Case Law Details

Case Name : Mangalam Alloys Ltd. Vs Commissioner of Central Excise Ahmedabad-III (Gujarat High Court)
Appeal Number : TAX APPEAL NO. 1088 of 2018
Date of Judgement/Order : 05/09/2018
Related Assessment Year :
Courts : All High Courts (4308) Gujarat High Court (368)

Mangalam Alloys Ltd. Vs Commissioner of Central Excise Ahmedabad-III (Gujarat High Court)

The Revenue authorities and the Tribunal concurrently came to the conclusion that the transactions in question were non­existence. The assessee was not able to establish the actual movement of the goods. When the RTO report strongly suggested that the vehicles in which the goods were stated to have been transported were incapable of doing so, the burden would be on the assessee to dislodge these primary findings particularly when the report of the RTO was not challenged. This reason would be further augmented when seen in light of the statement of the representative of the supplier who also could not explain the discrepancy. The assessee’s stand that it had merely ordered goods on FOR value and therefore was not obliged to explain the manner of transportation is too simplistic in background of facts on record. When RTO report as it remained unexplained by the suppliers of the goods clearly establish that the goods could not have been transported in the vehicle stated to have been done, the assessee called a greater explanation.

Learned counsel for the assessee however vehemently contended that the Tribunal proceeded merely on drawing presumptions and in similar circumstances transactions similar presumption has not been drawn. Firstly, we do not think that the conclusions of the Tribunal are based on drawing presumptions or adverse inference even though the Tribunal has fleetingly so stated. The findings are based on evidence suggesting no movement of goods. Secondly, the quality cannot be claimed in negative. If we find that findings of the Tribunal in respect of these twelve invoices not perverse, we would not entertain the appeal only to examine a contention that under similar circumstances the Tribunal has not adopted similar course.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

1. These tax appeals arise in common background. They would be disposed of by this common order. For convenience, we may notice facts from Tax Appeal No.1088 of 2018.

2. Assessee is in appeal against the judgment of the Income­ tax Appellate Tribunal dated 11.5.2018 raising following questions for our consideration :-

(a) Whether “adverse inference” could have been drawn by the Appellate Tribunal against the appellant for denying Cenvat credit of Rs.5,89,667/­ in respect of 12 invoices when the appellant has received duty paid inputs under 4,686 invoices during the period in question involving Cenvat credit of Rs.27,32,17,300/­ for which no dispute at all been raised by the Revenue; and similar dispute raised by the Revenue for 76 invoices involving Cenvat credit of Rs.39,76,922/­ has also been rejected by the Appellate Tribunal ?

(b) Whether the order of the Appellate Tribunal upholding denial of Cenvat credit of Rs.5,89,667/­ for inputs covered under 12 invoices is legal and justified when there is no corroborative evidence establishing that the appellant had actually not received inputs covered under such 12 invoices ?

(c) Whether the order of the Appellate Tribunal upholding denial of Cenvat credit of Rs.5,89,667/­ with interest and also penalty of Rs.5,89,667/­ on the appellant and personal penalty of Rs.50,000/­ on the 2nd appellant is sustainable and justified in the facts of this case ?”

3. Appellant assessee is a manufacturer of goods. For the duty paid inputs received by the assessee, it would be entitled to take cenvat credit. During the course of inquiries in cases of two of the suppliers of such inputs, namely, M/s. Goodluck Empire, Bhavnagar and M/s. Jenil Empire, Bhavnagar, the department noticed certain clandestine transactions. Since the assessee was also one of the recipient of the goods, the assessee’s record was checked. Since the Tribunal confirmed duty and penalty demands in respect of twelve such transactions, we may focus only on them.

4. The Tribunal noted that the Department had obtained a report from the RTO suggesting that the twelve invoices pertained to goods stated to have been transported by vehicles which were incapable of carrying the quantity of such inputs. The quantity of goods and the vehicle details would always be available in the assessee’s records or the corresponding records of the supplier. The RTO authorities certified that these were vehicles in the nature of three wheelers such as chhagdo rickshaw and auto­rickshaw and totally incapable of transporting the quantity of goods stated to have been done. The Tribunal also noted that during the course of investigation, the suppliers’ representatives’ statements were recorded. They did not give any satisfactory explanation for such discrepancies. These statements were also furnished to the assessee. The assessee’s representative was also not able to explain the discrepancies. He merely stated that goods were ordered on FOR basis and therefore the transportation of the goods was responsibility of the supplier and not that of the assessee. The Tribunal noted that none of these statements were ever retracted. On the basis of such materials, the Tribunal believed the case of the Department that the goods were not physically received by the assessee and the cenvat credit therefore could not have been claimed. The Tribunal relied on the judgment of this Court in case of Gyscoal Alloys Ltd. vs. CCE, reported in 2014 (35) STR 199 (Guj.).

5. We do not find the decision of the Tribunal gives rise to the question of law. Entire issue is fact based. The Revenue authorities and the Tribunal concurrently came to the conclusion that the transactions in question were non­existence. The assessee was not able to establish the actual movement of the goods. When the RTO report strongly suggested that the vehicles in which the goods were stated to have been transported were incapable of doing so, the burden would be on the assessee to dislodge these primary findings particularly when the report of the RTO was not challenged. This reason would be further augmented when seen in light of the statement of the representative of the supplier who also could not explain the discrepancy. The assessee’s stand that it had merely ordered goods on FOR value and therefore was not obliged to explain the manner of transportation is too simplistic in background of facts on record. When RTO report as it remained unexplained by the suppliers of the goods clearly establish that the goods could not have been transported in the vehicle stated to have been done, the assessee called a greater explanation.

6. Learned counsel for the assessee however vehemently contended that the Tribunal proceeded merely on drawing presumptions and in similar circumstances transactions similar presumption has not been drawn. Firstly, we do not think that the conclusions of the Tribunal are based on drawing presumptions or adverse inference even though the Tribunal has fleetingly so stated. The findings are based on evidence suggesting no movement of goods. Secondly, the quality cannot be claimed in negative. If we find that findings of the Tribunal in respect of these twelve invoices not perverse, we would not entertain the appeal only to examine a contention that under similar circumstances the Tribunal has not adopted similar course.

7. In the result tax appeal is dismissed.

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