Decided on April 27,2015

Alloys Industries Pvt. Ltd. Appellant
Commr. Of C. Ex. And S.T., Jaipur -Ii Respondents


ASHOK JINDAL,MEMBER (J) - (1.)THE appellants are in appeals against the impugned orders. As the issue involved is common in both the appeals. Therefore, both are taken up for disposal. The facts of the case are that an investigation was conducted at the premises of the appellant on 15 -12 -2008 to 20 -12 -2008. All the stocks were found correct but 30 gate passes were resumed during the investigation and consequently the statement of officials and Managing Director of the appellant were recorded. At the time of recording the statement of the officials of the appellant admitted their clandestine removal of the goods on the strength of gate passes without paying duty and consequent to that the duty was paid for the clearance of these 38 gate passes. It was also found that appellant has availed Cenvat credit on steel items to the tune of Rs. 2,23,221/ - which was used in civil construction of factory which was not admissible to the appellant. Further, the appellant also availed Cenvat credit of Rs. 1,93,972/ - on construction services which was used for construction of labour colony. In these set of facts a show cause notice was issued to the appellant for:
(a) Payment of duty on the clearance made by them against 38 gate passes along with interest and imposition of penalty.

(b) Denial of Cenvat credit of Rs. 2,23,221/ - for availing inadmissible Cenvat credit on steel items which was ineligible as input.

(c) Denial of Cenvat credit on the construction services as they are not input services to the appellant.

The show cause notice was adjudicated. The demands proposed in the show cause notice was confirmed along with interest but penalty proposed in the show cause notice was reduced to Rs. 19,26,966/ -. Against the said order appellant filed an appeal before the ld. Commissioner (A) to challenge the order and Revenue also challenged this order on the premise that the Adjudicating Authority was required to confirm the penalty to the tune of Rs. 23,47,199/ - instead of Rs. 19,26,966/ -. The Commissioner (A) allowed the appeal of the Revenue and dismissed the appeal filed by the appellant. Aggrieved from both the orders appellant is before me.

(2.)THE ld. Counsel for the appellant submits that for demand on duty of 38 gate passes in fact these gate passes were issued for their internal purposes as the person issuing the gate pass have admitted the same by way of affidavit and the person who has received the said goods and also their employee who has also filed their affidavit and these facts has not been contravened and they are able to prove these evidence that goods have not been removed clandestinely on the strength of gate passes. Therefore, demand on duty is not sustainable. To support this contention she relied on the decision in the case of Vikram Cement (P) Ltd. v. CCE Kanpur - : 2012 (286) E.L.T. 615 (Tri -Del) which has been affirmed by the Hon'ble High Court of Allahabad reported in, 2014 (303) E.L.T. A82 (All.).
(3.)SHE further submits that appellant has not contested the denial of Cenvat credit on the steel items and same has been reversed along with interest. The appellant is seeking waiver of penalty on these steel items as these were in dispute during the period whether they are entitled to take Cenvat credit on the steel items or not.
She also submits that the searches were conducted at other units also but nowhere it was found that they have received unaccounted goods from the appellant in their factory. She further submits that the appellant is not disputing the denial of Cenvat credit on steel items which was being used in construction of factory. Same has been reversed along with interest. Therefore, they are praying that penalty is not imposable and as the issue of availment of Cenvat credit on the steel items was not disputed during the relevant period and pending for disposal before this Tribunal. She further submits that the appellant is entitled to take Cenvat credit on construction services of labour colony in the light of the decisions in the case of Hon'ble High Court of Andhra Pradesh in the case of ITC Ltd. v. CCE Hyderabad -, 2013 (32) S.T.R. 288 (A.P.). Further she submits that the investigation was conducted during the period 15 -12 -2008 to 20 -12 -2008 and show cause notice has been issued on 14 -9 -2010 by invoking extended period of limitation and same is not sustainable in the light of the decision of the Hon'ble Apex Court in the case of Orissa Bridge & Construction Corpn. Ltd. v. C.C. Bhubaneswar - : 2011 (264) E.L.T. 14 (S.C.). Therefore, she prayed that impugned orders are to be set aside and appeals be allowed with consequential relief.


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