CX - Allegation of availment of credit without receipt of inputs - Incomplete investigation - Appeal allowed: CESTAT by Majority
By TIOL News Service
CHANDIGARH, MAY 08, 2018: THE appellant took CENVAT credit on the strength of invoices issued by M/s National Udyog (a first stage dealer) and from M/s Ridhi Sidhi Alloys Pvt. Ltd. (manufacturer suppliers).
Both the suppliers allegedly claimed to have received the inputs from M/s AIP Industries (alleged manufacturer) but the case of the Revenue is that M/s AIP Industries did not have any manufacturing facility so there was no way that they could have supplied the inputs.
SCN was issued for denial of Credit and imposition of penalties on the appellant and the suppliers.
The CCE, Rohtak confirmed the demand and imposed penalties.
In appeal before the CESTAT, the appellant relied upon the decisions in Ridhi Sidhi Alloys Pvt Ltd. - 2015-TIOL-1462-CESTAT-DEL and Juhi Alloys Ltd. - 2013-TIOL-1310-CESTAT-DEL which has been affirmed by the Hon'ble Allahabad High Court - 2014-TIOL-2693-HC-ALL-CX & Nidhi Metal Auto Components Pvt. Ltd. - 2015-TIOL-667-CESTAT-DEL and submitted that credit cannot be denied.
The AR submitted that proceedings against M/s AIP Industries were initiated and order was passed against M/s AIP Industries to deny the Cenvat Credit to them on input used in manufacture of their final product and the said order has attained finality on account of Tribunal Order No. 57281 dt. 12.08.2013 which has been affirmed by the High Court of Punjab & Haryana vide order dt. 10.12.2014.Inasmuch as the appeals need to be dismissed, the AR pleaded.
Whereas the Member (Judicial) agreed with the submissions made by the appellant and after extensively extracting the decisions cited allowed the appeal with consequential relief, the Member (Technical) distinguished the decision cited of Juhi Alloys Ltd. (supra) and concluded that denial of credit is perfectly in order to the extent of the inputs allegedly received from the first stage dealer M/s National Udyog . The decision cited of Nidhi Metal Auto Components (supra)was held as not binding since being passed by a Single Member. As regards the credit taken on invoices received from the manufacturer, M/s RidhiSidhi Alloys Pvt. Ltd., the Member (Technical) agreed with the Member (J) on the reasoning that the Tribunal order with regard to the M/s. Ridhi Sidhi Alloys Pvt.Ltd., which has been relied upon by the appellant had attained finality.
The matter, therefore, came to be referred to the third Member to decide on the following question -
(a) Whether in the facts and circumstance of the case and evidences placed on record, Member (Judicial) is correct in holding that the appellant namely M/s. JSL Stainless Limited has correctly taken Cenvat credit on the invoices issued by M/s. National Udyog and therefore, proceedings against the appellant are not sustainable;
OR
Whether, in the facts and circumstances of the case and evidences placed on record, the Member (Technical) is correct in holding that appellant M/s. JSL Stainless Limited is not entitled to avail Cenvat credit on the invoices issued by M/s, National Udyog and consequently, Cenvat credit is required to be reversed along with interest and the appellant is to be penalised, and penalty under Rule 26 (2) is to be imposed on M/s. National Udyog, Shri Ram Kishan Gupta and Shri Jagdish Jindal for the period after 01.03.2007, as per the order of Member (Technical).
We reported this order dated 14.12.2017 as 2018-TIOL-353-CESTAT-CHD.
The third Member (Technical) on reference heard the submissions made by both sides and while agreeing with the order passed by Member (Judicial) observed thus –
++ I find that the show cause notice is silent on the investigation in respect of the documents on the basis of which the appellant have availed Cenvat credit which was sought to be denied by Revenue, and that Revenue have not carried out any investigation regarding the goods which were transported from M/s National Udyog Limited to the appellant.
++ The show cause notice is silent on the name of the manufacturer who supplied the said goods to the first stage dealer which were in turn received by the appellant. The said show cause notice only discussed about the transaction between M/s. AIP Industries Limited and M/s. National Udyog.
++ M/s. National Udyog is a first stage dealer and any first stage dealer is not required to receive the goods only from one manufacturer. The National Udyog being a first stage dealer was therefore, eligible to purchase duty paid goods from any manufacturer.
++ Had there been any investigation establishing that the inputs on which Cenvat credit was availed, as entered in the invoices issued by the first stage dealer, were the same goods which were involved in the investigation about the transaction between M/s AIP Industries and M/s National Udyog, then only this show cause notice could have sustained.
++ In the present case, the assessee is found to have duly acted with all reasonable diligence in its dealings with the first stage dealer.
In view of the majority decision, the appeals were allowed.
(See 2018-TIOL-1448-CESTAT-CHD)
