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2016 (10) TMI 476 - CESTAT CHANDIGARH

2016 (10) TMI 476 - CESTAT CHANDIGARH - TMI - Demand on account of clandestine clearance of scrap - Held that: - a certificate issued by chartered engineer certifying that the factory of the appellant is not able to manufacture such huge scrap during the impugned period. Shri Amajit Singh Bajaj, in the course of examination has denied of purchasing scrap from the appellant. Moreover he has admitted that he has supplied only tempo for transportation of the scrap and received transportation charge .....

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om the job worker against job work challan. These evidences had not been given credence by the adjudicating authority during the course of adjudication. The adjudicating authority has only relied on the statement that the appellant has not received HR/CR coils. It is admitted position that the appellant has not received HR/CR coil in the factory and the same has been sent to the job worker directly for cutting/slitting. These facts have not been considered by the adjudicating authority. It is al .....

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se parts have come back for repairs and further they have been cleared without payment of duty as the second time duty is not required to be paid - Held that: - in the absence of any documentary evidence in support of the appellant's contention, the defence taken by the appellant is not admissible - the demand of ₹ 13,698/- confirmed. - The demand of duty of ₹ 32,61,960/- confirmed on account of shortage of inputs detected during verification of stock confirmed - the demand of du .....

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ocate Respondent By : Shri Vijay Gupta, AR ORDER Per Ashok Jindal: The appellants are in appeals against the impugned order. 1.1 M/s Sheel Auto Industries Pvt. Ltd. (hereinafter referred to as SAIPL) having their factories at E-472-473, phase VI, Focal Point, Ludhiana and at Delhi-Jaipur Highway, Rampur, Gurgaon, are manufacturer of Motor Vehicle parts and Steel forging etc. chargeable to Central Excise Duty under Chapters 87, 72 &73 of the Central Excise Tariff Act, 1985. Sha Ravi Sharda is .....

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o claim to have supplied HR/CR coils to M/s SAIPL, Gurgaon. 1.2 On 19.05.2006, on receipt of an information that M/s SAIPL are taking Cenvat Credit on the basis of invoices for HR/CR coils claimed to have been received by them, without actually receiving any such goods, while actually they were purchasing HR strips from unregistered dealers without any invoices, the factory premises of M/s SAIPL at Ludhiana and Gurgaon were searched in the course of which a number of documents and records were r .....

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drawer of Sh. Surinder Singh, Security Supervisor at Ludhiana unit. The diary recovered from She Surinder Singh contained date wise details of the receipt of raw materials HR/CR sheets and also details of clearance/sale of the finished goods and scrap. Although both the units of M/s SAIPL were showing the receipt of HR/CR coils, in none of the units any facility for cutting/sitting of the CR/HR coils was found. Statement of Sh. Surinder Singh was recorded on 19.05.06 wherein he said that the two .....

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Singh stated that the pocket diary contained the details of only those raw materials HR/CR sheets which had been received under Kachcha Challans without proper bills. Since the entries in the diary maintained by sh. Surinder Singh also mentioned the names raw-material suppliers M/s. Salig Ram Manik Chand, M/s. Neelkanth Steel and they confirmed having supplied the HR sheets as mentioned in his diary. On inquiry with Shri Amarjit Bajaj of M/s. Bajaj Steel mentioned in Shri Surinder Singh's d .....

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el, M/s Saljg Ram Manik Chand, Ludhiana etc. and that the HR/CR sheets were being purchased in strip only and not coil form and they do not have and facility of cutting or slitting of the coils. Shri Khanna also stated the cenvatable invoices regarding purchase of HR/CR coils were being obtained from M/s Allied Agro and M/s Krishna Agro without actually receiving any material, that such bogus invoices had been obtained through M/s Salig Ram Manik Chand and that they are ready to reverse Cenvat C .....

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oices in respect of those clearances. 1.4 As regards Gurgaon unit of M/s SAIPL, it was found that while this unit had taken Cenvat Credit on the basis of the invoices for HR/CR coils issued by M/s Golden Steel Co, And Rajeev Steel, Faridabad, on enquiry with the store keeper and Sh. Bir Singh yadav, works Manager of the unit, it was found that only the HR/CR sheets had been received, not coils, as there was no facility for slitting of the coils in the factory. On enquiry with M/s Golden Steel Co .....

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of the raw-materials received, as mentioned in the diaries are not reflected in the statutory records. 1.6 On the basis of the above investigation, a show cause notice dated 23.10.2007 was issued to M/s SAIPL, Ludhiana and Gurgaon, Shri Ravi Shards, M.D. of M/s SAIPL, M/s Krishna Agro, Ludhiana, M/s Allied Agro, Ludhiana, M/s Golden Steel Co., Faridabad, M/s Rajeev Steel, Faridabad and M/s Allied Steel, Ludhiana-for (a) Recovery of Cenvat Credit amounting to ₹ 50,23,955/- alleged to have .....

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earance of scrap alleged to have been made without payment of duty, alongwith interest on the same at the applicable rate; (c) Recovery of Central Excise Duty amounting to ₹ 13,513/- chargeable on clearance of auto parts alleged to have been made clandestinely without payment of duty alongwith interest on the same under section 11AB and appropriation of an amount of ₹ 13,698/- voluntarily paid by M/s SAIPL; (d) Recovery of Central excise duty amounting to ₹ 3,62,477/- on the sh .....

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(h) Recovery of Cenvat Credit amounting to ₹ 17.60.447/- from Gurgaon unit of M/s SAIPL alleged to have been taken on the basis of invoices of HR/CR coils, without receiving such goods; alongwith interest on the same at the applicable rate and appropriation of an amount of ₹ 7,00,000/- lakhs already paid by M/s SAIPL towards this demand; (i) Imposition of penalty on M/s SAIPL, Gurgaon under Rule 15 of Cenvat Credit Rules, 2004 read with section 11AC of the Central Excise Act for fra .....

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447/- alongwith interest was confirmed against M/s SAIPL, Gurgaon and amounts of ₹ 37,74,000/-. and ₹ 7,00,000/- already reversed/paid towards these demands were ordered to be appropriated; (ii) Central Excise Duty demands of ₹ 32,61,960/-3,62,447/- and ₹ 13,513/- were confirmed against M/s SAIPL, Ludhiana along with interest and total amount of ₹ 3,76,175/-(3,62,477+13,698) already paid towards these demands was ordered to be appropriated; (iii) Penalty of ₹ .....

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e 25 of Central Excise rules, 2002. 1.8 It is against the above order of the Commissioner that the present appeals along with stay applications have been filed by M/s SAIPL, Sh. Ravi Sharda, M/s Krishna Agro, and M/s Allied Agro, M/s Golden Steel and M/s Rajeev Steel. 3. Learned Counsel appearing for the appellants submitted that the demands have been confirmed mainly on the following ground: (a) alleged clandestine clearance of the scrap (b) disallowance of cenvat credit on the ground that ther .....

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s been paid. In the instant case, it is alleged that the said scrap and waste has been cleared without bill/invoice to various party. It is his submission that the said allegation of clandestine clearance of scarp is not sustainable if the cross examination of Shri Amarjeet Singh Bajaj is considered. He further submits that the Revenue was required to examine as to whether the quantity of excisable goods which alleged to have been removed without payment of duty could be produced in the factory .....

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idence that given quantity have been manufactured and removed without payment of duty. When a quantity higher than a quantity of 1577.708 Mts which is shown manufactured as pr RG1 register could not be generated during the course of manufacture of auto components then the allegations of clandestine removal without payment of duty is not sustainable. He further submits that if the allegation is taken to be correct then there should be production of 2370.951 MT of scrap be produced in the factory .....

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finished goods. Therefore, the maximum waste can be generated to the tune 1612.058 whereas the appellant has recorded waste of 1577.708 in the RG-1 register out of 1560.095 MT has been cleared on payment of duty. This fact has not been disputed by the Revenue. The demand confirmed simply on the basis of statement of Shri Surinder Singh, security supervisor who has noted in the slip pad. The revenue has also relied on the statement of Shri Amarjit Singh Bajaj and during cross examination of Shri .....

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sustainable in the absence of any corroborate evidence. 5. For demand of duty, on clearance of finished goods of ₹ 13,698/-, it is his submission that the appellant have not cleared the parts on payment of duty as later on these parts came back for repairs. Upon repairs, these parts have been cleared and therefore the second time, the duty is not required to be paid. In the circumstances, the demand is not sustainable. 6. With regard to the denial of credit on the ground that the appellan .....

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40 invoices the description is HR coils slitted but the demand has been against the appellant on all 80 invoices. It is his submission that the appellant has purchased HR coils from the dealers. The said coils were directly sent to the job worker for cutting into HR sheets. These sheets received by the appellant used in the manufacture of their final product. The appellant has produced job work challan and paid for job work to the job worker on the issuance of invoices. These facts have not been .....

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security supervisor and also confirmed by Shri Amajit Singh Bajaj (a major buyer of scrap). He submits that the material received was HR/CR sheets from various suppliers without any bill and for availing the credit on the invoices procured form M/s.Allied Agro, Allied Steel and Krishna Agron It is admitted were not having the facility to cut HR/CR coils/sheets at their unit Ludhiana/Gurgaon obviously it is not using HR/CR coil into their factory. It is proved that the appellant were not using t .....

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e demand on account of goods received and cleared without cover of invoices Issue No.1 10. To deal with the issue of clandestine clearance of the scrap based on slip pad received from, security supervisor and the statement of Shri Amajjt Singh Bajaj who initially stated that he has received the scrap on the basis of entries made in the slip pad recovered from security supervisor. We have seen the statement of Shri Amajit Singh Bajaj and Shri Surinder Singh were recorded on 19052006. Both the sta .....

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at during the course of cross examination of Shri Amajit Singh Bajaj has denied of purchasing scrap from the appellant. Moreover he has admitted that he has supplied only tempo for transportation of the scrap and received transportation charges from the appellant. No contrary evidence to this defence has been produced by the Revenue in support of their contention. Moreover, to generate such huge quantity of scrap, there need to be purchased excess raw material an manufacturing thereafter finishe .....

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s inputs and clearance of excess finished goods is on record. In these circumstances, the demand on account of clandestine clearance of scrap is not sustainable, therefore the same is set aside. Issue No.2 11. Denial of credit on the allegation that the appellant has received the invoices and not inputs. To allege that such allegation, the sole ground is appellant has procured HR/CR coil having no facility to manufacture the same in their factory, therefore, they have not received such quantity .....

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he goods have been received from the job worker against job work challan. These evidences had not been given credence by the adjudicating authority during the course of adjudication. The adjudicating authority has only relied on the statement that the appellant has not received HR/CR coiln. It is admitted position that the appellant has not received HR/CR coil in the factory and the same has been sent to the job worker directly for cutting/slitting. These facts have not been considered by the ad .....

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