C.C.E. Bhopal vs M/S Farmer Engineering Industries Ltd

[Arising out of Order-In-Appeal No. 41-CE/BPL/06 dated: 29.06.2007 passed by CCE Bhopal]

For approval and signature:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

C.C.E. Bhopal ...Appellant

Vs.

M/s Farmer Engineering Industries Ltd. Respondent

Appearance:

Mr. R K Mishra, DR for the Appellants

Mr. Z U Alvi, Advocate for the Respondent

CORAM:

Hon'ble Mr. S.K. Mohanty, Member (Judicial)

Date of Hearing.26.05.2015

FINAL ORDER NO. 54138 /2015

Per S. K. Mohanty:

Heard both the sides and perused the records.

2. The issue involved in the present appeal, in brief, are that the respondent is a partnership firm engaged in the manufacture of Parts of Motors & Generators, parts of Railway Locomotives and Threaded Articles of Iron & Steel. The main raw materials used by the respondent for manufacture of the above goods are MS Plates, HR Plates, Sheets, Angles, Channels, Rounds, Square, Bar, Steel Wire and Welding Electrodes, Bearing and Paints etc. The buyers of the excisable goods manufactured by the Appellant are M/s BHEL, Bhopal/Jhansi and Diesel Locomotive Work, Patiala of Indian Railways . The factory of the Respondent was visited by the Officers of Central Bureau of Investigation and the officers of Central Excise Department on 25.06.2004. On scrutiny of records, it was revealed by the said officials that the respondent had availed cenvat credit of Rs. 17,49,974/- fraudulently on the basis of documents without receipt of 716.1225 MT of MS Steel/Sheets. On the basis of such investigation, the Central Excise Department initiated show cause proceedings for recovery of irregularly availed cenvat credit from the respondent. The SCN dated 18.07.2005 issued in this regard, was adjudicated by the Joint Commissioner of Central Excise vide order dated 23.12.2005, wherein the proposals made in the SCN were dropped. Feeling aggrieved by the said order of the Adjudicating Authority, the Department had preferred appeal before the Commissioner (Appeals), Central Excise, Bhopal. Vide impugned order dated 29.06.2007, the appeal of the Revenue was dismissed by affirming the order passed by the Original Adjudicating Authority. Hence, the present appeal is before this Tribunal.

3. I find that both the Authorities below have held the case in favour of the Respondent by holding as follows:

i) That the buyers of the goods have not provided the complete details to the Central Excise Department regarding purchase made from the Respondent in terms of weight. Since the quantity of the goods in terms of weight cannot be compared with the number of the parts/ equipments sold, the allegation cannot be laveled for non-receipt of the input material for use in or in relation to manufacture of the final product.

ii) The allegation of non-receipt of raw material and availment of cenvat credit on proper documents are not sustainable because from clearance of so much value of finished goods, used quantity of raw material, the value addition must be more than 300% of raw material cost, which is not acceptable for considering the nature of goods handled by the Respondent.

iii) The Respondent has maintained the cenvat records showing receipt/purchase and issue of raw material used of manufacture of finished goods. Since, the purchase transactions were made only through cheque i.e. bank transactions, the allegation of non-receipt of the input goods is not sustainable.

iv) Cenvat credit taken on the input material have been utilized by the Respondents for clearances of the finished product to the above named buyers. After utilization of the cenvat credit, the balance amount has been paid by the Respondent from their PLA account, which shows that there is no fraudulent availment of Cenvat Credit, justifying confirmation of demand on the alleged ground that the duty paid inputs have not been received in the factory.

4. I find from the above observations of the Lower Authorities that upon analysis of the facts in detail, duty demand proposed in the SCN has been dropped. Hence, I do not find any infirmity in the impugned order and accordingly, appeal filed by the Revenue is dismissed. The Cross Objection filed by the Respondent also stands disposed of.

(Dictated and pronounced in open court)

(S.K. Mohanty)

Member(Judicial)

Neha

Page | 1