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M/s Sri Laxmi Industries & Shri Ramesh Chand Agarwal Versus Commissioner C&C. E, Hyderabad-IV

2016 (6) TMI 823 - CESTAT HYDERABAD

Cenvat Credit - allegation of receipt of invoice without receipt of inputs / goods - fraudulent activity - Held that:- he case is seen to have been initiated against the appellants basing on the private records seized from the residence of Sh.Prabhakar, KMC . In these note books, certain figures/entries were mentioned against Mayur. Though in the impugned order, it is stated that the investigating officer has elaborately dealt about the link of Mayur with appellants, I do not find any such elabo .....

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.7mm to 1.22mm. The department has not adduced any evidence to show that the fan blades manufactured by appellants cannot be manufactured using sheets of thickness as stated to have been used by appellant. - The main evidence relied by department is the private note book resumed from the residence of Shri Prabhakar of KMC. In his statement dated 29-06-2005 Shri Prabhakar has deposed that the sale and purchase recorded in note book no.1 were made by him in his personal level as a side busine .....

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third party, Shri Prabhakar. In the absence of independent evidence the charges leveled against the appellant is not sustainable - Demand set aside - Decided in favor of assessee. - E/2705 & 2706/2010 - Final Order Nos. A/30028-30029/2016 - Dated:- 20-1-2016 - Ms. Sulekha Beevi, Member(Judicial) Shri M.V.S.Prasad, Advocate for the Appellant Shri Ajay Saxena, AR for the Respondent ORDER The appellant is a proprietary concern engaged in the manufacture of electrical fans and motors falling under .....

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t facility on invoices issued for purchase of inputs. 2. The case of the department is that on specific intelligence, by DGCEI it was found that appellants were indulging in fraudulent availment of Cenvat credit. The allegation is that during the period January, 2003 to February, 2007, the appellant availed Cenvat credit on input invoices issued by M/s KMC/BALCO/NALCO/ALL, who issued the invoices to appellants without actual supply of materials mentioned in the invoices. A search was conducted i .....

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ments made by KMC to various parties which was not accounted in official records of KMC. Certain cash payments received for unaccounted sales were noted against the name mentioned Mayur As per investigation the name Mayur mentioned in these private records refer to M/s Sree Lakshmi Industries (SLI) the appellants herein. In pursuance to this, the statement of Shri Ramesh Chand Agarwal the sole proprietor of appellant firm was taken. The case of the department is founded on the following discrepa .....

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required thickness only, but different thickness was shown in the invoices. That to manufacture final products, the appellants can use aluminium sheets of thickness either 0.9 to 1.05 mm. But the invoices show that appellants have received sheets of thickness less than 0.9 or more than 1.05 mm. That it indicates that such goods were never received in the factory. 3. A show cause notice was issued alleging that appellant had availed Cenvat credit fraudulently using the invoices issued by KMC and .....

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n fine. Penalty of ₹ 20,00,000/- was imposed on appellant, besides separate penalty of ₹ 20,00,000/- on the proprietor Shri Ramesh Chand Agarwal. 4. The learned counsel for appellant submitted that the appellant had nothing to do with the omissions and commissions of KMC/AAL as well as the entries found in the note book recovered from the residence of Shri Prabakar, Manager, KMC. The statement of Shri Ramesh Chand was obtained under duress and he signed computer generated statements .....

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aced by the department. The allegation is based on private records seized from third party-Prabhakar. The entries in these private note books do not tally with the invoices of the appellant and appellant has been merely implicated on the ground of entries made against one Mayur. Prabhakar has given contrary explanations with regard to the figures in the private note books. When goods were dispatched to appellant directly from BALCO/NALCO through KMC, the same were accompanied by invoices and del .....

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to have verified the stock position and production. No such verification was done. Again, appellants had made payment by cheque, no evidence is adduced to establish that appellants had received back cash as alleged by department. With regard to the allegation of thickness of aluminium sheet procured it was submitted that appellants use sheets with thickness ranging from .7mm to 1.22 mm for manufacture of fan blades. That the impugned order is passed without appreciating the facts and evidence a .....

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or evidence. The only statement is that appellants, SLI is known in the market as Mayur Fans There is no evidence to link the entries resumed with the appellant. 6. The raw material (inputs) are purchased by appellants from KMC , who are registered as first stage dealer, with the central excise department to pass on Cenvat credit. KMC procured the raw materials from AAL/BALCO/NALCO who have paid excise duty on the goods and the same was passed on to appellants by KMC. The allegation is that KMC .....

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t is that the specification of thickness of sheets shown in the invoices do not match with the specification of sheet thickness required by the appellant for manufacture of fan blades. This is answered by the appellant saying that they use sheets with thickness ranging from 0.7mm to 1.22mm. The department has not adduced any evidence to show that the fan blades manufactured by appellants cannot be manufactured using sheets of thickness as stated to have been used by appellant. 7. The main eviden .....

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s the entries do not reflect any connection with the appellant. Again the appellants have purchased major raw material from KMC. The allegation raised now is that appellants did not receive the goods, but received only invoices. If so, in the absence of evidence to prove that appellants have procured raw material from local market, the production of finished goods and cleared by paying duty cannot be explained. Even though it is alleged that the description of goods in job work challan varies fr .....

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