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TMI Blog2018 (3) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... CETH No. 73 & 84. SRIPL, Unit-I were availing cenvat credit of inputs like Steel Scrap and MS scrap received mainly from Central Excise registered dealers. Pursuant to certain investigations, it appeared to the department that SRIPL, Unit-I had taken ineligible cenvat credit fraudulently on non-duty paid scrap in the guise of receiving HR coil, HR sheet, MS rounds, MS Bar rods etc. whereas they have received only MS scrap / SS scrap from the concerned Central Excise dealers. Accordingly, SRIPL, Unit-I was issued a show cause notice dt. 05.09.2007 inter alia proposing recovery of cenvat credit of Rs. 80,96,900/- on the goods received during August 2002 to October 2006 along with interest thereon and imposition of penalty under various provisions of law. The SCN also proposed imposition of penalties under Rules 25 and 26 of the Central Excise Rules, 2002 against M/s. Sree Vishnu Steels, M/s.Lakshmi Traders, M/s. R.K. Steels & Alloys and M/s. Ubique Alloys Pvt. Ltd. After due process of adjudication, the Commissioner vide impugned Order-in-Original No.06/2009 (Commr.) dt. 27.03.2009 inter alia, held that there is sufficient evidence, material as well as documentary evidence to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - on M/s.Sree Vishnu Steels [Appeal No.E/205/2010] iv) Rs. 5,00,000/- on M/s.R.K. Steels & Alloys [Appeal No.E/216/2010] v) Rs. 1,00,000/- on Shri R. Sekar, Manager of R.K. Steels & Alloys.[Appeal No. E/206/2010] In Appeal, the Commissioner (Appeals) vide impugned Order-in-Appeal No.06/2010-CE to 10/2010-CE dt. 29.01.2010 restricted the demand to the extent of recovery of cenvat credit to normal period of one year with interest thereon, reduced the penalty on SRIPL, Unit-II under Rule 13 (1) of CCR 2002 read with Section 38A of the Act, to Rs. 1,00,000/-. Appeal of Shri V. Narayanaswamy, Managing Director of SRIPL, Unit-II was allowed by setting aside penalty imposed on him. However, appeals of Sree Vishnu Steel, R.K. Steels & Alloys and Shri R. Sekar were rejected. Hence the last named three appellants filed Appeals E/205/2010, E/216/2010 & E/206/2010. Revenue aggrieved by impugned Order-in-Appeal dt.29.01.2010 against restricting the demand to normal period of one year and reduction of penalty on SRIPL, Unit-II filed Appeal E/189/2010 as also appeal E/297/2010 against dropping of penalty on V. Narayanaswamy, Managing Director of SRIPL, Unit-II. 4. On 14.02.2018, when the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by these people and categorically stated that he sent HR Coil and HR Sheets along with the CENVAT invoices. He had also pointed out that he gives HR Sheet, CR sheet, HR Coil, HRSTL coil which was cut according to the requirement of the customer. That the said statement is not made part of RUD in the show cause notice. iv) The appellant has not committed any mistake by taking credit based on the invoices issued by the Registered Dealers. The entire transaction with their suppliers of raw material is transparent and the records are clear. The appellant issues Purchase Order to their suppliers of raw material indicating the description of the material, chemical composition of the ingredients, quantity, rate etc. An endorsement is made on the invoice as follows : EXCISE DUTY : AS APPLICABLE AGAINST MODVAT INVOICE ONLY. S.T. INCLUSIVE IN THE ABOVE PRICE . From the above, it would be clear that only on production of central excise invoice indicating the duty element, the supplier would be paid the excise duty element. When the goods are received inside the factory the same is weighed and also tested in the lab. If there is a shortage the same is indicated in the internal document wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 only on 01.03.2007 whereas in this case, the impugned invoices are dated 16.06.2005 and 18.07.2005 and hence not applicable. Further penalty under Rule 26 can be imposed only upon the person and not on the company. ix) Ld. counsels relied upon the following case laws : (a) CCE, CUS & ST Vs Juhi Alloys Ltd. 2014 (302) ELT 487 (All.) (b) CCE, Mumbai-V Vs Mahindra & Mahindra Ltd. 2017 (350) ELT 492 (Bom.) (c) CCE Vs Tata Motors Ltd. 2013 (2940 ELT 394 (Jhar.) (d) CCE, Delhi Vs R.S. Industries 2008 (228) ELT 347 (Del.) (e) CCE,Chandigarh Vs Mini Steel Traders 2014 (309) ELT 404 (P&H) (f) Ram Ganga Cement (Pvt.) Ltd. Vs CCE, Meerut 2015 (321) ELT 299 (Tri.-Del.) (g) Manoranjan Singh Duggal Vs CCE, Delhi 2015 (325) ELT 892 (Tri.-Del.) 5. On the other hand, on behalf of the department, ld. A.R Shri A Cletus led the arguments and put forward various submissions which can be summarized as under : i) For melting only scrap can be used and that too in small pieces since mouth of the furnace is only 1 feet. If raw material is other than scrap as mentioned in Cenvat invoices, it does not make commercial senseto buy coils/sheets and then cut them to less than 1 feet size ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modus and is different method of suppression with intent to evade payment of duty. Hence the tribunal decision cannot help the assessee to argue that the present proceedings are hit by limitation. vi) As discussed in the impugned orders, the onus is very much on the person availing the credit to ensure genuine nature of the goods and the documents received before availing the cenvat credit. vii) Hence modus operandi of paper trading of invoices has been adopted in these cases. Cenvat invoices have been issued by certain dealers who supplied non-duty paid scrap to SRIPL Unit-I and Unit-II and yet issued Cenvat invoices for SS coils/plates etc.,without actually transacting goods shown in the invoices. Dealers have acted in connivance in the entire modus operandi which is fully established. viii) Revenue has filed appeals No. E/189/2010 & E/297/2010 being aggrieved by the order passed by Commissioner (Appeals) in setting aside the demand beyond the normal period. The Commissioner (Appeals) erred in setting aside the demand for the extended period when in para 4.9 he has observed that there is a racket for paper trading of dealers invoice widely in the area, and that appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved in the inputs as the Cenvat credit Rules 2002/2004. In the case before are M/s. Sree Vishnu Steels and M/s. Lakshmi Traders are second stage dealers whereas M/s. R.K. Steel and Alloys and M/s. Ubique Alloys are first stage dealers. Apart from these, department has recorded statement of Shri. Periakaruppan, who is also a first stage dealer.ShriA.Periakaruppan, Proprietor of M/s. Sri RaaghavendraSteels, one of the dealers, on 21.08.2007 deposed that they received HR sheet, CR sheet, HR coil, HR, SR coils from JSW Steel Ltd. and Salem Steel Plant Ltd., and sold to second stage dealers and few companies. He has unequivocally stated that he used to cut the above goods and sell as per customers requirements. That he had sold goods to second stage dealers such as M/s. Sree Vishnu Steels and M/s. Lakshmi Traders. Department has heavily relied upon the statement of ShriK. Veluswamy of M/s. Sree Vishnu Steels and Shri V. Aananthan of M/s. Lakshmi Traders contending that these two have stated that Shri Periakaruppan had sent only invoices without goods. However, Shri A.Periakaruppan, denied the statement of thesetwo persons and categorically reiterated that he had sent the goods (HR coi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no dispute over this factum, the department in that case found fault with the factum of the dealers, even after such cutting having issued invoices with the same description and classification as was described in the invoicesunder which they purchased from manufacturers. 10. Viewed in this light, there is no reason for us not to give credence to the statement of Shri A.Periakaruppan both in his initial statement and also in a subsequent one, who has asserted that he had supplied only such SS coils / plates etc. received from the manufacturers, after cutting them to size as was required by SRIPL. We are not able to understand how the department, in the present case, has differed with the stand that was taken in the earlier proceeding and further why statements of A.Periakaruppan have not been relied upon or made part of the SCN. At this juncture, it would be worthwhile to reproduce para-3 of CESTAT Final Order No.946-947/2005 dt. 06.07.2005 in the earlier proceedings as under : "3. The immediate question before me is whether M/s.SRIL are entitled to avail Modvat credit on the cuttings of plates, sheets etc. Supplied by SCPL. It is not in dispute that these are cuttings of pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder proviso to Section 11A (1) of the Central Excise Act on the ground that SRIPL, Unit-I have deliberately taken ineligible cenvat credit on non-duty paid scrap by committing fraud with an intention to evade payment of duty and utilising the said credit during the said period. So also, in respect of Appeal E/219/2010, the period involved is September& October 2006 and the SCN dt. 09.10.2007 has been issued similarly invoking extended period on the same grounds. We find that major part of the periods sought to be covered in the SCN are beyond the normal period of limitation. Although extended period of limitation has been invoked we are not able to appreciate how there can be an intent to evade payment of duty considering that the major chunk of their final products of these appellants were exported. 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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