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M/s. SMI Electrowire (P) Ltd. Versus CCE, Delhi-II

2016 (1) TMI 592 - CESTAT NEW DELHI

Cenvat Credit - duty paid on its inputs namely CC copper rod - allegation that goods were not actually received by the appellant and that the transactions were bogus - demand based on statement of trader / supplier - Held that:- After taking the statement of Shri R.K.Gupta, department has not conducted any investigations with regard to the tempo number shown, in these invoices. Instead, the department has just shifted the burden on the appellant stating that appellant has to correlate the cheque .....

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rs of the appellant are proper, it is for the department who alleges fraud to establish that the invoices issued to the appellant by Shri R.K.Gupta were not genuine.

Department has not succeeded in establishing guilt on the part of appellants. The statement of Shri R.K.Gupta does not contain incriminating evidence against the appellants so as to deny the credit. - Credit allowed - Decided in favor of assessee. - Appeal No. E/2791/2002-EX(DB) & E/Misc/51903/2015 - Final Order No.53505/ .....

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9.4.2003. By the said order, the Tribunal then upheld the disallowance of cenvat credit but reduced the penalty imposed. The appellants then filed an application for rectification of mistake before the Tribunal as E/ROM/121/03. The same was decided vide order dated 23.12.2005 whereby the ROM was rejected. The appellants then approached the Hon ble High Court of Punjab & Haryana, at Chandigarh and vide judgement dated 23.1.2015 in CEA 128/2006 the High Court set aside the Final Order of the T .....

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nputs namely CC copper rod. A show cause notice dated 1.1.2002 was issued alleging wrongful availment of modvat credit on invoices issued by M/s.R.K.Enterprises, a registered dealer, alleging that goods as per these invoices were not actually received by appellants. After adjudication, the Order-in-Original was passed confirming the demand of duty and also imposed equivalent penalty. Being aggrieved, the appellant filed appeal before the Commissioner (Appeals) who dismissed the appeal filed by a .....

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ices were issued and these invoices were accompanied by goods. The appellants made payments by way of cheque. The goods were duly entered in the RG-23A register and the invoices were sent for defacement to Range Office along with RT-12 returns as per law. These goods were used in production of final products and the same has been entered in RG-1 and reflected in RT-12 returns also. That therefore the allegation that the appellant has not received goods as per invoices is not sustainable. The aud .....

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llant. The appellant had no reason to doubt the invoices issued by M/s. R.K. Enterprises as these invoices were accompanied by goods. Full payments were made by cheque and this is reflected in the bank statement produced by appellant to the department. A photocopy of the purchase ledger would show the details of payments made to the suppliers. On receipt of goods, the appellant entered the same in Form-IV register and its RG-23A Part 1. Copies of these registers were furnished. The utilization o .....

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the dealer. The authorities while placing reliance on the statement of Shri R.K. Gupta failed to appreciate the evidences placed by the appellant and fact that Shri R.K. Gupta has deposed that some of transactions were genuine. There is no iota of evidence to show that appellants have not received goods as per the invoices. 5. Per contra, the learned DR reiterated the findings in the impugned order. He submitted that Shri R.K. Gupta/M/s. R.K. Enterprises was not having godown or storage place f .....

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who in turn gave Shri R.K.Gupta equivalent cash. He used to sell such invoices to his customers. The customer used to give him cheque to cover the transaction and Shri R.K. Gupta used to give the cash received from seller to the customer. The cash was thus passed to the final buyer of the bogus invoices. One cheque of the appellant (S.M.I. Electrowire (P) Ltd.) drawn in favour of M/s. R.K. Enterprises was resumed from the premises of Shri R.K. Gupta. Though the appellant contends that goods were .....

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. The name of the appellant is actually S.M.I. Electrowire (P) Ltd. . This name is seen stated in the show cause notice as well as in the Order-in-Original. But in the impugned order passed by the Commissioner (Appeals), the name of the appellant is seen stated as S.M.I. Electronics (P) Ltd. . Interestingly in the appeal memorandum as well as in the stay application, the appellant has impleaded itself as, S.M.I. Electronics (P) Ltd. The reason may be because, the appellant might have apprehended .....

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s seen from the judgement of the Honble High Court. In view thereof, we hold that the error in the cause title of the appeal will stand corrected as S.M.I. Electrowire (P) Ltd., as seen stated in the show cause notice. 7. Reverting to the facts of the case, the foremost contention put forward by the appellant is that all his documents, registers would go to show that the transactions were genuine and that appellant had actually received the goods. It is seen that the department has mainly relie .....

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n of the goods but in few cases these G.R. were also used where genuine transaction that is actually delivery of goods took place. Question No.17: Why did you use the bogus G.Rs to cover the genuine transaction where actual delivery of the goods effected also? Answer: Many a times we used to deliver the goods through tempos picked up at random from the tempo stands that is goods were not delivered through any established transport Co. As such tempo owners usually do not have any G.Rs book of the .....

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rom me they were given only the modvatable invoices without actual delivery of goods. The names of these two buyers are: (i) Gupta Metal Sheets Pvt.Ltd., Rewari (ii) Prakash Strips Ltd., Jagadhari As told by me elsewhere that I did not have any godown to store the goods purchased therefore I used to deliver the goods to my buyers directly from the manufacturers or the warehouse of the dealer/importer in the same tempo in which I used to take delivery. Therefore in all these cases where the tempo .....

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invoice quantity sold to my buyers is more than 6 tons the such invoices are bogus . 8. Again as answer to Question.No.29, Shri R.K.Gupta has stated, one cheque pertaining to M/s. S.M.I. Electrowire (P) Ltd. was in favour of my firm and was for sale made by my firm where the goods were physically sold. Shri R.K.Gupta has stated that he used to dispatch goods directly to the customers from the sellers godown. He emphasized names of the two buyers to whom goods were never sold, but only modvatable .....

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g that appellant has to correlate the cheque with the transactions made. It is the department who alleges fraud. Shri R.K.Gupta has specifically stated that all the transactions were not bogus. It was stated by him that with regard to the cheque of the appellant the goods were actually supplied. In case of supply of less than 6 tons (i.e. capacity of a tempo vehicle) the transactions are genuine; and that though he had no godown, he used to dispatch goods directly from the sellers godown. In suc .....

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