Full Judgment
2. The relevant facts of the case, in brief, are that the respondent Nos. 2 & 3 are engaged in the manufacture of electric wire and cables, PVC components, strips at their factory and availed Cenvat credit. On 12-3-2003, the Central excise officers visited the factory of the respondent Nos. 2 & 3. The said visiting officers resumed invoices issued by M/s. Aggarwal Plastic (India), Delhi Respondent No. 1 on the ground that they had been issuing the fake sale invoices. The statements of the representative of the respondent Nos. 2 & 3 were recorded wherein they slated that they received inputs accompanied with duty paying documents of M/s. Aggarwal Plastic (India) Respondent No. 1 and utilized in the finished goods. Show cause notices dated 17-7-2003 were issued to the respondent Nos. 1 & 2. It has been alleged that Shri Rajiv Aggarwal, authorized signatory of respondent No. 1 in his statement dated 14-2-2003 stated that their firm was registered for the manufacture of PVC compound and there has been no production of PVC compound since 1-1-2002 and the invoices issued by them from 1-1-2002 were issued without any production which was done due to monetary constrains. It was proposed in the said show cause notice to disallow Cenvat credit of Rs. 1,34,784/- availed by the respondent No. 2 along with imposition of penalty. It has also proposed to impose penalty under Rule 25(d) of the Central Excise Rules, 2001 and 2002 upon the respondent No. 1. Another show cause notice dated 26-8-2003 was issued to the respondent No. 3 on the similar ground proposing to disallow Cenvat credit of Rs. 4,63,968/- availed by them on the basis of the documents issued by the respondent No. 1. The adjudicating authority by common Order-in-original dated 29-1-2004 dropped the proceedings against both the show cause notices. Revenue filed appeals against the respondent Nos. 2 & 3 which were dismissed vide Order-in-appeal dated 29-12-2004. Revenue also filed appeal against the respondent No. 1 which was dismissed vide Order-in-appeal dated 28-1-2005. Now, the Revenue filed common appeals against both the impugned orders.
3. The learned DR on behalf of the Revenue submits that both the authorities below while passing the order have totally ignored the statement of Shri Rajiv Aggarwal who is an authorized signatory of M/s.
Aggarwal Plastic (India), respondent No. 1. He submits that the respondent No. 1 supplier of inputs in their statement stated that buyer used to take Cenvat credit on fake invoices issued by the respondent No. 1 and the materials were procured by them from the open market. He also submits that Delhi Commissionerate issued show cause notice on 20-5-2004 to the respondent No. 1 for passing Cenvat credit on the basis of the invoices without physically manufacturing/supplying the excisable goods. Therefore, both the authorities below wrongly allowed the credit to the respondent Nos. 2 & 3 and failed to impose penalty on the respondents.
4. Shri Naveen Mullick, learned Advocate, appearing on behalf of respondent No. 1 submits that the respondent No. 1 manufactured inputs in question and cleared on payment of duty as evident from the Central excise duty paying documents and RT-12 return which were examined by both the authorities below. The department did not dispute authenticity of the said documents. He further submits that the alleged show cause notice issued on 20-5-2004 as mentioned in the appeal of the Revenue is beyond the scope of the show cause notice. He fairly submits that the show cause notice dated 20-5-2004 as indicated in the Revenue appeal has yet not been adjudicated and, therefore, the statement of Shri Rajiv Aggarwal, as relied upon by the Revenue, cannot be accepted. He submits that the stand taken by the Revenue is totally contradictory inasmuch as the Revenue took a stand that the respondent No. 1 is not manufacturer of the excisable goods. But it is revealed from the show cause notice that it was proposed to impose penalty under Rule 25(d) of the Central Excise Rules, 2002 as manufacturer of the excisable goods.
He also submits that the imposition of penalty under Rule 25 of the Central Excise Rules, 2002 upon the respondent No. 1 under the control of Delhi Commissionerate is beyond jurisdiction.
5. Shri K.K. Anand, learned Advocate, appearing on behalf of the respondent Nos. 2 & 3 reiterates the findings of the Commissioner (Appeals) as well as adjudicating authority. He drew attention of the Bench to the certificate issued by the transporter certifying that they have transported the consignment from M/s. Aggarwal Plastic (India), Delhi to the factory of the respondent Nos. 2 & 3 at Chandigarh. He submits that it is amply clear from various evidences which were examined by the authorities below that the respondent received goods accompanied with duty paying documents supported by transporter certificate and the said inputs were utilized in the manufacture of the finished goods and there is no scope to deny Cenvat credit to the respondent Nos. 2 & 3. He further submits that the department initiated proceedings on the basis of the uncorroborated statement of Rajiv Aggarwal and, therefore, the same cannot be relied upon. He relied upon the decision of the Tribunal in the case of Tripa-thi Rubber Industries and Ors. v. CCE, Kanpur, Final Order Nos. 773-76/05-Ex., dated 14-9-2005, 2006 (194) E.L.T. 103 (T). He also submits that the respondents produced copy of RT-12 returns and the sale tax certificate of the respondent No. 1 before the authorities below and the genuinity of the said documents was not disputed in the Revenue appeals.
6. After hearing both sides and on perusal of the record, I find that the show cause notice dated 17-7-2003 was issued to the respondent Nos.
1 & 2 proposing disallowance of Cenvat credit to the respondent No. 2 and to impose penalty on respondent No. 1 by the Deputy Commissioner of Chandigarh Commissionerate. It is pertinent to note that the respondent No. 1 is manufacturer of inputs in question having its factory situated at Delhi under the control of Delhi Commissionerate. There is no order and/or evidence placed by the Revenue that the duty paid by the respondent No. 1 was unlawful. The entire proceedings is initiated on the basis of the statement of Shri Rajiv Aggarwal, authorized signatory of the respondent No. 1. The alleged show cause notice dated 20-5-2004 as mentioned in the Revenue appeal has not yet been adjudicated. In my view, the allegation against the respondent No. 1 that they issued fake invoices to the respondent Nos. 2 & 3 for availing Cenvat credit till the decision of the show cause notice issued by the Delhi Commissionerate is totally premature. On the other hand, it is revealed from the record particularly certificate of the transporter and other documents that the respondent Nos. 2 & 3 received goods from the respondent No. 1 accompanied with duty paying documents. The Revenue did not dispute the payment of duty by the respondent No. 1 in their memo of appeal. So, the contention of the learned DR that the respondent Nos. 2 & 3 availed credit on the basis of the fake invoices are not sustainable. The learned DR strongly relied upon the statement of Shri Rajiv Aggarwal. It is seen that the statement of Rajiv Aggarwal is not corroborated by any evidence. On the contrary, the respondent Nos. 2 & 3 produced several evidences in support of their contention that the inputs in question were received by them accompanied with duty paying documents. It is further seen from reply to the show cause notice of the respondent Nos. 2 & 3 that they asked for cross-examination of Rajiv Aggarwal. In the case of Tripathi Rubber Industries and Ors. v. CCE, Kanpur (Supra), the Tribunal As already noted, the findings in the impugned order are contrary to statutory records maintained by all the manufacturing units. RG-1 maintained by the appellant M/s. Risansi Industries Ltd., also remains periodically attested by visiting of Central Excise Officer.
The removal of the machinery in May 1999 to new premises had also been intimated to the Central Excise Officer by the assessee. The production of rubber parts in that new premises and the presence of machinery in the new premises are also not being disputed. Thus, the contemporaneous documentary evidence is fully in support of the appellant. In the face of such verified statutory records, statements to the contrary cannot find acceptance. In this view of the matter, we are of the opinion that the finding in the impugned order that the appellant assessee had fraudulently availed of ineligible Modvat credit is not sustainable. Penalties are also not sustainable since the finding regarding credit is not sustainable.
Accordingly, the impugned order is set aside and the appeals are allowed with consequential relief, if any, to the appellants.
7. In view of the above, I do not find any merit in the appeals of the Revenue and the same are rejected.