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A.K. Alloys Pvt. Ltd. Versus Commissioner of Central Excise, Ludhiana

2015 (6) TMI 1010 - CESTAT NEW DELHI

Denial of Cenvat credit on the goods found short - shortage of imported melting scrap was found short during the course of physical verification of scrap - Held that:- The contention of the assessee is correct as the huge stock of 639 MT cannot be weighed in a single day physically. Moreover, the reasons for shortage has been explained by Shri Ashok Kumar Jain that scrap is having dust, cemented material, good, etc., and there is a burning loss during the course of manufacturing process. Revenue .....

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their factory and taken only invoices from the supplier of the goods - Held that:- Commissioner (A) has correctly analyzed the issue and hold that Cenvat credit on re-rollable scrap cannot be denied merely on the basis of the statement of the transporters or vehicles are found to be non-existent. Further, Revenue has failed to produce any corroborative evidence. In these circumstances, find that demand is not sustainable against the assessee. - Decided in favour of assessee - E/2052, 2053/2008-E .....

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erification of stock was done and it was revealed that the assessee has availed Cenvat credit on re-rollable scrap during the period 2001-2006. It was also alleged that the assessee has clandestinely sold 140.630 MT of imported heavy melting scrap which was found short during the course of physical verification of the stock without issuing any invoices and without reversal of Cenvat credit. It was alleged that the assessee has fraudulently availed Cenvat credit on the basis of the invoices cover .....

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onfirmed the demand as proposed in the show cause notice of ₹ 19,89,887/- along with interest and imposed penalty on the assessee to the tune of ₹ 19,89,887/- and penalty is on Shri Anil Kumar Jain and Shri Ashok Kumar Jain of ₹ 10 lakhs and ₹ 5 lakhs, respectively. The said order was challenged before the ld. Commissioner (A) who confirmed the demand of ₹ 2,79,964/- which involved the stock of 140.630 MT of imported scrap found short during verification but allowed .....

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pping the penalties on Director and Excise In-charge. Hence these appeals. 3. The ld. AR contended that the shortage of imported melting scrap was found short during the course of physical verification of scrap and same was admitted. The method of weighment was not disputed. Therefore, Cenvat credit has rightly been denied on the shortage of raw material. To support this contention she relied on the decision in the case of CCE, Chandigarh v. Nagpal Steel Pvt. Ltd. - 1995 (79) E.L.T. 463 (Tr .....

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ransportation of the said goods. They also denied their involvement in the loading impugned material in the trucks mentioned in the invoices or have any knowledge about existence of transporters. The remaining dealer was not found at the given address. The transporters were also found non-existent and vehicle number mentioned in the invoices were either of scooter, motors cycle, car, etc., which was not capable of transporting said goods. One transporter Shri Amrik Singh also denied for transpor .....

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and they have removed the goods clandestinely. Therefore, both are to be penalized. With regard to the rejected goods supplied by M/s. Paryag Ispat Project she submits that the technical opinion was obtained out from National Institute of Secondary Steel Technology and as per the technical opinion M/s. Aggarwal Steel Rolling Mills, manufacturer was capable of producing minimum 75% normal defect free goods whereas they were showing 80% production as defective which is not correct. Therefore, Cen .....

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TAT-DEL) = 2007 (213) E.L.T. 100 (T) is not applicable to the facts of this case wherein it was held that demand cannot be made out on the basis of the vehicle number mentioned in the invoices. Whereas in this case corroborative evidence and statement of dealers supports the revenue s case. 4. Heard the parties. Considered the submissions. 5. In this case two issues are required to be decided by me : (a) Whether assessee has correctly availed Cenvat credit on 140.60 MT of imported scra .....

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as 639.051 MT of inputs and finished goods as per statutory records as on 10-8-2005. The weighment of 639.051 MT is physically not possible/feasible in a single day and weighment slip/chart has not been placed on record by the Revenue. The assessee was also having the stock of steel scrap non excisable of 175.965 MT as on 10-8-2005 on which no credit was taken. It is the statement during the course of investigation on 10-8-2005, the shortage were explained by Shri Ashok Kumar Jain that the short .....

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n account of burning loss of scrap. To support this contention it was relied on the decision in the case of Rana Paper Ltd. v. CCE - 2008 (228) E.L.T. 271 (Tri.). I find that the contention of the assessee is correct as the huge stock of 639 MT cannot be weighed in a single day physically. Moreover, the reasons for shortage has been explained by Shri Ashok Kumar Jain that scrap is having dust, cemented material, good, etc., and there is a burning loss during the course of manufacturing process. .....

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and dealers have stated that there selling the goods on ex-delivery/ex-godown basis and they have no concern with the transportation of the goods. Therefore, the only reason to deny Cenvat credit on re-rollable scraps is mainly on account of mode of transportation of the said scrap is not correct. But the revenue failed to give any evidence for procurement of the scrap by the appellant for manufacturing their final product. Moreover, the Revenue have not adduced any evidence if the dealer has s .....

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ich supports that the re-rollable scrap is an input for the assessee. 8. Further, this issue has been examined by the ld. Commissioner (A) in the impugned order in Para Nos. 8, 9, 10, 11, 12, 13 & 14 which is reproduced here as under : 8. Further, a demand of ₹ 17,09,923/- has been confirmed on the appellants on the allegation that during the period April, 2002 to June, 2005 the appellants took Cenvat credit amounting to ₹ 17,09,923/- on re-rollable material fraudulentl .....

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and defective blooms, billets, etc., are not input for manufacture of steel ingots being, not cost effective. 9. The allegation is that the appellants took Cenvat credit amounting to ₹ 17,09,923/- on re-rollable material fraudulently without actual receipt of the same in their factory and diverted the same to small scale re-rolling mills without issue of invoice but no corroborative evidence has been brought on record by the department to prove that the said goods were actually divert .....

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r firm due to internal problems. However, the appellant have intimated the contact number of the relevant person Shri Sonu Prop. as 98155-80802. Under the above explained position and in the absence of any other cogent corroborative evidence the submission of the appellant is acceptable particularly when they are disclosing even the personal details of the registered dealer who is being alleged to be non-existent by the department. Therefore, it could not be alleged that M/s. Reena Ispat Udyog M .....

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tal Industries of Mandigobindgarh and the allegation is that both these units were capable of producing 75% normal defect free goods whereas they were showing 80% of their clearance as defective. The adjudicating authority while dealing with this issue in the impugned order has recorded that the appellant had remained silent on their so called receipts from M/s. Prayag Ispat Projects MGG. This finding of the adjudicating authority is not factual. From the reply dated 20-6-2007 to show cause noti .....

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e appellant have sought cross-examination of authorized representative of M/s. Aggarwal Steel Rolling Mills and Metal Industries MGG and Prop. of M/s. Prayag Ispat Projects MGG. It is observed that the adjudicating authority has neither given any findings on these submissions nor afforded cross-examination of the concerned persons whose statements were being relied upon. Under these circumstances the statements do not have any evidentiary value and even otherwise those statements have not depose .....

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oduced by the appellants in this regard were found to be non-existent and the vehicle no. shown in invoices/GR s were also fake and were also found to be of non-transport vehicle like scooter, car, etc. On the other hand, the appellant contend that vehicle Nos. are mentioned on the invoice at the instance of driver; neither consignor verifies the registration certificate of vehicle before loading the consignment nor consignee does the same at the time of taking delivery and it is incorrect to di .....

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ts and inputs supplied were duly received by manufacturers and used in goods manufactured which were cleared on payment of duty - No evidence that manufacturers used some alternative raw material than which was mentioned in invoices - Penalties set aside - Rule 25 of Central Excise Rules, 2002. [paras 3, 5] The fact of the present case are identical to the above said case law. The payments were made by the appellants to the dealers through banking channels and there were no evidences on records .....

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gations conducted by the department in this regard. Therefore, simply for the reasons that the transporters have not responded the summons issued by the department, it could not be presumed that they are not non-existent. Even if it is presumed so, then it would be a case of raising demand of duty on presumptions which does not sustain under law unless proved by corroborative evidence. 12. It is further seen that the dealers from whom the said inputs were procured by the appellant had not d .....

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department in support of their proof of the impugned goods having been transported to their unit at Malerkotia. It is observed that but for issuing summons to the transport agencies who issued the GRs, no enquiries were caused from them to verify the particulars of GRs submitted by the appellants. Therefore, the contents of the GRs have to be accepted and in that situation there does not remain any dispute regarding the transportation of the impugned goods to the premises of appellant s unit. 13 .....

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llable materials sustains only in the case of consignment involved in Truck No. PB-11U5595 and the rest of the demand does not sustain which is set aside. 14. The other ground for disallowing the Cenvat credit is that the impugned goods were not cost effective having been highly priced as compared to the other goods used by the appellant in the manufacture of steel ingots. In the submissions made before the adjudicating authority and also in the grounds of appeal the appellant have submitte .....

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