Gupta Steel Rolling Mills vs Cce & St, Ludhiana

Date of Pronouncement:22.09.2015

Appeal No. E/55669/2014-EX(SM)

(Arising out of OIA No. LUD-EXCUS-000-App-222-14-15 dated 24.09.2014 passed by the Commissioner (Appeals), Central Excise Chandigarh-I)

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

2. Whether it would 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 Department Authorities?

Gupta Steel Rolling Mills Appellant

Vs.

CCE & ST, Ludhiana Respondent

Appearance:

Present for the Appellant: Shri Poojan Malhotra, Advocate

Present for the Respondent: Shri M.R. Sharma, DR

Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No.52939/2015

Per: Sulekha Beevi C.S.

1. The allegation raised is that appellant availed Modvat/Cenvat credit amounting to Rs.6,27,387/- on the basis of fictitious invoices without actually receiving any goods.

2. Brief facts are as under:

2.1 The appellant, M/s Gupta Steel Rolling Mills, engaged in manufacture of goods falling under Chapter 72 of CETA, 1985, are registered with Central Excise Department and were also availing Cenvat Credit. On intelligence received that M/s HBR Steel Corporation, Ludhiana, a registered dealer was passing on irregular Cenvat/Modvat Credit to different manufacturers of Iron and steel, the officers of the department visited the premises of M/s HBR Corporation on 4.9.2000 and recovered 19 invoices showing receipt of duty paid materials. The same were found not accounted in RG 23 D Register. On further visit by officers on 7.2.2001 there was nil stock in their records as well as in their approved godown. M/s HBR was unable to explain this, as there was no corresponding sale invoices for sale of the goods received on those 19 invoices, nor was there stock in the godown. On further investigation, it was found that the vehicle numbers mentioned in the invoices issued by M/s HBR Corporation against which they had passed Cenvat credit to appellants were of buses, motor cycles, scooter/moped etc. Accordingly show cause notice was issued proposing to disallow credit of Rs.6,27,287/-. The case was adjudicated and order passed on 20.6.2005. It was noted in this order that the appellant herein had neither submitted reply to SCN nor attended the personal hearing on the three opportunities given. The appellant filed appeal against the said order and vide Order-in-Appeal dated 26.4.2006, the Commissioner (Appeals) allowed the appeal observing that the there is violation of principles of natural justice.

3. Against the said Order-in-Appeal, the Revenue filed appeal before the Tribunal. The Tribunal vide Final Order No. 88/2009 dated 09.1.2009 remanded the case for de novo adjudication. Thereafter the case was re-adjudicated and Order-in-Original dated 31.3.2010 was passed confirming the demand. It is observed in that order that the appellant here in, has again neither filed reply nor appeared for the personal hearing. In Para 2 of the said order the adjudicating authority has observed as below:

Reply of the Notice

2.1 No reply was received from the Noticee even after more than one year since the receipt of the said remand order for denovo proceedings from the Honble CESTAT. The Noticee was nevertheless given opportunity to present their case on 11.2.2010, 26.02.2010, 08.3.2010, 22.03.2010 & 30.3.2010, but all these dates went unattended and un-replied.

4. Ahainst the said Order-in-Original dated 31.3.2010 the appellant filed appeal before the Commissioner (Appeals) who directed the appellant to make pre-deposit. The appellant failed to comply with this direction and the appeal was dismissed vide Order-in-Appeal dated 20.12.2010. The appellant then filed appeal before the Tribunal and the Tribunal vide order dated 10.10.2011 directed the appellant to deposit Rs.1.5 lacs and report compliance to the Commissioner (Appeals) on or before 29.12.2011, and on such compliance the Commissioner (Appeals) was directed to decide the case on merits. The appellant made the pre-deposit as directed by Tribunal. Thereafter the Commissioner (Appeals) has passed the impugned order upholding the disallowance of credit alongwith recovery of interest and penalty. It has to be mentioned that the appellant attended the personal hearing before the Commissioner (Appeals) this time. Aggrieved by this Order-in-Appeal the appellant is before the Tribunal.

6. The allegation is that the appellant availed credit on fictitious invoices without actual/physical receipt of goods. The learned counsel for appellant argued on the merits of the case and contended that the statement of the consignor or any other person was not taken by the department. That the whole case of the department is based on assumptions and presumptions. The order is passed on the statement of Happy Gupta and that no person from the appellants firm was examined. That the respondents have failed to establish the allegation raised in the Show Cause Notice.

Per Contra, the Revenue supported the impugned order, and submitted that the credit has been rightly denied.

7. Heard both sides. The appellant is alleged to have fraudulently availed Cenvat credit on the basis of invoices issued by M/s HBR Steel Corporation without actual receipt of raw materials mentioned therein. On investigation it was found that the vehicle numbers mentioned in the invoices issued by M/s HBR were found to be not of truck but of other vehicles such as moped, scooter, or vehicles which do not exist at all. The owner/driver of vehicles whose numbers were seen mentioned in the invoices have deposed that they have never lifted any material from M/s HBR and they have not received any freight from them. Verification from Transporting authorities was also done which showed that vehicle registration numbers pertain to Scooters, Motorcycles, Luna Moped, Esteem Cars, Buses etc. The department after recording statements and conduct of investigation concluded that M/s HBR has issued modvatable invoices to the appellant and actually no goods were sold so as to pass the modvat credit in contravention of provisions of law.

8. The main argument advanced by the learned counsel for appellant is that department did not record the statement of any one from the appellant firm. That the statement given by persons belonging to M/s HBR has been the basis for concluding that appellant has fraudulently availed credit. The statement of Shri Happy Gupta who is the son of Shri Ved Prakash, Proprietor of M/s HBR was recorded. He has deposed that due to the ill health of his father, he is looking after the affairs of M/s HBR. In his statement, Sh. Happy Gupta has made a frail effort to give an explanation regarding the recovery of 19 invoices from his office premises, and the discovery of the fact that neither did the godown contain any goods nor were any invoices issued for sale of such goods shown in 19 invoices. He explains that the goods were kept for a short period in a godown belonging to his friend. That due to some family dispute regarding partnership of their sister concern namely M/s Gupta Steel Rolling Mills, Ludhiana (appellant herein) and illness of his father, they were forced to shift the excisable goods from the approved godown. These statements reveal that appellant was a sister concern of M/s HBR Steel Corporation. I do not find any irregularity or illegality in relying upon the statement made by Shri Happy Gupta. The department has been able to safely establish fraudulent activities of appellant. The recovery of 19 invoices together with the discovery of the fact that there were no goods corresponding to such invoices in the godown and no sales invoices were issued for sale of such goods alongwith statement of Shri Happy Gupta, and other vehicle owners/drivers establish the case of the department regarding fake invoices. Moreover, it has to be stated that the appellant has not replied to the SCN even after getting ample opportunity. These contentions in defence are raised only at appellate stage. There is actually no defence raised at the primary adjudication level.

9. From the foregoing I do not find any infirmity in the impugned order. The same is sustained and the appeal filed by assessee is dismissed.

(Pronounced on 22.09.2015)

(Sulekha Beevi C.S.)

Member (Judicial)

K. Gupta

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