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Judgment
The appellants are in appeal against the impugned order denying the cenvat credit to the appellant no.1 and imposing penalties on the all appellants.
The facts of the case are that premises of M/s Prem Steel & Metals Pvt Ltd (appellant no.1) were searched on 18.01.2011. During the course of
stock taking, the shortage of 245.860 MT of pig iron was found and Shri M R Jaidka, Director of Prem Steel & Metals Pvt Ltd (appellant no.2)
admitted the shortage and debited the duty involved. On the basis of that shortage, further investigation was conducted and it was found that during
the period 01.04.2010 to 18.01.2011, the appellant received various goods/inputs and taken cenvat credit thereon but after compilation of the chart, the
cenvat credit sought to be denied as per the ‘Annexure-A’ of the show cause notice, which is reproduced as herein below:
During the course of investigation, it was also found that the dealers have admitted that they have supplied the goods ex-godown and they do not know
how the goods have been transported by the appellant no.1. Moreover, when the investigation was conducted with the transport authorities, it was
found that some of the vehicles are auto-cycles, some are tractors, scooters and light goods vehicles, therefore, the cenvat credit on the above 14
invoices sought to be denied by issuance of the show cause notice dt. 29.05.2015 and to impose penalties on the other appellants. The matter was
adjudicated. Cenvet credit as proposed in the show cause notice was denied and penalties were imposed on all the appellants. Against the said order,
the appellants are before me.
Shri Sudhir Malhotra, the ld. Counsel appeared on behalf of the appellants namely Prem Steel & Metals Pvt Ltd (appellant no.1) and M R Jaidka
(appellant no.2), submits that in this case, one of the vehicle having registration no. PB-32A-3844 is stated to be light goods vehicle and it has been
alleged that the same is not able to transport the goods, but in the case of M/s Ram Parkash & Sons, one of the supplier of the appellant, the ld.
Commissioner (Appeals) vide Order No. LUD-EXCUS-001-APP-1302-18 dated 19.06.2018 has found after investigation that the said vehicle is a
heavy goods vehicle and is capable of transportation of the goods, therefore, the allegation that the vehicle in question is not capable of transportation
of the goods is not correct. It is further submitted that whatever goods have been received by the appellants were used in manufacture of the final
goods on which they have paid the duty, therefore, they are entitled for the cenvet credit.
Shri Sudeep Singh Bhangoo, the ld. Counsel appeared on behalf of M/s Madan Industrial Corporation (appellant no.3), submits that during the
course of investigation they have made a categorical statement that they have supplied the goods and received the payments and the transportation
has been arranged by the manufacturer/buyer, therefore, the penalty on the appellant cannot be imposed.
On the other hand, the ld. A.R. for the Revenue submits that during the course of investigation, it is an admitted fact that the shortage of 245.860
MT of pig iron was found and the same has been admitted by the appellant no.2 who has agreed to reverse the cenvet credit availed thereon, clearly
indicates that the appellant no.1 was engaged in the activity of availing the cenvet credit without receiving duty paid goods. It is further submitted that
during the course of investigation, it was found that some of the goods, on which no duty is payable, were found unloading in their premises which
creates doubt that the appellant is procuring the duty free goods to manufacture their final product. It is further submitted that screen reports of the
vehicles involved were also procured from the D.T.O., which clearly shows that some of the vehicles are not capable of transportation of the goods in
question, therefore, on those goods, the cenvet credit is to be denied. It is further submitted that in the case of M/s Marwah Trading Co. Batala, the ld.
A.R. produced the copy of the order passed by this Tribunal today itself and he is not able to go through the said order to confirm the fact that it is in
the case of appellant or some other case.
Heard the parties and considered the submissions.
It is a fact on record that during the course of investigation, shortage of inputs was found. Further, duty free goods were also been unloaded which
creates doubt that the appellant is procuring duty free goods and procuring invoices to avail the cenvat credit without receiving the goods; therefore,
investigation took place. In the annexure to the show cause notice at Sr.No.1 & 2, the vehicles were found to be auto cycles and transportation of
goods has been arranged by the appellant themselves. In these circumstances, the cenvat credit is not admissible to the appellant on the invoices
issued by Kanhya Lal Jai Narain at S No. 1&2 of the SCN. Further, with regard to the invoice issued by Ram Parkash & Sons, their vehicle found to
be Tractor Trailer and it has been alleged in the show cause notice that some of the vehicles were light goods vehicles which were later found to be
heavy goods vehicles further the Tractor Trailer is capable of transportation of the heavy goods; therefore, I hold that on the invoices issued by Ram
Parkash & Sons, the appellant is entitled to avail the cenvat credit and to that extent, no penalty can be imposed on the appellant at S.No. 3, 4, 9-13 of
the SCN. With regard to the invoice issued by Marwah Trading Co. Batala, the appellant has produced the decision of this Tribunal vide Final Order
dt. 29.08.2019 wherein penalty against Marwah Trading Co. has been dropped by this Tribunal observing as under:
“6. I find that in this case, the appellants are selling the goods at their factory gate and the transportation has been arranged by the
buyers themselves. These facts have not been disputed by the Revenue. Moreover, the buyers of the goods have never named the appellants
that they have not received the goods from the appellants and received only invoices. In these circumstances, without investigating the
appellants in detailed, penalty under Rule 26 of the Central Excise Rules, 2002 is not imposable. Therefore, penalty imposed on the
appellants is set aside.â€
and the ld. Counsel for the appellant has stated that the said penalty order is in the case of appellant themselves. In that circumstance, benefit of doubt
goes in favour of the appellant. Therefore, for invoices issued by the Marwah Trading Co. at SNo. 14 of the SCN, the appellant is entitled to avail the
cenvat credit.
In the case of invoices issued by M/s Madan Industrial Corporation, the ld. Counsel has stated that they asked for D.T.O. report which was not
supplied to them. Moreover, it is their statement on record that they have supplied the goods and received the payments and the buyer has arranged
for transportation of the goods. In that circumstance, penalty on M/s Madan Industrial Corporation cannot be imposed, but it is also a fact that the
transportation has been done by the appellant themselves and as per the D.T.O. report, the vehicles involved are scooters, which are not capable of
transportation of heavy goods, therefore the cenvat credit to the manufacturer/buyer is denied mentioned at SNo. 5-8 of the SCN.
In view of the above discussion, the following order is passed:-
a) cenvat credit is denied in some of the invoices namely issued by Kanhya Lal Jai Narain and M/s Madan Industrial Corporation to appellant no.1.
The same is required to be paid along with interest and if already paid, be adjusted.
b) penalty is imposable on the appellant no. 1 to the extent of denial of cenvet credit.
c) no penalties imposable on M/s Madan Industrial Corporation (appellant no.3). Penalty on the M R Jaidka is reduced to Rs.50,000/-.
With above terms, the appeals are disposed of.
(Dictated and pronounced in the open court)