TMI Blog2006 (12) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise dealers, without actually receiving the materials covered thereby, the factory premises of the appellants were visited by the Excise officer and during the course of verification it came to their notice that besides other the scrap was being supplied by one dealer M/s. Arihant Steel Enterprises (M/s. ASE) from whom the most of the material was received. The investigations and the statements tendered by the various representatives of the appellant's revealed that the category of SS scrap actually were sheet cut ends, broken utensils, kitchen sinks, chemical equipments flanges, wire mesh and the same did not match with the description of the goods shown in the invoices received from M/s. ASE under which the scrap was described as S.S. patta-patti. The statement of proprietor of M/s. Arihant, Shri Narpat Bokadia was recorded, in which he admitted that the goods actually are of prime quality and are sold to small fabricators who do not require Cenvat credit and that the unutilized Cenvat credit was transferred to the appellant M/s. Mukand Limited; and the scrap actually supplied to M/s. Mukand Limited was a Bazaar scrap procured locally. He further stated that in order to en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is against this order of the Commissioner that M/s. Mukand Ltd., Shri Narapat Bokadia, Shri Jhaveri and M/s. Cambridge Construction have come up in appeal before us. There is yet another appeal by the revenue by which order passed by the Commissioner in allowing the Cenvat credit to the extent of Rs.11,01,226/- on the ground that the invoice on the basis of which the credit was taken was verified by the Central Excise Officers is incorrect as the verification by the Central Excise Officers was done with reference to documents and not physical inspection. Since all the appeals arise out of the same order-in-original they are being decided through a common order. 4. Learned advocate for the appellant M/s. Mukand Ltd. submits that the credit has been denied to them solely on the ground that the scrap received by them did not match with the description of the scrap given in the invoice on the basis of which the credit has been taken. It was submitted that the steel scrap is used for melting in the furnace and therefore it's physical appearance and how it is generated is immaterial. What is relevant is the content of the Nickel, chrome etc. in the scrap and the chemical melting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not mean that the goods of which the sample is drawn exclusively tall under the category described in the said entry. They are only concerned with the chemical composition of the scrap and not physical form and therefore they accept/reject the scrap once it meets their chemical parameters. Therefore it is immaterial whether the scrap was a Bazaar scrap or a prime material/rejected material. 6. It was vehemently argued that the scrap is received under the Central excise invoices showing payment of duty and once the duty has been paid on the scrap and the scrap has been used in the manufacture of final product the cenvat credit on the same cannot be denied even if the material described on the invoice does not match with the description of the inputs found by them on visual inspection as long as payment for the same has been made by cheque along- with Central excise duty component of the same. Therefore even if it is admitted that the scrap received was different than the one described in invoices they cannot be denied the Cenvat credit once the scrap has been paid for along-with the duty payable on the same and once that scrap has been used in the manufacture of the final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lms Ltd. v. Commissioner of Central Excise, Aurangabad - 2006 (202) E.L.T. 131. In their case it is clearly evident that Mukand Ltd. have no intent to evade duty be cause Mukand paid duty to Arihant and was claimed Cenvat credit in respect of duty it paid itself. Reliance in this regard was placed on tribunal decision in the case of IDL Chemicals Ltd. v. Commissioner of Central Excise, Bhubaneshwar - 1996 (88) E.L.T. 710 (Tribunal). It was further submitted that while inspection was carried out in the year February 2002, the show cause notice was issued in the year 2004 which is beyond the period of one year and in such case extended period cannot be invoked as held by the Tribunal in the case of Vaspar Concepts (P) Ltd. v. Commissioner of Central Excise, Bangalore - 2006 (199) E.L.T. 711 and Studioline Interior Systems Pvt. Ltd. v. Commissioner of Central Excise, Bangalore-I - 2006 (201) E.L.T. 250 (Tri.-Bang.) and Apex Court decision in the case of Nizam Sugar Factory - 2006 (197) E.L.T. 465 (S.C.). 9. In respect of other three appellants i.e. Shri Bokadia, Shri Jhaveri and M/s. Cambridge Construction, it was submitted by the respective advocate for appellants that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e physical verification of the goods nor he inspect the goods at the time of receipt of the inputs by the customer/consignee, in whose name the invoice is issued and therefore once the inputs were found to be different than what was reflected in invoice, the credit should have been denied on the same ground as has been done in respect of other scrap for which the credit has been denied. 12. We have considered the submissions. We find that from the statement Shri Bokadia, proprietor of M/s. Arihant it is abundantly clear that the goods with description as mentioned in the dealer's invoices i.e. SS Scrap patta patti have neither been supplied by M/s. Arihant nor received by M/s. Mukand Ltd. but what was actually received in the Mukand factory premises is more in the nature of obsolete, discarded and used industrial machinery, waste scrap which has not suffered any duty as no duty is payable on bazaar scrap collected from various households or kabadis. The evidence of Shri Bokadia has not been negated by M/s. Mukand. They have neither asked for his cross examination nor cross examined him. It is further confirmed by the visual inspection reports recorded by three representative of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the order of the Commissioner demanding back the credit availed on invoices which describe the scrap as patta patti. This is not a case where though no duty was payable on bazaar scrap but still the manufacturer has knowingly or unknowingly paid duty on the same without availing exemption and therefore the innocent buyer cannot be deprived of the credit of the duty so paid by him. In the present case the duty has admittedly been paid on prime material like stainless steel patta-patti and it was at the instance of the appellant M/s. Mukand that documents were manipulated and invoice was issued showing payment of duty on scrap purchased by them which was very well in their knowledge, was not the scrap on which duty has been paid and therefore this is not a case of innocent buyer but a case where knowingly credit has been availed of duty paid on such product which were never used by the appellant in the manufacture of final product. Therefore the question of taking any credit does not arise. Therefore it cannot be said that the demand is based on surmises and speculation and accordingly Supreme Court decision in Oudh Sugar Mills Ltd. [2006 (198) E.L.T. 225] and Tribunal decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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