TMI Blog2018 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... econdly, that the difference in the stock is less than 5% which is permissible by the BIS standards. Apart therefrom, the confirmation of demand of cenvat credit was on the basis of non receipt of inputs in the respective units. The Tribunal holds that there is no dispute that the entire shortage found in the physical stock taken by the officers is less than 5%. It is in these circumstances and when in the assessee's own case it was held that shortage in the range of +/ 5% should be ignored, then, the Tribunal followed its own order in the case of this very assessee and dropped the demand in respect of shortage found in the physical stock and consequent penalty commensurate to the duty on such shortage. Thus, the Group, the units and their activities were known to the Revenue. It is not as if the shortage was noticed for the first time. The shortage was not to such an extent as would make a demand for duty interest and penalty sustainable. It was in the permissible range. Wrongful availment of CENVAT credit - Held that: - the goods have been consumed within the Group units and there is no cenvat credit which was wrongfully availed, but was adjusted as stated above. Thus, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispose of these Appeals by the present order. 3. The assessee has pointed out that it is a company duly incorporated under the Indian Companies Act, 1956. The respondent exercises powers and discharges duties conferred upon him under the Central Excise Act, 1944. The appellants are engaged inter alia in manufacture of rolled products of iron and steel falling under Chapter 72 of the Central Excise Tariff Act, 1985. There are six factories of M/s. Sanvijay Group of Industries (for short, Sanvijay Group ). Out of six factories, five are located in MIDC, Hingna Road, Nagpur and one is located at MIDC, Butibori. In para 7 of the memo of Central Excise Appeal No.114 of 2016, the names of six factories and their addresses are set out. It is stated that the present Appeal (Central Excise Appeal No.114 of 2016) concerns the first of the units/companies, namely M/s. Sanvijay Rolling Engineering Ltd. It is stated that the appellants as well as the other units received the duty paid blooms, which is their main raw material used for the manufacture of different types of rolled products. The appellants take cenvat credit of the duty paid on the raw materials received from the supplier. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egularities noticed in the individual units. The appellants were therefore called upon to show cause as to why the amounts mentioned in the notice besides penalty should not be recovered. 6. Replies were filed to notice on 18th November, 2004 after which the order in original was passed on 30th March, 2007. Aggrieved thereby, an appeal was carried to the Commissioner (Appeals). The Commissioner (Appeals), after a personal hearing, proceeded to dismiss the Appeals by the order in Appeal dated 12th September, 2007. 7. That is how the appellants and others preferred Appeals before the CESTAT and which have been partly allowed. 8. Our attention has been invited to the order of the CESTAT and which sustains the demand but interferes with the penalty. It is in these circumstances that the present Appeals have been filed. 9. It was argued by Mr. Sridharan, learned Senior Counsel appearing on behalf of the appellants that credit has been denied on the ground that the goods were actually delivered to the other factory of the appellants. If the credit is denied to the appellants, the same should be allowed to the other factory where the goods were alleged to be actually delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to dispose of these Appeals. The show cause notice which is common to all the units, proceeds and alleges that the six units named therein are of M/s. Sanvijay Group of Industries. They have common registered office. That was visited by the officers of Central Excise Commissionerate, Nagpur on 20th May, 2003 to carry out preventive checks. During the course of verification of the statutory records with the physical stocks of finished goods as well as raw materials with cenvat credit, it was prima facie revealed that there were discrepancies in the stock of finished goods as compared to the recorded balance, as well as in the raw material. Physical verification of both was conducted in the presence of independent panchas and authorized persons of the Sanvijay Group on 20th May, 2003 and 21st May, 2003. The verification resulted in a shortage of finished goods as well as raw materials. The details of the same are set out and then it is alleged that the Central Excise Officers recorded the statements of the authorized signatory of each unit of the Sanvijay Group, who inter alia admitted that the group comprises of six units, four of which are in close proximity to each other. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the reasons is that this surprise visit revealed that the shortage of finished goods/raw materials was noticed during verification of the statutory records with the physical stocks at the six units. The assessee did not maintain that record correctly, but in none of the findings and conclusions it is held that there was a diversion of stocks. It is only an omission to record the inter unit transfer. It is in these circumstances that we expected the Commissioner (Appeals) at least to take an appropriate decision. However, the Commissioner (Appeals) as well, while confirming the view of the adjudicating authority, concluded that this irregularity cannot be condoned, nor there is any question of revenue neutrality. 15. When the Tribunal was approached by the assessee, the Tribunal passed a short but cryptic order. It noted the facts and which we have already set out in great details. After noting these facts and the payment of duty under protest, what the Tribunal does is to hold that the credit was availed by the unit whose name was mentioned in the invoices as consignee, whereas in investigation it was revealed that the inputs were received in some different unit of the Sanvij ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Throughout, the admission was not of any guilt but of an irregularity. The inputs were initially received and delivered on different unit, but credit was availed of by the unit in whose name the invoices were issued. The finding is that the assessee could not produce any single evidence regarding re transportation of inputs from wrong factory to the correct factory. Therefore, it is clear that the cenvat credit was availed by the assessee but the input was delivered at different factory and it was used in the production by the different factory. At the same time, the assessee's explanation that this was all done by local transportation and therefore no records were maintained but there is revenue neutrality, has been conveniently brushed aside and ignored. In the sense, the inputs were also the inputs of the common finished product of all the factories/units in the Group. They were therefore entitled and eligible to take cenvat credit on these raw materials as far as finished product is concerned. Thus A unit may be the recipient of the goods/inputs and utilized the same as raw materials for its finished product, but B unit was the entity to which the consignment was delive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perverse. The Tribunal has found that the jurisdictional Gujarat High Court considered a similar controversy and questions. The Tribunal found that once the inputs have been delivered only at the factories of the assessees from the associate companies, then no loss occurs to revenue. The assessees would derive no benefit by not reversing Cenvat credit on the inputs, when sister concerns are also eligible to take Cenvat credit. Therefore, in the absence of cogent and reliable evidence particularly on the diversion of these inputs, the Tribunal applied the doctrine or principle of revenue neutrality. We do not see how the same was inapplicable in the admitted facts and circumstances. 5. Even the order in original and the paragraph which was relied upon by Mr. Oak does not indicate that any other material or evidence was placed. The Tribunal has taken this factual position from order in original itself. The only procedure that was required to be complied with was clearance of the raw materials after reversing the credit availed on it. Thus, the duty amount should have been paid and thereafter when these inputs or raw materials were utilized in the manufacture of the final product ..... X X X X Extracts X X X X X X X X Extracts X X X X
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