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M/s Adhikasri Electromech Ltd, Sri Suresh Tibrewala, M/s Karnataka Metal Company Versus The Commissioner C.C.E & ST, Hyderabad

2016 (6) TMI 912 - CESTAT HYDERABAD

Cenvat Credit - fraudulent availment of Cenvat credit on invoices obtained from a registered dealer, without actual receipt of goods - assumptions / presumptions - Held that:- This Tribunal in the final Order dated 20-01-2016, in the case of M/s Sri Lakshmi Industries Ltd [2016 (6) TMI 823 - CESTAT HYDERABAD] and another has analyzed the very same evidence and has set aside the demand raised on the allegation of fraudulent availment of credit on invoices issued by KMC. After examining the eviden .....

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Demand set aside - Decided in favor of assessee. - Appeal No. E/689 & 690/ 2012-SM & E/774/2012-SM - A/30267-30269/2016 - Dated:- 1-4-2016 - Ms. Sulekha Beevi, C.S. Member(Judicial) Shri P.Dwarakanath and Shri B.Venugopal, Advocates for the Appellants Shri M.K.Mall, Shri S.Dora Reddy & Shri V.J.Manvatkar, AR for the Respondent ORDER [ Order per Sulekha Beevi, C.S. ] 1. The above appeals emanate from the same Order-in-Appeal. Hence they are disposed by this common order. 2. The appeal No.E/7 .....

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on invoices obtained from a registered dealer, without actual receipt of goods investigation was conducted. On scrutiny of input invoices for the period February, 2003 to March, 2007, it was revealed that AEPL availed credit mainly on three items ie. Aluminium wire rods, Aluminium rolled products of various types and Aluminium ingots. The allegation of fraudulent availment of credit is confined with regard to certain consignments of aluminium wire rods and aluminium rolled products. Their major .....

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eipt of goods. 3. A search was conducted in the residential premises of Shri Prabhakar who was the Manager of KMC. Some private records were resumed. Basing upon the entries found in note books, Katcha slips etc. in the residence of Prabhakar and also his statement, investigations were initiated against several manufacturers including AEPL. KMC, being a co-notice. The statement of the Managing Director of M/s AEPL Shri Suresh Tibrewala was recorded. So also the statement of Shri Ashish Tibrewala .....

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voices are issued without even mentioning the sizes of the rolled products. iii) Perusal of RG 230D register of KMC shows that KMC issued the invoices to AEPL for various types of rolled products. iv) No purchase orders were found issued by AEPL to KMC mentioning quality or quantity. Further, in the note book resumed form the residence of Shri Prabhakar, one entry was mentioned as Ddhikasri against which figures 1558 and 166270 was quoted. These figures tallied with an invoice issued by KMC to A .....

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nfiscation of goods mentioned in the invoices and also confiscation of finished goods cleared by paying the duty using the alleged credit. After adjudication, the Order-in-Original dated 29-09-2009 was passed confirming the demand of credit of ₹ 8,20,779/- and confiscation of goods as per the invoices on which credit was availed and imposed equal amount of penalty as the goods are not available for confiscation. The finished goods cleared at value of ₹ 50,81,200/- was confiscated and .....

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8,20,779/- along with interest and equal penalty was imposed. The confiscation of finished goods valued at ₹ 50,81,200/- and imposition of penalty of ₹ 1,00,000/- in lieu of confiscation was set aside observing that the goods are not physically available for confiscation and hence not maintainable. The penalty of ₹ 1,00,000/- imposed on AEPL was reduced to ₹ 50,000/-. The penalty of ₹ 1,00,000/- imposed on Shri Suresh Tibrewala was sustained. The appellants are thus .....

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y him in his personal level as a side business for which no permission was obtained from KMC. The learned counsel submitted that no opportunity was given to cross examine Shri Prabhakar. Even though the department alleges that the goods were not supplied to AEPL there is no discrepancy in the statutory records maintained by AEPL. Further, during the relevant period AEPL has used inputs and cleared finished goods on payment of duty. Though the department alleges that AEPL obtained the raw materia .....

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ly accounted the inputs in their statutory records. Though the department alleges that goods were procured form local market none of such buyers were examined. The transporters/truck drivers were also not examined. Further, that Shri Prabhakar has made contradictory and inconsistent statements which cannot be relied at all. No evidence is adduced to show how the private records are related to KMC. 7. The learned counsel then drew attention to the Order-in-Original dated 30-10-2009 passed by the .....

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rder No.A/30028-30029/2016 dated 20-01-2016 has set aside demand raised on similar allegation against M/s Sri Lakshmi Industries, to whom show cause notice was issued pursuant to search at the residence of Shri Prabhakar. Again, the Commissioner (Appeals) vide order dated 04-12-2009 in Order in-Appeal dated No.99/2009 has set aside the demand raised against M/s Khaitan Electrical Ltd., which was also pursuant to search and seizure of private records of Shri Prabhakar. The Commissioner(Appeals) v .....

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atement of Shri Prabhakar and the documents resumed from his residence, have been elaborately scrutinized in these decisions. He pleaded that the appeals may be allowed. 8. The learned AR Sheri M.K.Mall, Shri Dora Reddy and Shri V.J.Manvatkar supported the findings in the impugned order. They submitted that there is no evidence that the statement of Shri Suresh Tibrewala or Shri Prabhakar was recorded under duress. Therefore, their statements are admissible and acceptable. During the material ti .....

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terial is sold without bill, the quantity purchased on invoices from AAL, NALCO, BALCO remain in their stock and for this KMC issued invoices to AEPL/ manufacturers without supply of material. KMC received the payments by way of cheque and then KMC returned the amount in cash. That the note books revealed the names of various manufacturers. It was submitted that the statement given by Shri Prabhakar is corroborated by the statement given by Shri Suresh Tibrewala. He pleaded that the appeals may .....

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residence has undergone detailed analysis. This Tribunal in the case of Sri Lakshmi Industries Ltd also had considered these evidences. In the case on hand, a single entry shown against Adhikasri in the note book tallies with figures in one invoice dated 05-04-2003 which was an invoice issued by KMC. There is no dispute that KMC was a supplier of raw material to AEPL. One important question that remains unexplained by department is that, if such huge quantity of raw material was not supplied to .....

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No.99/2009, dated 04-12-2009 in the appeal filed by Khaitan Electrical Ltd and KMC, the Commissioner (Appeals) observed as under: As discussed, if the desired thickness is not actually supplied by KMC, the basis for production of blades of standard thickness and/or the alternate source of sheets of desired thickness needed to be identified. The implied or implicit meaning of the charge made is that the sheets of thickness 0.25 and 3.00 have actually been invoiced but have been diverted either by .....

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other customers who do not need such sheets. But, this probability is also ruled out, as there is no incentive for doing all this exercise either at the appellants end or at the dealers end as in that case, the sheets invoiced would need to be diverted to some other manufacturer or customer on kacha bills. The dealer does not gain anything in diversion and substitution and the manufacturer also does not gain anything. Therefore, the allegation of diversion or non use of sheets, in my view, is no .....

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ntained by Shri Prabhakar, Manager, the denial of credit in my view, will be based on surmises and presumptions which is not held sustainable. Sh. Prabhakar however is not made a party to the proceedings. It is debatable if incriminating documents recovered from his residence and incriminating statements given in relation to the documents recovered can be relied fully, when he is not a party to the notice and as per his own admission, has been actively engaged in issuing inputs under kacha bills .....

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