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Judgment
The issue involved in the present appeal is whether the learned Commissioner (Appeals) was correct in upholding the order-in-original passed by the learned adjudicating Authority who denied the cenvat credit of Rs. 40,26,474/- along with imposition of interest and penalties on the ground that the appellant had availed cenvat credit on inputs without their receipt and use in or in relation to the manufacture of final products.
The brief facts of the case are that the appellant is engaged in the manufacture of Stainless-Steel Pipes & Tubes and registered with the department. On the basis of intelligence, a search has been conducted at various premises of M/s Shah Foils Limited [M/s SFL] located in Gujarat and Maharashtra by the officers of DGCEI. As per department, the search resulted in recovery of incriminating documents and pen drives indicating clandestine clearance by M/s SFL, which were seized by them. Thereafter, statement of Sh. Ramesh Mailal Shah, Director of M/s SFL and Sh. Manoj Prabhudas Tanna was recorded. The case of the department is that M/s SFL was engaged in clandestine removal of goods and also received only invoices from various parties without actual receipt of goods, therefore, show cause notice was issued to M/s SFL. In follow up action, summon has been issued to the appellant on the reasonable belief that M/s SFL has passed on the ineligible cenvat credit through M/s Sankalp Foils Pvt. Ltd. [M/s SFPL] (registered dealer floated by M/s SFL) to other parties including the appellant, without actual delivery of goods. The appellant provided the details to the department in compliance of the summon. The department also recorded various statements on different dates. Based on the aforesaid investigation, a show cause notice was issued to the appellant for denial of cenvat credit of Rs. 40,26,474/- on the ground that the appellant has wrongly availed cenvat credit on the strength of invoices of M/s SFL and M/s SFPL without receipt and use of such inputs in or in relation to the manufacture of final products in their factory. The appellant contested the show cause notice and filed its reply, wherein all the allegations levelled against them were denied. However, the learned Adjudicating Authority vide its Order-in-original dated 02.02.2017 confirmed the demand of cenvat credit along with interest and imposed penalties. On appeal, the learned Commissioner (Appeals) rejected the appeal filed by the appellant. Hence, the present appeal.
Assailing the impugned order, learned Counsel urges - that the allegation of wrongful availment of cenvat credit is totally baseless as they have substantiated their legitimate availment of credit with various evidences. They placed reliance on the judgement passed by the Hon’ble Allahabad High Court in the case of COMMISSIONER OF C.EX., CUS & SERVICE TAX Vs. JUHI ALLOYS LTD. [2014 (302) E.L.T. 487 (ALL.)], wherein it was held that it would be impractical to require recipient to go behind the records maintained by the first stage dealer to ascertain if the original manufacturer is genuine or not. The High Court held that the cenvat credit should be allowed if the recipient acted with all reasonable diligence while procuring goods from first stage dealer.
It is further urged that the genuineness of the transaction can be appreciated from the following facts which are not disputed such as:-
(a) The invoices issued by the dealer from whom the appellant procured goods are part of RUD in the show cause notice.
(b) The details of purchases made were duly accounted for in their excise records maintained such as RG 23 A Part-II register, which is part of Annexure-A to the show cause notice.
(c) The copies of bilties/consignment notes issued by the transporter evidencing movement of goods from Mumbai to Sanchore, were enclosed, which proved the actual receipt of goods by the appellant. The transportation bilties also contained the stamp of Gujarat Check-post evidencing that the said goods have crossed the Gujarat Border, thereby establishing that the appellant have received the goods and have correctly availed the cenvat credit.
(d) The appellant had paid the applicable freight to the transporter and they have also enclosed the freight ledger highlighting the payment entries of freight with respect to invoices under consideration.
(e) The appellant had also enclosed the copy of ledgers and Bank Statements in order to prove that the payment of purchase consideration has been made to the selling dealer M/s Sankalp Foils Private Limited through proper banking channel. Hence, when payments have been made through bank account, the genuineness of the transaction cannot be disputed.
The appellant also places reliance on the judgement passed by the Hon’ble High Court of Jharkhand in the case of COMMISSIONER OF C. EX., EAST SINGHBHUM Vs. TATA MOTORS LTD. [2013 (294) E.L.T. 394 (JHAR.)], in support of the contention that the assessee cannot be expected to do the impossible act of verifying whether the supplier dealer has paid the duty on the goods to the government.
It is further submitted that the proceedings against one of the co-noticees, M/s Shah Foils Limited has already been dropped by this Tribunal, which is reported at [2019 (1) TMI 1162-CESTAT AHMEDABAD], so the present appeal may be allowed on this score also.
Learned Authorised Representative for the Revenue Ms. Tamanna Alam relies on the impugned order.
Having considered the rival contentions, I find that the aforementioned facts taken notice of in para 4 above are not disputed. It is also not disputed that the appellant have manufactured dutiable finished goods by using the inputs in question, and have cleared the same on payment of duty. I further take notice that no alternative source of raw material have been identified by Revenue. Accordingly, I hold that the issue is squarely covered by the decision of Hon’ble Allahabad High Court in the case of Juhi Alloys (supra). The appellant have clearly established the genuineness of the transaction as regards purchase and receipt of inputs from the first stage dealer. Thus, I hold that the appellant has discharged their onus for credit of the goods as required under the scheme of the Act read with Cenvat Credit Rules. Accordingly, I hold that the allegation of Revenue as regards non receipt of duty paid raw material is not substantiated by cogent evidence.
In view of the aforementioned observations, this appeal is allowed with consequential benefits. The impugned order is set aside and appeal is allowed.
(Pronounced on 31.01.2022).