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2016 (5) TMI 778 - CESTAT CHANDIGARH

2016 (5) TMI 778 - CESTAT CHANDIGARH - TMI - Demand of duty alongwith interest and imposition of penalty - Fraudulent availment of modvat credit on GP sheet which was neither an input nor it was used for the manufacture of OE parts - No positive evidence on record for diversion of the goods GP sheets and procurement of HR/CR sheets - Held that:- this Tribunal on identical issue in the case of Silence Auto vs. CCE, Chandigarh [2014 (6) TMI 306 - CESTAT NEW DELHI], wherein this Tribunal has held t .....

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er : Shri Surjeet Bhadu, Adv For the Respondent : Shri M R Sharma, AR ORDER Per Ashok Jindal The appellants are in appeals against the impugned orders demanding duty alongwith interest and imposing penalty on all the appellants. 2. The facts of the case are similar in all the appeals, therefore, the same are disposed of by a common order. 3. The appellants are manufacturers of motor vehicles/tractor parts and accessories falling under sub heading 8708.00,8607.00 and 9401.00 of the Central Excise .....

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the manufacture of OE parts. During the preliminary investigation, it was found that modus operandi of the appellant was that though OE manufacturers such as Punjab Tractors Ltd., HMT Ltd., Railway Coach Factory and Maruti Udyog Ltd, required their parts to be manufactured from hot rolled/ cold rolled but steel the appellants were purchasing GP sheets showing them to be used for OE products. In fact, the GP sheets, so purchased products were clandestinely sold in the market and HR/CR sheet were .....

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d on all the appellants. Aggrieved with the said order, the appellants are before me. 4. Learned Counsel for the appellant submitted that there was an investigation conducted at the end of the manufacturer/supplier of motor vehicles part from the appellants and in the same investigation in the case of Silence Auto vs. CCE, Chandigarh-2014 (307) ELT 339 (Tri.-Del.) the issue was settled in favour of the appellant. Therefore, the impugned orders are set aside. Moreover, without bringing any positi .....

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horities below vide which denial of Cenvat credit of ₹ 7,42,649/- stands confirmed against the manufacturer M/s. Silence Auto Ltd. along with imposition of penalties upon both the appellants. 2. The case has a chequered history, M/s. Silence Auto Ltd. are engaged in the manufacture of motor vehicle parts and accessories including silencers (hereinafter referred to as OB parts). The said OE parts manufactured by them are being supplied to various motor vehicle manufacturers like Punjab Trac .....

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om the appellant's customers as also from the dealers. As per the enquiries made from the manufacturers-customers, it was deposed by them that they were getting various tractor parts manufactured from the appellant for further use in the manufacture of the motor vehicles at their end; that for this purpose drawing and specifications of the raw materials are supplied by them to various vendors; that the main raw material for manufacture of the motor vehicle parts is CR/HR sheets; that the tra .....

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rs and the manufacturing process of silencers was sheering and cutting of sheets and pipes, bending to pipe, sheet, rolling and pressing, sheet press work, assembly with we/ding, oil burning, derusting in acid tank, enamelling, turning of casting and drilling, roll threading, plating, hardening and assembly of all different items of silencers for despatching after packing. The records maintained by the appellant revealed that the Cenvatable invoices mentioned the description of the goods as shee .....

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at the appellant has taken credit on the GP sheets, which were not capable of being used in the manufacture of their final product. As such, the Revenue further entertained a view that the appellant has sold the said procured GP sheets and has used the other procured HR/CR sheets in the manufacture of their final product. Accordingly, proceedings were initiated against the appellant by way of issuance of show cause notice dated 4-4-2000, for denial of the Cenvat credit in question. The said proc .....

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o on limitation. While deciding the merits of the case he observed that the appellant has the facility to use the GP sheets in the manufacture of their final product. The allegation of the Revenue that they have disposed of the said GP sheets in the market and have substituted the same with HR/CR sheets is not proved because the allegation is based upon assumption and presumption and no evidence stands given by the Revenue. There is no statement of any buyer of the GP sheets recorded by the Reve .....

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observed that the entire credit was being availed by the appellant by reflecting the same in the statutory returns; that all the invoices were being produced before the Range officer, who was regularly defacing the same and; that RT-12 returns were being regularly filed by the appellant; that the said RT-12 returns were being finally assessed. As such there was no question of suppression of fact and the extended period was not invocable, in terms of the Apex Court's decision in the case of .....

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part of the order, it stand remitted to the lower authorities, preliminary on the ground that the entire material collected by the Revenue was not supplied to the assessee. 13. The Assistant Commissioner has passed a detailed order by referring to the evidences collected from the OE manufacturers as also from the dealers who have sold the GP sheets to the appellants. The said evidences are not being referred to inasmuch as the same lead to the fact that the appellants have received GP sheets, wh .....

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al product. 14. However, the Revenue is completely silent on the point as to whom the said procured GP sheets were sold by the assessee and from which alternate source, they have procured the HR/CR sheets. Though the Assistant Commissioner has referred to the Hon'ble Supreme Court's decision in the case of Kundan Lal v. Custodian Evacuee Property reported at AIR 1961 SC 1316 and has correctly observed that the phrase "burden of proof has two meanings - one is the burden of proof as .....

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ing the evidence to establish a case keeps on shifting throughout the process of appreciation of the evidence in a case. Accordingly, he has observed that if the department is able to adduce sufficient evidence, which gives rise to a reasonable inference of clandestine clearance against the party, then the onus to rebut the evidence shifts on the party. However, the above principle may be true but I really fail to understand that which initial evidence the Revenue has produced to establish that .....

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r final product cannot be manufactured. In the absence of any evidence produced by the Revenue, the burden of countering and rebutting the evidence does not get shifted to the assessee. 15. In any case and in any way of the matter, I find that the appellants have tried to explain as to how the GP sheets can be used by them in the manufacture of their final product. It stands explained by them that such GP sheets are first dipped in the sulphuric acid as a result of which Zinc coating thereon dis .....

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re the adjudicating authority who has simpiicitor observed that the half non-galvanised part may not be a result of de-galvanisation but the other half may be galvanised part. The adjudicating authority has also Google searched on internet and observed that the search engine which shows millions of result for any term searched thereon, showed only 384 results for the term de-galvanisation and none of these results showed that a commercial process of de-galvanisation exists in automobile industry .....

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ng the appellants stand that there is no technical literature to show that de-galvanisation actually exists. He has also observed that the show cause notice has referred to and relied upon circumstantial evidences to show that it is not possible to use GP sheets in the manufacture of tractor component. 16. The evidences collected by the Revenue from the tractor component manufacturer have nowhere stated that it is impossible to manufacture OE parts out of GP sheets. In fact the opinion tendered .....

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blish that the appellants have procured the HR/CR sheets from any other source. 17. It is also seen that the appellants have produced the parts manufactured by them from GP sheets before the earlier Commissioner (Appeals). Though no reliance can be placed on the findings of the appellate authority in his earlier order, nevertheless, I find that the said facts remains unrebutted. 18. The appellants have also taken a categorical stand that there was no benefit for them the produce HR/CR sheets fro .....

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available for utilisation of credit of by unscrupulous manufacturers. On the other hand, HR/CR sheets can be obtained from the grey market without payment of excise duty, while the corresponding Modvat documents of GP sheets can be obtained by payment of amounts which are only a fraction of duty amount Involved. This explains the economic rationale behind adoption of such a modus operandi. . Obviously, the above reasoning is in the realm of surmise and conjecture. The judicial decisions are not .....

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