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M/s Akshay LPG Valves, V.K. Janaki Ram, M/s Jagadamba Engineering (P) Ltd., V.K. Janaki Ram Versus The Commissioner C & C.E, Hyderabad

Fraudulent availment of Cenvat Credit without receipt of raw material in the factory - as per department the appellants though imported goods vide Bill Entry , diverted the same without bringing the goods into the factory or use in their manufacture - Held that:- Mere statements recorded would not be sufficient to establish the charges alleged in the show cause notice. The statements should be supported by corroborative evidence. In the case on hand, if the department alleges that the raw materi .....

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Apart from the above, the statement of the transporter Shri Satish Agarwal has been retracted before a Magistrate and Sri Janakiram in cross examination retracted his statement and also deposed that his statement was recorded under duress. The case of the department is built-up mainly on these statements. As the statements have been retracted, there has to be some other evidence to conclude that the goods were not actually received. Whereas, the statutory records, weighment slips, job work chall .....

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idence that the goods were not actually received in the factory. In the totality of facts and evidence, paced it is find that revenue has miserably failed to establish the allegations raised in the show cause notice. Thus disallowance of credit availed is not sustainable. - Decided in favour of assessee - Appeal No. E/1242, 1243, 1266 & 1267/2011 - Final Order Nos. A/30039-30042/2016 - Dated:- 19-1-2016 - Ms. Sulekha Beevi, C.S. Member ( Judicial ) Shri Sri Y.Sreenivasa Reddy, Advocate for the A .....

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ide B/E No.426 225 dated 16-05-2005 and appeal No.E/1243/2011 is the penalty proceedings against co-notices. The appeal No.E/1266/2011 is with regard to goods imported vide B/E No.412403, dated 07-03-2005 and appeal No.E/1267/2011 is again the penalty proceedings against co-notices. The issue involved in all the above appeals being the same and the show cause notices having been issued from the same investigation process, the appeals were heard together and are disposed by this common order. 3. .....

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rers, however, availed Cenvat Credit on the Bills of Entry showing that these goods were transported from Delhi to their factory and received in the factory, when actually the goods were not received. The appellants were then issued show cause notices invoking extended period of limitation. After adjudication, the original authority confirmed the demand, interest and penalty. 4. The appellants filed appeal before the Commissioner (Appeals) and vide the Order impugned herein the Commissioner(Appe .....

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r better appreciation of facts and evidence in the present case. Verification of case records reveals that the appellants had irregularly availed cenvat credit of ₹ 7,17,415/- based on the Bill of Entry No.426225 dated 16-05-2005 without actual receipt and consumption of raw material mentioned therein, in contravention of above mentioned Cenvat Credit Rules, 2004 by adopting modus operandi as deposed in the statement dated 02-07-2008 by Sri V.K.Janaki Ram, Authorised Signatory of the appel .....

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vailed Cenvat Credit on the raw material without receiving the same into their factory premises since payments for raw material cost, customs duties, transport charges and CHA charges were made through cheques and later on they received back the amounts through cash except customs duties and CHA charges as the raw material was imported through Tughlakabad ICD, Delhi and cleared the same on payment of customs duty through the services rendered by the CHA. Whereas, the said raw material was not re .....

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modus operandi has been unraveled by the investigating agency beyond any scope of doubt and issued show cause notice, which was adjudicated by the respondent by not considering the contents of the cross examination of Sri V.K.Janaki Ram, Authorised Signatory and the affidavit of Sri Satish Agarwal, Partner of the transport company as the contents therein are after thought preparations to safeguard the malafide intentions of the appellants. In this regard, I concur with the findings of the respon .....

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pellants had not received the raw material covered under the subject bill of entry but irregularly availed Cenvat credit based on such bill of entry contrary to the provisions of Cenvat Credit Rules as discussed in para supra . 6. The very same findings are made in the impugned order regarding appeal No.E/1266/2011 except for the change in amount of credit availed, number and date of bill of entry. Further according to department, Sri V.K.Janaki Ram whose statement is heavily relied by departmen .....

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slips were issued. Appellant had furnished these documents to the department. The goods received in the factory was entered in statutory and private records maintained by appellant. The goods were then sent for job work for conversion into rods under job work challans. The receipt of processed goods from job worker and their usage in the manufacture of finished goods viz. LPG cylinder valves was entered in the records. The finished goods were manufactured and cleared on payment of duty. Amounts .....

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ny cash transactions other than those entered in books. Further, though department alleges that the inputs were diverted there is no evidence to even suggest that appellant had procured inputs from elsewhere to substitute the diverted inputs. That during the relevant period the appellant has manufactured finished goods and paid duty. (iii) The whole case is framed upon statements recorded, some of which have been retracted. None of the statements are corroborated by material evidence. The statem .....

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ry of the appellant in appeal No.E/1242/2011. In fact Shri V.K. Janakiram is no way connected with the appellant in that case. The GPA is in favour of Sri Ashwin. Sri V.K.Janakiram is the father of the proprietor/appellant and during his cross examination, he stated before the original authority that his computer typed statement was recorded by physically assaulting his elder son by the officer of DGCEI by removing his clothes. He admitted to be the Managing Director of appellant firm in E/1266/ .....

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is alleged that the CHA, J.M.Baxi cleared the goods for the importer and that he received the money in cheque and later returned the same as cash, the statement of CHA was not recorded. (viii) The statement of the transporter at Delhi was not taken and also the statement of the Owner/Driver of vehicles in which the appellants contend that the goods were transported was not recorded. (ix) The appellant produced the weighment slips to establish that the goods were received in the factory. Neither .....

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ully. At the outset, it has to be stated that in this case no discrepancy was found in the statutory records. So also apart from the statements there is no material evidence brought out by investigation to establish that the goods did not reach the factory of the appellants. Whereas, all the documentary evidence stand in favour of the appellants. The learned AR Sri Mohammed Yousuf vehemently argued that the operation was meticulously planned and therefore the department in such cases cannot be a .....

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ching the factory, then there should surely be evidence let in to show how the appellants have substituted the raw material since the statutory records show production and clearance of finished goods on payment of duty. There is absolutely no evidence to show the substitution of raw material which in my view would cut the root of the allegation as the statutory records show that goods were manufactured. No shortage of raw material was detected during enquiry. 9. Apart from the above, the stateme .....

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