- (1.) These appeals by the revenue arise from a judgment of the Customs, Excise & Service Tax Appellate Tribunal dated 1 July 2013 in a batch of three appeals. Since the facts are similar, all the three appeals which have been filed by the revenue, are being disposed of by this judgment.
(2.) The following questions of law have been framed in the appeals:- "(1) Whether on the facts and in the circumstances of the case, the CESTAT was justified in law in rejecting the appeal filed by the Appellant against the Respondent who availed Cenvat Credit on the basis of invoices issued by M/s M.K. Steels, Kolkata as sequel to an inquiry and fake nature of the said invoices was proved and M/s Sarla Ispat (P) Ltd., Durgapur who was mentioned to be the manufacture of goods in the said invoices was found to be non-existent? (2) Whether on the facts and in the circumstances of the case, the CESTAT was justified in law in rejecting the appeal of the Appellant even when the Respondent have not taken due care for receiving the goods and violated the provisions of Rule 3, 9(3) & Rule 7 of the Cenvat Credit Rules, 2004?"
(3.) The assessee is engaged in the manufacture of MS Bars, Rounds, SS Flats and SS Products. The assessee is a registered dealer and had procured raw material through M/s MK Steels (P) Ltd. The inputs covered by the invoices raised by M/s MK Steels (P) Ltd. were received by the assessee and were entered in the cenvat credit account. Inputs were used for the manufacture of final products which were cleared against the payment of duty. On enquiry by the Assistant Commissioner, Central Excise Commissionerate, Bolpur, it was found that the original manufacturer of MS Ingots, namely Sarla Ispat (P) Ltd., Durgapur, was non-existent. The assessee availed of the cenvat credit on the strength of invoices which were issued by M/s MK Steels (P) Ltd., which was the first stage dealer. A notice to show cause was issued to the assessee which resulted in an order of adjudication confirming a demand of duty under Rule 14 of Cenvat Credit Rules, 2004 (hereinafter referred to as the 'Rules of 2004') read with Section 11A(1) of Central Excise Act, 1944. A personal penalty was imposed on the Director of the assessee as also the Authorised Signatory of the assessee. In appeal, the Commissioner (Appeals), Central Excise, Kanpur held that in terms of the provisions of Rule 7 (4) of Cenvat Credit Rules, 2002 (hereinafter referred to as the 'Rules of 2002') read with Rule 9 (5) of the Rules of 2004, a manufacturer is required to check the particulars as mentioned in the invoices issued by the first stage dealer. During the course of the hearing before the Commissioner (Appeals), the assessee submitted, inter-alia, Form 31 issued by the Uttar Pradesh Trade Tax Department, the ledger account evidencing payments by cheques made to M/s MK Steels (P) Ltd., and Form RG 23-A, Part-II. It was held that the assessee has received goods against the invoices of M/s MK Steels (P) Ltd. for which payment was made by cheque and that the manufactured goods were cleared against the payment of central excise duty. The Commissioner (Appeals) also held that the transaction on the part of the assessee was bona fide and a buyer can take only those steps which are within his control and would not be expected to verify the records of the supplier to check whether in fact he had paid duty on the goods supplied by him. The only reasonable steps which he can take is to ensure that the supplier is trustworthy, the inputs are in fact received and that the documents, prima facie, appear to be genuine. The fact that the assessee made payment by cheque was held to be a proof of his bona fides. The Commissioner (Appeals) also relied on a circular of the Central Board of Excise & Customs (CBEC) dated 15 December 2003 clarifying that cenvat should not be denied to a user-manufacturer as long as bona fide nature of the consignee's transaction is not doubted. Moreover, if the manufacturer-supplier has received payment from the buyer in respect of goods supplied including excise duty, action should be initiated against him under Section 11D and 11DD. In the circumstances, it was held that cenvat credit could not be denied to the assessee.;