TMI Blog2018 (3) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... sees have manufactured their final products by procuring locally manufactured scrap , is also not backed up by any corroborative evidence and can at best be termed as an assumption - there is no evidence of suppliers of local scrap, transporters, payment to such suppliers etc. The case of the department therefore does not sustain on merits. Time limitation - Held that: - Appellants have stated that they have not benefited otherwise by taking any irregular credit as alleged by the department. The proviso to Section 11 A (1) would be attracted when there is suppression of facts with intent to evade payment of duty. The department has no case that appellants utilized the alleged wrongly availed credit to discharge duty liability. There is no evidence coming forth in this angle. Tthe proceedings initiated by the department which have resulted in the appeals filed by SRIPL Unit I & II and other co-noticees are not only hit by limitation for the predominant period covered in the SCN, but more particularly cannot be sustained on merits. Appeal allowed - decided in favor of appellant. - E/390/2009, E/367/2009, E/368/2009, E/378/2009, E/219/2010, E/205/2010, E/206/2010, E/189/2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 15 (1) of CCR, 2004. Hence appeal No.E/390/2009 by SRIPL, Unit-I. The following penalties were also imposed under Rule 25 26 of CER 2002 on the co-noticees, who have filed appeals as noted under:- i) ₹ 4,50,000/- on M/s.Lakshmi Traders ii) ₹ 11,50,000/- on M/s.Sree Vishnu Steels [Appeal No.E/368/2009] iii) ₹ 2,50,000/- on M/s.R.K. Steels Alloys [Appeal No.E/367/2009] iv) ₹ 3,10,000/- on M/s.Ubique Steels Alloys [Appeal No.E/378/2009] 3. On similar allegations department initiated proceedings against Sri Ranganathar Industries Pvt. Ltd., Unit-II (hereafter referred to as SRIPL, Unit-II by way of issue of a show cause notice dt.09.10.2007 alleging that the said assessee had actually received non-duty paid SS scrap and MS scrap in the guise of HR coil, HR sheets, MS rounds, MS bar rods, MS wire coils etc. from various registered Central Excise dealers and thereby had fraudulently availed ineligible cenvat credit of ₹ 40,97,755/-. The said amount of cenvat credit along with interest was proposed to be recovered from SRIPL, Unit-II along with imposition of penalties under various provisions of law. The concerned Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant never indicated inputs consumed by them as Stainless Steel Sheets, mild steel sheets etc. It has always been their claim that they are using only scrap of mild steel and stainless steel. The purchase order would also indicate the above fact. The show cause notice alleged that the materials received by the appellant are non-dutypaid goods, which is without any basis or without any evidence. This presumption of the Department is totally incorrect for the simple reason that the appellant has been paying the supplier of raw material by way of cheque only, it includes the excise duty element. If the appellant had received non duty paid goods then they would not have paid the excise duty element to the Registered Dealers who supply the same. ii) There was no necessity for the appellant to buy non duty paid goods under the guise of duty paid invoices for the following reasons: a. The appellant was very particular about the quality of the raw material and therefore a sample would be tested before taking the scrap inside the factory. b. Further major portion of the goods (nearly 90%) manufactured by the appellant are cleared for export. c. The appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id inclusive of central excise duty. While so, there is no justification to demand the said credit from the appellant based on the allegation that they have taken credit on non-duty paid goods. vi) There is nothing on record to show that the material supplied to the appellant has not suffered central excise duty. vii) Show Cause Notice C.No.V/72/15/155/2000 Cx.Adj (Sl.No.171/2001) dated 18.4.2001 was issued earlier by the Joint Commissioner of Central Excise, Coimbatore on similar lines for the period from 10.10.1998 to 1.4.2000. In that notice also it was alleged that the appellant availed credit on non-duty paid goods viz., SS Scrap and MS Scrap. It was alleged that the inputs actually received by the appellant was different from the products described in the invoice and they had suppressed the fact and wrongly availed the duty paid on MS Sheets/Plates. A perusal of the show cause notice would show that similar issue was dealt with earlier and thereafter orders were passed against the appellant by the original adjudicating authority which was upheld by the appellate authority. Thereafter the Hon ble Tribunal vide Sivamani Co. and Sri Renganathar Industries (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the investigation conducted in respect of the testing of the raw material received and also the statements of concerned persons, it is also been established that the raw material received is nothing but scrap. iii) At the time of visit of the factory no raw material in the form of HR coils / sheets were found; the only raw material that was found was 4000 MTs of scrap whereas the assessee had taken cenvat credit on HR coils, SS Coils etc. Thus the purchase order, commercial invoices, GRN, testing in lab, all indicated the raw material used by the appellant as scrap, whereas, the cenvat invoices only showed the items as HR Coils, SS coils etc.. Further, invoices issued by the registered dealers reflected a lower price of SS coils etc. against the original purchase price at which the dealers had obtained such goods. It does not make business prudence that dealers would resell SS coils / plates etc. at lower price than what they had paid for them. This also clearly indicates that although raw material had been shown as SS coils etc.in the cenvat invoices however only much cheaper scrap was actually sent by the dealers and received by SRIPL Unit-I and Unit-II. iv) It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is no need for them to avail wrong credit as they are accumulating the credit balance since 90% of their goods are exported and that therefore there is no intention to evade payment of duty. When assessee has availed credit wrongly, the Commissioner (Appeals) need not look into the question whether such act benefitted them or not. The issue whether there is intention to evade payment of duty need not be considered when it is established that credit has been fraudulently availed. 6. Heard both sides. In our view, the core issues that come up for decision in this matter can be framed as under: (1) Whether there is sufficient evidence that SRIPL Unit I II had availed cenvat credit on invoices issued by dealers declaring despatched items as SS sheets/MS sheets, coils etc. and that actual goods received by SRIPL Unit I II was only MS/SS scrap. (2) Whether the proceedings per se are hit by limitation since on similar dispute related to inputs CESTAT Chennai vide Final Order No.946-947/2005 dt. 06.07.2005 had held in favour of SRIPL and the supplying dealer M/s.Sivamani Co. Private Ltd. 7. The assessees have been at pains to contend that the raw material re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assertions given by that person has been brushed aside on the ground that it was just an argument after a long time gap to counter the version made earlier. It is also relevant to note that the said Shri K. Velusamy had, through his statement dt. 18.11.2006 read with his cross examination on 07.08.2008, retractedhis admissions made earlier. Shri K. Velusamy had stated that officers had visited premises four times earlier and that it was suggested by them that he had to admit that he received only cenvat invoices. So also we find that V. Ananthan in his initial statement dt. 21.11.2006 had given a statement inter alia that he gets only Central Excise invoices and commercial invoices through agents of first stage dealers andmanufacturers and no goods are being received by him. However, at the time of cross examination on 07.08.2008, V. Ananthan stated that he has given such statement because he was threatened by officers. Once the initial admittory statements have been retracted in cross examination, the department s reliance on those statements in support of their allegation will naturally get demolished. 9. Another contention of the appellant is that they received only good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssification of these goods under Chapter 72 of the CETA Schedule, area is irrelevant. Sheets, plates etc. Classifiable under heading 7208 are so classifiable in reduced area also. Hence the cuttings suppliedby SCPL to SRIL cannot be treated differently from the sheets, plates etc. From which they were cut. In selling the cuttings to M/s.SRIL, SCPL were only dealing in sheets, plates etc. hence the cuttings were correctly declared by SRIL. As the department has not case that SRIL took Modvat credit of duty in excess of what was paid on the cuttings by SCPL, there is no dispute in terms of the quantum of credit. In the circumstances, I hold that M/s.SRILwere taking Modvat credit on cuttings of plates, sheets, etc. Classifiable under heading 72.08 as declared by them under Rule 57F and were not taking credit on scrap (Heading 7204) as alleged by the department. They were eligible for the credit. It would follow that no offence can be attributed to SCPL in connection with the regular availment of credit by SRIL. 11. We thus find that the main planks of the department s case against the assessee do not stand to scrutiny. There is also no other cogent or compelling evidence which ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay - 1995 (75) ELT 721 (SC) holding that it is not correct to say that there can be suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of proviso to Section 11A (1) of the Central Excise Act. The relevant paragraphs of above Supreme Court judgment are reproduced as under: 4. In short, the Tribunal was of the opinion that so far as fraud, suppression or mis-statement of fact in the information statutorily required to be supplied to the excise authorities is concerned, question of intent is immaterial. 5. The main limb of Section 11A provides limitation? of six months. In cases, where the duty is not levied or paid or short-levied or short-paid or erroneously refunded, it can be recovered by the appropriate officer within six months from the relevant date.(The expression `relevant date is defined in the Section itself). But the said period of six months gets extended to five years where such non-levy, short levy, etc., is by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules with intent to evade payment of duty.. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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