2015-TIOL-667-CESTAT-DEL. 5. Shri J. Nair (AR) appearing on behalf of the Revenue argued that as per the investigation undertaken by the officers of DGCEI, the original manufacturer M/s. Prasun Ferro Alloys & Metal Casting Pvt. Limited, Thane was found to be having no facility for the manufacture of inputs shown to be received by registered dealer and M/ .....

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claimed to have been received alongwith inputs issued by the registered dealer when original manufacturer M/s. Prasun Ferro Alloys & Metal Casting Pvt. Limited had no facility for manufacturing the goods on which ultimately credit was taken. There is no evidence on record that appellant M/s. Dhakad Metal Corporation did not receive the inputs alongwith cenvatable invoices issued by M/s. Bhavna Metal Company. It is also not on record whether M/s. Dhakad Metal Corporation was aware that the in .....

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ase can not be established on the basis of few confessional statements without other corroborative evidences like shortage of raw materials, cash transactions, alternative procurement of raw materials. Appellant requested for cross-examination of the persons whose statements are relied upon but the same was not extended. It is now well settled law that cross-examination of the persons whose witness are relied upon by the Revenue should be extended to the appellant and in the absence of such cros .....

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ve any malafide intention to take wrong credit and extended period of demand cannot be invoked in the present case against them. In this case, the demand is for the period 2005-06 whereas the show cause notice was issued on 20.02.2009. As the extended period is not invokable, therefore, the demand is also time barred in addition to credit being admissible on merits. Accordingly appeal filed by M/s. Dhakad Metal Corporation is required to be allowed. 7. So far as imposition of penalty upon M/s. B .....

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he duty or service tax on such goods or services, as the case may be, or two thousand rupees, whichever is greater. (2) In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made there under with intent to evade payment of duty, then, the manufacturer shall also be lia .....

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