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Joginder Castings (P) Ltd V/S CCE, Chandigarh-I

    Appeal No. E/385/2012 [Arising out of the Order-in-Appeal No. 443/CE/CHD-I/2011 dated 22.11.2011 passed by the CCE (Appeals), Chandigarh-I] and Final Order No. 61164/2017

    Decided On, 20 June 2017

    At, Customs Excise Service Tax Appellate Tribunal Chandigarh Bench

    By, MEMBER

    For Petitioner: Sudeep Singh, Advocate And For Respondents: G.M. Sharma, AR

Judgment Text

1. The dispute in the present appeal relates to the cenvat credit of Rs. 15,56,037/- availed by the appellant on the basis of invoices by the registered dealer M/s. Sidh Balak Enterprises Mandi, Gobindgarh.

2. As per facts on record, certain investigations were made at the end of manufacturer of steel ingots M/s. Jay Alloys who were clearing their final product through the consignment agent M/s. Ved Trading Co. Who in turn was clearing the same to various traders/dealers of Mandi Gobindgarh. As per the said allegations, there was no clearance of steel ingots from the manufacturing units and only invoices were being issued. However, investigations conducted at the end of registered dealer M/s. Sidh Balak Enterprises, the Revenue found that godown address given by him at the time of registration as a dealer was subsequently vacated and the said dealer was not actually dealing in the goods in question as such, the Revenue entertained a view that such dealer was issuing only invoices without the corresponding supply of goods.

3. On the above basis, proceedings were initiated against the appellant by way of issuance of show cause notice dated 02.04.2009, proposing to disallow the cenvat credit of Rs. 15,56,037/- availed by the appellant during September 2004 to March 2005 on the basis of invoices issued by the said dealer. The said show cause notice was contested by the appellant before the original adjudicating authority on various grounds, which did not find favour with the adjudicating authority who confirmed the demand along with confirmation of interest and imposition of penalty. The said order stand upheld by the Commissioner (Appeals).

Hence the present appeal.

4. After hearing both the sides, I find that the short issue required to be decided is as to whether the appellant is entitled to avail the credit on the basis of invoices issued by Sidh Balak Enterprises, who according to the Revenue was not actually supplying the goods. The appellants have challenged the said order on merits as also on limitation. I find that in terms of provisions of Rule 7 of Cenvat Credit rules, the assessee is required to ensure the genuineness of the supplier of the inputs by taking reasonable steps. Explanations attached to the said Rule is to the effect that manufacturer shall be deemed to have taken the reasonable steps, if he can satisfy himself about the identity and address supplied on certificate issued by the Superintendent of Central Excise. When a dealer is registered with the department and is issued cenvat credit invoices, duly incorporating the excise registration number. It has to be held that manufacturer has duly complied with the requirement of verifying the identify and address of the supplier. Subsequent investigations relied upon by the Revenue revealed that godown address were subsequently changed by M/s. Sidh Balak Enterprises. This shows that during the relevant period it was rightly registered at the address given at the time of registration. It is not also disputed that the invoices were actually issued by M/s. Sidh Balak Enterprises, on the basis of which the appellants have availed the credit and the same were being duly reflected by them in their RG 23A Part I and credit was reflected in their RG 23A Part II registration. Such registers were being annexed by them in the quarterly return filed with the department and no objection was ever taken by the department. Further, I find that in the case of Shakti Steel Rolling Mills : 2014 (304) ELT 108 (Tri. Del.). This Tribunal has observed as under para 5, 6, 7 & 8:

"5. I have also seen a sample invoice and find that the address of the manufacturer is M/s. JTG Alloys Pvt. Ltd., Mandi Gobindgarh. As such, it becomes clear that the investigation conducted at the manufacturer's end M/s. Jay Alloys at their factory address located in Himachal Pradesh has got nothing to do with the invoices received by the present appellant in as much as admittedly the manufacturer in the present appeal is different. Further M/s. Sidh Balak Enterprises has nowhere named the present appellant as a person to whom only invoices were issued without the corresponding supply of goods. The payments of all the supplies is made by the appellant through cheque and it is not the Revenue case that any money stand paid back to them in lieu of cheque.

6. The Tribunal in the case of CCE, Chandigarh V. Neepaz Steel India (2007(213) ELT 100) has held that payment of the raw material through cheque and demand draft establishes the appellants case as regards the receipt of inputs in the absence of any alternative source of procurement of raw materials. In the case of M/s. Shyam Forgings Pvt. Ltd. V. CCE, Kolkata-II (2005 (192) ELT 255 (Tri. Kol.)), it was held that if the dealer from whom the inputs were purchased had been found as not having any godown, the credit taken on the inputs cannot be denied. The Hon'ble Karnataka High Court in the case of CCE, Bangalore V. Bhuwalka Alloys Pvt. Ltd. (2012 (281) ELT 213 (kar.)) held that even where the dealer was not found on the address mentioned in the invoices and no business activity was found therein, the cenvat credit cannot be denied which stand availed on the basis of genuine invoice issued by said dealers. I also find that Tribunal's decision in the case of Luxmi Metal Industries V. CCE, Delhi-II (2013 (287) ELT 487 (Tri. Del.) as also in the case of Commissioner of Cus. & Central Excise, Kanpur V. R.H.L. Profiles Pvt. Ltd. (2013 (292) ELT 313 (Tri. Del.)) has held that denial of cenvat credit availed on the basis of proper invoices issued by the registered dealer is not justified in as much as buyer cannot be expected to go beyond so as to verify and to find out as to whether the registered dealer has purchased the said inputs legally or not. The Tribunal's decision in the case of Shakti Roll Cold Strips Pvt. Ltd. stand confirmed by Punjab and Haryana High Court in the decision reported as (2008 (229) ELT 661 (P&H)) and further by the Hon'ble Supreme Court in the case as reported in (2009 (242) ELT A83 (S.C.)). Reference can also be made to another decision in the case of Rajan Engineering Works V. CCE, Delhi-IV, Faridabad (2012 (279) ELT 306 (Tri. Del.) as also in the case of Commissioner of Central Excise, Mumbai V. Prakash Industrial Corporation (2009 (248) ELT 536 (Tri. Mum.)). It stands held in the said decision that in the absence of complete investigation conducted by the Revenue as regards the actual vehicle number used in the transportation of goods and in the absence of corroborating evidence, denial of credit cannot be held on mere facts of input supplier.

7. On the other hand, I find that the appellants in their statements recorded during investigation have taken a categorical stand that they have received the inputs alongwith invoice. The Revenue has not made any investigations with the transporter so as to arrive at the correct factual position as to whether the inputs were supplied or not. The Revenue has now placed on record a letter written by the Assistant Commissioner wherein certain investigation stand conducted at the appellate stage, recording the statement of cousin brother of owner of the vehicle laying down that such vehicles were not used for transportation of the goods. However, I find that in the said statement, which stand remained with his brother only and was driven by the drivers employed by them as also by his brother. He has nowhere disclosed that he was aware of movement of said truck. In such a scenario, the submission of brother disclosing that this truck was never used, is without any evidentiary value. The Assistant Commissioner in his letter has also addressed that said matter pertained to the year 2005 and documentary evidence cannot be adduced at this appellate stage. As regards the second truck, he has disclosed in the said letter that the owner of the same could not be traced.

It is not understood why such an inquires from the transporter were not made during the relevant period. In any case, the Revenue has not produced any evidence to reflect that the appellant has procured the raw material from some other alternative sources. Admittedly the inputs stand reflected in the RG I register and stand used by the appellant in the manufacture of their final product, which stand cleared on payment of duty. In the absence of any evidence to show that such raw material was procured from other sources. The Revenue's case that no inputs were received by the appellant cannot be held sustainable.

8. An identical dispute was the subject matter of another decision of the Tribunal in the case of Talson Mill Store V. CCE & ST, Ludhiana vide its Final Order No. A/976/2012-SM(BR) Tribun

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al held in favour of the assessee and has held that reliance on the sole statement of representative of M/s. Sidh Balak Enterprises cannot be appreciated. In as much as the facts in the present case are identical to the facts and circumstances of the case of Talson Mills Store, by following the same as also the pronouncement of law made in the above referred various judgments of the Tribunal, I set aside the impugned order and allow the appeal with consequential relief to the appellant." 5. As in similar investigation this Tribunal held that cenvat credit cannot be denied to the appellant and admittedly the appellant have followed the procedure of under Rule 7 of the Cenvat Credit Rules 2004, while procuring the input, therefore, following the case of Shakti Steel Rolling Mills (Supra), I hold that the appellant have correctly taken the cenvat credit. In that circumstances, the impugned order is set aside and the appeal is allowed with consequential relief, if