TMI Blog2018 (8) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2-2018 - MR. K. S. JHAVERI AND MR. VIJAY KUMAR VYAS, JJ. For The Appellant(s) : Mr. Kinshuk Jain For The Respondent(s) : Mr. Sandeep Taneja with Mr. Kartikeya Sharma Order 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal of the assessee. 2. This court while admitting the appeal on 12. 07. 2017 framed the following question of law:- Whether the Hon ble CESTAT was correct in setting aside the applicable interest statutorily required under Section 11AB/Section 11AA of Central Excise Act, 1944 and the equal penalty imposed mandatorily u/s 11AC of Central Excise Act, 1944 on the assessee? 3. The brief facts of the case are that acting upon an intelligence that M/s S Pal Enterprises (Pvt. ) Limited, 521-22 RIICO Industrial Area, Chopanki, Bhiwadi are indulged in fraudulent availment of CENVAT Credit in the guise of transfer of material/ goods from their Gurgaon unit to Bhiwadi unit while no actual transaction of goods had taken place, officers of the Preventive Branch of Central Excise Division, Bhiwadi visited the factory premises of the assessee situated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Traffic Register number ( Wahan Aawagaman Panjika Kramank ) and signature of the concerned in- charge of check posts, thus, the stamps on the invoices do not appear to be genuine of Commercial Tax department . ( i) In terms of Rule 10 of CENVAT Credit Rules, 2004, if a manufacturer of the final products shifts his factory to another site, then, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred factory only if the stock of inputs as such or in process, or the capital goods, is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for, to the satisfaction of time Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Excise . ( ii) On all fifteen invoices 'shifting of raw material to new premises has been marked and Sh . Shishu Pal Garg in his statement dated 14 . 7 . 2008 admitted that they did not obtain any permission from Central Excise, Gurgaon in terms of Rule 10 of in CENVAT credit Rules, 2004 as required for tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoices are key statutory documents required to be prepared at the time of removal of the goods in terms of Rule 11 of the Central Excise Rules, 2002 . I further observed that Sh . Raj Kumar Kalra, in his statement dated 3 . 7 . 2008, has categorically admitted that they had issued thirteen different Grs between 5 . 5 . 2007 10 . 5 . 2007 showing transportation of goods of the unit from Gurgaon to Bhiwadi on truck no . HR- 55E-5728 HR-55E-5729 and all the consignments had been shown reached Bhiwadi on 11 . 5 . 2007, however, they had not transported these goods till 9 . 5 . 07 . Although, he had stated that the goods had been actually transported through different trucks in the night of 10 . 5 . 2007 and reached at Bhiwadi on 11 . 5 . 2007 . He had in fact confirmed that the trucks, numbers of which were mentioned in the invoices had not been used for transporting the goods and were in fact being used for transportation of other goods at different locations . He has also confirmed that on the day said GRS corresponding to the invoices were prepared they were not having the said trucks with them available for transportati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only if the stock of inputs/WIP/capital goods is transferred to the new site or ownership, that too, to the satisfaction of the Jurisdiction Assistant commissioner . During the course of investigation, sufficient opportunity was available to the appellant to produce evidences showing actual transportation, transfer of the goods as claimed by them . However, they have not been able to produce any evidence to this effect . Therefore, it cannot be said that there has been any compliance of the Rule which requires actual transfer of the goods before making the credit available for transfer . The appellant have also claimed that they had entered the goods in their statutory records and had removed the goods as such to M/s Sriram Cables after reversing the credit taken . They have submitted copies of invoices claiming to be evidence showing clearance of the said goods . I have seen these invoices which have been raised between dates 9 . 05 . 2007 to 15 . 05 . 2007 . These invoices, on the contrary, conclusively prove the Department's case . I find that two of these invoices were raised on 9 . 05 . 2007 (S . No . SPEPL/01 and SPEPL/02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and the other is a provision in the Rule. We are not also concerned in this case with any challenge to the inconsistency of a rule with any statutory provision in the Act. ( ii) Commissioner of Central Excise, New Delhi vs . Hari Chand Shri Gopal and Ors, 2010(260) E . L . T . 3 wherein it has been held as under:- 24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the essence or the substance of the requirements. Like the concept of reasonableness , the acceptance or otherwise of a plea of substantial compliance depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the sides and examined the appeal records . The denial of credit for the main appellant is mainly on the ground that the transport documents and the check post details raised a serious question regarding the bonafidiness of the transport of duty paid inputs lying in stock at their Gurgaon unit and later transported to the new Bhiwadi unit . After careful consideration of the appeal papers and arguments, I find that the following factors emerged as relevant :- ( a) There is no dispute regarding the raw material account and other statutory records maintained both at Gurgaon unit and Bhiwadi unit . When the licence was surrendered for Gurgaon unit, the officers conducted verification of records regarding input receipt credit availability etc . and finally the surrender of certificate was accepted on 18/2/2008 ; ( b) the truck numbers in the GR forms issued by the transport were apparently not correct . This by itself does not establish the nontransport of goods . The claim of the appellant that the usual practice of the transporters is to indicate some truck numbers as per the initial plan or to get business and later transport the goods through other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein it has been stated as under: ( v) Goods were not loaded as per the date time of removal given in the invoices but all the goods were actually loaded on 10 . 5 . 2007 and received in factory on 11 . 5 . 2007 . 11. He further contended that the defence which has been put forward by the assessee reads as under: A . RULE 10 OF CENVAT CREDIT RULES COMPLIED WITH SUBSTANTIALLY . i). They were having a factory at Gurgaon engaged in the manufacture of wires cables. They closed their factory at Gurgaon with effect from 01. 06. 2007 and started a new factory at Bhiwadi for manufacture of wires cables. They had inputs in balance with them at Gurgaon Factory. These inputs were transferred to their new factory at Bhiwadi through trucks provided by M/s Sai Ram Logistics Pvt. Ltd. They had taken the CENVAT Credit in their RG-23A Part-II at Bhiwadi. ii). Rule 10(1) of the Central Excise Rules, 2004 enables a manufacturer of the final products to transfer the CENVAT Credit lying unutilized in his accounts if he shifts his factory to another site. There is no dispute about the facts of them transferring their factory to another site. In view of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that the inputs were not removed from Gurgaon factory and were not received in Bhiwadi factory. (iii) It was further added that they have duly entered the inputs in RG23 Pt. I and credit in RG23A Pt. II at the Bhiwadi factory. There was no statement from any employee at Bhiwadi factory to the effect that the credit had been taken without the receipt of the inputs in Bhiwadi factory. In absence of any evidence, there was no substance in the allegation that they had manipulated RG23A Pt. I and Part- II Registers to justify the receipt. (iv) It was also submitted that that it has not been disputed in the show cause notice that there was no balance of inputs in the Gurgaon factory in the month of May, 2007. Further, there is neither any allegation nor any evidence has been adduced in the show cause notice that the inputs have been sold by Gurgaon factory to any other person. In absence of any evidence to the contrary, it was not open to the Department to allege that inputs were not received by the factory at Bhiwadi. Once the presence of balance of inputs at Gurgaon factory is not disputed, is receipt by new unit at Bhiwadi cannot be doubted when the gurgaon factory has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere duly accounted for in the books of accounts of the receiving factory. The ER-1 return for 5/2007 showing the inventory of input removed as such, Sales Tax stamp affixed on invoice showing entry of goods in Rajasthan through Sales Tax check post at Haryana-Rajasthan Border, entry of goods in the gate register of chopanki factory and their accounted in the book of account, ledger A/c showing payment of freight to the transport company and verification and audit of records of Gurgaon unit by the concerned Excise authorities are more than sufficient to prove the dispatch of goods from Gurgaon factory and their receipt in Chopanki Bhiwadi factory and their further removal on reversing of Credit to M/s Sriram Cables from Bhiwadi factory. (xii). It was further argued that it has been alleged in the show cause notice that vehicle Number RJ-01-09092 was not registered with Ajmer Transport office. In this regard, it was submitted that it has been presumed by the Department that RJ series is issued by Ajmer Transport Office without any basis and enquiry has been made from Ajmer Transport office only through Central Excise Ajmer. There is no letter directly issued by the Transport offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te is not sale has to prove that the Inter-State transfer is not sale by producing a declaration from branch from other State in prescribed form F . In the present matter, the F form was in existence which clearly goes to prove the transfer of goods from Gurgaon to Biwadi. It was added that it is provided in Section 6A(2) of the Central Sales Tax Act that if the assessing authority is satisfied that the particulars contained in Form F are true he may make an order so that effect. In the present matter the Assessing Authority had accepted the fact of Inter State transfer in the Assessment order. This clearly proves the transfer of goods from Gurgaon to Bhiwadi. (xv) It was also submitted that Superintendent Central Excise Range-VII. Gurgaon had directed their factory at gurgaon to produce records relating to inputs/semi finished goods (WIP) transferred to Bhiwadi factory from Gurgaon unit. They had shown these records to the Range Superintendent. It was emphasized that only after seeing these records, the Range Superintendent issued the letter dated 18. 02. 2008. (copy enclosed) conveying the acceptance of surrender of Registration Certificate by the Assistant Commissioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the Appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the Appellant wanted to cross-examine those dealers and what extraction the Appellant wanted from them. 6. As mentioned above, the Appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of crossexamination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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