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TMI Blog2023 (10) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... rst Schedule of the Central Excise Tariff Act, 1985. It avails CENVAT credit on the inputs which it receives and uses in the manufacture of the final products. Based on an investigation report of the Directorate General of Central Excise Intelligence dated 17.07.2015 and an alert notice dated 05.1.2016, officers of the Central Excise Commissionerate, Jaipur initiated enquiries from the second stage dealer of Jaipur M/s Shree Mahalaxmi Scrap Trading Company who had supplied scrap to the respondent to ascertain the names of the first stage dealers from whom M/s Shree Mahalaxmi purchased the goods and also the names of the manufacturers whose goods were supplied. Statements were recorded and after completing the investigation, a show cause notice dated 13.02.2018 was issued to the respondent proposing to recover CENVAT credit of Rs. 89,91,247/- under rule 14 of the CENVAT Credit Rules, 2004 [CCR] read with section 11A (4) of the Central Excise Act , 1944 [the Act]. Interest was also proposed to be recovered under rule 14 of CCR read with section 11 AA of the Act. Penalty was proposed to be imposed under rule 15 (2) of CCR read with section 11AC of the Act. After considering the writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kulti Asansol-III Division, Dist. Burdwan; (e) RUD-5-Statement dated 15.07.2014 of Shri Ajay Kumar Sharma Proprietor of M/s Hari Om Steel Jamshedpur & M/s Hari Om Udyog, Purulia, West Bangal; (f) RUD-6- Statement dated 20.07.2016 of Shri Vakil Luhar, proprietor of M/s Shree Mahalaxmi Scrap Trading Co., Jaipur (g) RUD-7- Statement dated 20.07.2016 of Shri Manoj Vijay, Authorised Signatory of M/s Shree Mahalaxmi Scrap Trading Co., Jaipur; (h) RUD-8- Statement dated 30.01.2017 tendered by Shri Dharamveer Singh, Director of the assessee; (i) RUD-9- Invoices raised by M/s Shree Mahalaxmi Scrap Trading Co., Jaipur on whose strength CENVAT credit has been availed. 5. Learned authorized representative submits that the impugned order is NOT proper and legal as the Commissioner (Appeals) ignored the following findings; i. the Central Excise duty was not paid or credited to the Government Exchequer by the non-existent/ existent manufacturers and, therefore, the CENVAT credit availed on the basis of dealers invoices issued on the basis of invoices of the said manufacturer is irregular/invalid; ii. The Superintendent of Central Excise, Burdwan sent a letter dated 31.05.2016 to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the invoices of "manufactures" who did not exist on pay duty. viii. The assertion of the respondent that since the full value of the invoices has been paid through the banking channels, CENVAT must be available cannot be accepted for the reason that the goods which were supposed to have been received by the appellant were not even manufactured by the manufacturers indicated in the invoices. The simple fact that the appellant had paid an amount to its dealer as representing excise duty makes no difference to admissibility of the CENVAT credit. ix. Respondent had pleaded that the adjudicating authority had not followed the procedure under section 9D and, therefore, the statements made before the Central Excise Officers cannot be admitted as evidence. This assertion is not correct; personal hearing was fixed on 06.08.2018 and 11.02.2019 but nobody appeared from the respondent side. Of the three manufacturers the statement of only M/s Aditya Enterprises was recorded and it was called for examination/ cross-examination but the owner of this firm sent an email stating that he was no direct or indirect involvement with the case and framed by someone and his financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent. Revenue is relying upon the statement of Vijay that the goods were not received in the premises of M/s Mahalaxmi. It is true that the goods have not gone to the premises of second stage dealers because the goods were, on account of second stage dealer, directly sent to the respondent. (c) Revenue has not disputed that final products were actually manufactured and sold by the respondent. It would not have been possible to do so unless it had received the inputs for use in their manufacture. (d) All payments were made by the respondent through banking channels only to the dealers who have supplied the goods under the cover of cenvatable invoices. There is no allegation or evidence of flow back of cash to the respondent. (e) Reliance has been placed on the judgment of Allahabad High Court in Commissioner of Central Excise and Service Tax, vs. Juhi Alloys Limited [2014 (302) ELT (481)], wherein it was held that it would impractical to require the respondent to go behind the record maintain by the first stage dealer to ascertain the original manufacture is issuing or not. The High Court held that CENVAT credit should be allowed if the respondent acted with all reasonable d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the period. This is also substantiated by inquiries by the revenue. Insofar as the other two manufacturers, namely, M/s Vedic Chemicals Pvt Ltd. And Ganpati Enterprises, Dhanbad are concerned, the jurisdictional officers reported that these companies did not manufacture any goods at all during the relevant period nor were they even find present at the premises. Statement of Manoj Vijay, the authorized signatory of the second stage dealer, who issued the invoices was recorded and he was also cross-examined before the adjudicating authority. He asserted that they never received the goods in their premises and issued invoices on the strength of invoices issued by the first stage dealer. The case of the revenue is that it implies that goods were never supplied at all. The explanation of the respondent is that the goods were sent directly to their premises without first transporting them to the premises of the second stage dealer. This assertion is also confirmed during cross-examination of Manoj Vijay. 11. We find that the show cause notice is based on 9 relied upon documents of which one is a set of the invoices in dispute (RUD-9). These are alleged to be ineligible for CENVAT cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provision of sub-section (1) shall, so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court." 9. A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set out the 3 of 10 CWP No. 12714 of 2016 circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Additional Director, DGCEI indicating that intelligence was received, the letter of the Additional Commissioner, Dhanbad, which is an alert notice indicating that Ganpati Enterprises was found to be non-existent and the letter of superintendent of Central Excise, Burdwan indicating that M/s Vedic Chemicals Pvt Ltd is also closed. 16. In our considered view, these three letters by themselves are not sufficient to establish that no goods were supplied to the respondent and only invoices were supplied on the strength which the respondent had taken CENVAT credit. It needs to be pointed out that the respondent is a user of the scrap which it procured from second stage dealer. The second stage dealer procured the goods from the first stage dealers, who, in turn, indicated that they purchased from the manufacturers. 17. The buyer of scrap or input is not required to launch an investigation to find out if his supplier had, in turn, purchased the goods properly from his suppliers (first stage dealer) and that first stage dealer had, in turn, purchased the goods from the manufacturer and if that manufacturer had, during the relevant time, manufactured the goods and also paid excis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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