P.V. Subba Rao, Member (T)
1. M/s. Shri Vinayak Prime Alloys (Pvt.) Ltd. the appellant filed this appeal to assail the order-in-appeal dated 04.9.2020 impugned order passed by the Commissioner (Appeals), Jaipur whereby he upheld the order-in-original dated 07.01.2019 passed by the Additional Commissioner and rejected the appellant’s appeal.
2. We have heard Shri Bipin Garg, learned counsel for the appellant and Shri Rakesh Agarwal, learned authorized representative for the Revenue and perused the records.
3. The appellant manufactured mild steel ingots from scrap. It availed Cenvat credit under the Cenvat Credit Rules, 2004 CCR. Receiving intelligence from DGCEI and after investigation a show cause notice SCN dated March 2018, was issued to the appellant covering the period 4 March 2013 to 31 October 2014 proposing to deny Cenvat credit of Rs. 71,12,227/- and recover the same from the appellant and to impose penalties. These proposals in the SCN were decided by the Additional Commissioner in his order-in-original confirming the demand of Rs. 71,12,227/- and imposing a penalty of equivalent amount under CCR, 15 (2) readwith Section 11 AC of the Central Excise Act. Further, he imposed a penalty of Rs. 7,00,000/- on Shri Gaurav Periwal, Director under Rule 26 of Central Excise Rules.
4. Learned counsel for the appellant made the following submissions :-
(i) the appellant manufactures MS Ingots. Receiving some intelligence from DGCEI, Jamshedpur that non- existent manufacturers and dealers registered with the Central Excise Department were providing only invoices and not the goods and that the recipients of such invoices have been availing Cenvat credit on the strength of such invoices, the Assistant Commissioner of Sikar, Rajasthan had sought some documents from the appellant which the appellant provided. After recording statements of such manufacturers and dealers and commission agents, the SCN was issued.
(ii) None of the manufacturers/dealers/commission agents said that they had provided only invoices without supplying with the goods. Shri Jitu Agarwal, Proprietor M/s Tirupati Associate, Jaipur and Shri Akhil Khandelwal, Proprietor of M/s A.K. Sons, Jaipur clearly stated that they issued invoices and billed to the parties and are not aware if only invoices were given to the purchaser. Shri Akhil Khandelwal of M/s A.K. Sons also said that he received payment for the goods through RTGS.
(iii) Shri Gaurav Periwal, Director of the appellant in his statement dated 08.11.2016 confirmed that he had checked on ACES website, the authenticity of the dealers and purchased goods.
(iv) The allegations in the SCN was denied by the appellant and specific request was made for cross- examination of the witness. Although the Adjudicating Authority called the witnesses they never turned up.
(v) The entire case of the Department based on presumptions and assumptions there is no evidence that the appellant had received only invoices and not goods.
(vi) Undisputedly, all the manufacturers/dealers and commission agents were registered with the Central Excise Department and had issued proper invoices.
(vii) The payments for the goods were made through banking channels.
(viii) All the raw material was entered in the appellant’s RG
23A register and there is no evidence the appellant had not received the inputs or manufactured the final products or cleared the final products. The Adjudicating Authority did not give any findings on these submissions. There is no force in the arguments of the Department that only invoices were supplied without supplying the goods and that the appellant had taken Cenvat credit on the strength of such invoices. The entire evidence is to the contrary.
(ix) There was no suppression on the part of the appellant and the Department also did not prove it.
5. Learned authorized representative for the Revenue vehemently supports the impugned order. He submits that Section 9D of the Central Excise Act provides for the mechanism to be followed to make statements recorded by the Central Excise officer relevant to the proving the facts; there are exceptions to this provision. In this case, the witnesses were called for cross-examination but they did not turn up. Under these circumstances, the officer had no choice, but to depend on the statements already recorded. Therefore, there is no infirmity in the impugned order.
6. We have considered the submissions on both sides.
7. The SCN alleges that the appellant had only received invoices and no goods and on the basis of such invoices it had taken Cenvat credit. The SCN is based on 34 Relied Upon Documents (RUDs) of which RUD-1 is the worksheet of the 78 invoices issued by six dealers credit taken on the strength of which is sought to be denied. Most of the remaining RUDs are merely correspondence between different officers or between officers and persons summoned to give statements only 7 RUDs are statements recorded. These are as follows :-
RUD 19 – statement of Shri Gaurav Periwal, Director of the appellant
RUD 29 – statement of Shri Ajay Kumar Sharma, Proprietor of M/s Hari Om Steel
RUD 31 – statement of Shri Dharamveer Kumar, Director of M/s A.S. Infratel P. Ltd.
RUD 32 – statement of Shri Sudarshan Singh, Proprietor of M/s Aditya Enterprises
RUD 33 – statement of shri Satish Pandey, Proprietor of M/s Bajrang Steel Traders
RUD 34 – statement of Shri Jitu Agarwal, Proprietor of M/s Tripati Associates
RUD 35 – statement of Shri Akhil Khandelwal, Proprietor of M/s A.K. Sons.
8. Statements of the above persons have been summarised in the SCN. Not one of these persons was questioned about any of the disputed invoices on the strength of which the appellant had taken Cenvat credit. If the department’s case is that only specific invoices were supplied without goods the least one expects is to question if it was so. All the statements were general statements and are vague and not one deals with the invoices in dispute.
9. It has also not been disputed that the appellant had recorded the receipt of inputs in its RG-23A Part I and Part II registers. It is also not the dispute that the appellant had paid for the inputs. It is also not in dispute that the appellant had manufactured final products and had cleared them on payment of duty. There is also nothing on record to show that the stock of the inputs and final products in the appellant’s premises were taken and any shortage of either inputs or final products was discovered as a result.
10. In view of the above, we find that the entire SCN is based on presumptions and assumptions and the confirmation of demand based on such an SCN cannot be upheld.
11. In view of above, the impugned order is set aside and the appeal is allowed with consequential relief to the appellant, if any.
