The ACIT,Vapi Range, Vapi V. M/s. Sunmet Industries, Mumbai

ITA 1449/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9529 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 29-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MONIL SHAH
• Keywords: Reason to believe
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.1449/AHD/2012 ( / ASSESSMENT YEAR : 2005-06) THE ASSTT.CIT VAPI CIRCLE, VAPI / VS. M/S.SUNMET INDUSTRIES 251, AGRASEN BHAVAN THAKURDWAR ROAD MUMBAI 400 002 # ./ ./ PAN/GIR NO. : AALFS 1631 C ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI JAMES KURIAN, SR.DR &#%(' / RESPONDENT BY : SHRI MONIL SHAH, AR )*(+ / DATE OF HEARING 10/11/2016 ,-./(+ / DATE OF PRONOUNCEMENT 05/01/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-1, VALSAD DATED 29/03/2012 FOR THE ASSESSMENT YEAR (AY) 2005-06. 2. THE GROUND OF APPEAL RAISED BY THE REVENUE READ S AS UNDER:- ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 2 - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE O F RS.1,85,49,005/- BY ALLOWING CENVAT CREDIT. 2. BRIEFLY STATED, THE ASSESSEE FILED RETURN OF INC OME FOR THE AY 2005- 06 DECLARING A TOTAL INCOME OF RS.13,61,993/- ON 20 /10/2005. THE CASE WAS SELECTED UNDER SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3)OF THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED TO AS 'THE ACT') VIDE ORDER DATED 22/02/2007 ACCEPTING TH E RETURNED INCOME OF THE ASSESSEE. THEREAFTER, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 30/11/2010 AND THE ASSESSMENT OF THE ASSESSEE WA S REOPENED. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT WAS T HAT INFORMATION WAS RECEIVED FROM THE DIRECTORATE GENERAL OF CENTRAL EX CISE INTELLIGENCE REGIONAL UNIT VADODARA AS PER WHICH THE ASSESSEE HA S UNLAWFULLY AVAILED/CLAIMED WRONG CENVAT CREDIT TO THE TUNE OF RS.1,85,49,005/-. IN VIEW OF THIS NEW EVIDENCE/INFORMATION GATHERED I N THE CASE OF THE ASSESSEE, WHICH WAS NOT PROVIDED BY THE ASSESSEE DU RING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER (AO) FORMED REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMO UNTING TO RS.1,85,49,005/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. HE ACCORDINGLY, USURPED JURISDICTI ON UNDER SECTION 147 OF THE ACT. THE REASSESSMENT ORDER WAS FRAMED UNDE R SECTION 143(3) R.W.S.147 OF THE ACT DATED 23/12/2011 WHEREIN IMPUG NED CENVAT ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 3 - CREDIT WAS DISALLOWED AND TOTAL INCOME RETURNED BY THE ASSESSEE WAS INFLATED TO THIS EXTENT. 3. THE RELEVANT PARA DEALING WITH THE ISSUE IN THE REASSESSMENT ORDER, READS AS UNDER:- [5] CENVAT CREDIT OF 1,85,49,005/-: IN THE CASE OF THE ASSESSEE, THE EXCISE DEPARTMENT CONDUCTED A SEARCH ACTION ON 16-1 2-2006. BASED ON THIS INVESTIGATION, A SCN WAS ISSUED BY THE EXCISE DEPARTMENT ON 04- 10-2007. IN THIS REGARD, DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE ASSESSEE WAS SHOW CAUSED VIDE THIS OFFICE LETTE R DTD. 18.07.2011 AS TO WHY CENVAT CREDIT TO THE TUNE OF 1,85,49,005/- SHOULD NOT BE DISALLOWED FOR THE YEAR UNDER CONSIDERATION AS THE ASSESSEE IS NOT ENTITLED TO CLAIM THE SAME. THE ASSESSEE WAS ALSO S HOW CAUSED AS TO WHY THE SAME SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN REPLY, THE AR OF THE ASSESSEE HAS SUBMITTED VIDE LETTER DTD. 01.11.2011 AS UNDER: 'IN RESPECT TO YOUR POINT NO. 6 OF THE LETTER DT. 1 8/07/2011 WE STATE THAT THE EXCISE DEPT. HAS UNDERTAKEN THE SEARCH IN OUR P REMISES ON 16/12/2006. IN THE SAID SEARCH THEY HAVE NOT FOUND ANYTHING INCRIMINATORY OR ANY EVIDENCES WHICH WILL SHOW THAT WE HAVE SOLD THE GOODS IN AND AROUND DELHI. THEY HAVE NOT PIN POINTE D ANY PARTIES TO WHOM WE HAVE SOLD GOODS. THEIR WHOLE CASE IS ON THE TRANSPORT NAKAS OF VARIOUS STATES AND THEIR RECORDS. THERE ARE THOUSAN DS OF TRUCKS TRANSPORTING DURING THE DAY AND IT IS VOLUMINOUS TA SK TO POINT OUT WHETHER OUR TRUCKS ARE RECORDED IN THE NAKAS OR NOT . WE FURTHER STATE THAT THE EXCISE DEPT. HAS ISSUED US THE SHOW CAUSE NOTICE ON 04/10/2007 ALLEGING OF WRONG CENVAT CREDIT TAKEN. HOWEVER THEY HAVE NOT PASSED ANY ORDER TILL TODAY CASTING ANY LIABILITY ON US. S INCE 2007 WE ARE ASKING THE VARIOUS DETAILS & CROSS EXAMINATIONS FRO M THE EXCISE DEPTT. ON THE BASIS OF WHICH THEY HAVE ISSUED SHOW CAUSE N OTICE. WE REGRET TO STATE THAT THE EXCISE DEPT. HAS NOT GIVEN TILL TODA Y FULL DETAILS. WE HEREBY LIKE TO POINT OUT YOUR ATTENTION TO THE FACT THAT EXCISE DEPT. HAS ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 4 - NOT OBJECTED TO OUR HIGH SEAS PURCHASES. THE PURCHA SES ARE GENUINE EVEN AS PER EXCISE DEPT. WE FURTHER STATE THAT THE CVD ON HIGH SEAS PURCHASES ARE PAID DIRECTLY BY US BY PAY ORDERS TO CENTRAL GOVT. THE XEROX COPIES OF THE PAY ORDERS/BANK STATEMENTS & BI LL OF ENTRIES EVIDENCING THE PAYMENT OF CVD ARE ENCLOSED HEREWITH AS ANNEXURE- VII. WE ARE ALSO ENCLOSING THE COPIES OF RG-23A - PART I I IN WHICH WE HAVE TAKEN CENVAT CREDIT OF CVD PAID AS ANNBXURE-VIIL THUS WE VEHEMENTLY STATE THE COUNTERVAILING CUSTOMS DUTY I.E. CVD OF RS.1,85,49,005/- IS ACTUALLY PAID BY US TO CENTRAL GOVT. & IT IS NOT BOGUS EXPENDITURE AT ALL. WE FURTHER STATE THAT THIS CVD OF RS.1,85,49,005/- IS TAKEN AS CENVAT CREDIT & CREDITED DIRECTLY TO EXCISE COLLECTION A/C . IT IS NOT DEBITED AS EXPENSES TO PROFIT & LOSS A/C NOR DEBITED TO PURCHA SES A/C. IN SHORT IT IS NOT CHARGED TO P & L A/C. THEREFORE THERE IS NO QUE STION OF ANY BOGUS EXPENSES OR ANY INCOME ESCAPING ASSESSMENT AS CLAIM ED IN YOUR LETTER DT. 16/08/2011. THUS WE STATE THAT THE ALLEGED HIGH SEAS PURCHASES ARE IN FACT CAME AS RAW MATERIAL TO OUR FACTORY/ TO OUR LABOUR JOB PROC ESSOR WHO WERE DOING EXTRUSION PROCESSES FOR US. THE NECESSARY EVI DENCES/PAPERS ARE SUBMITTED HEREWITH FOR YOUR PERUSAL & RECORD. (FULL SET OF SR. NO. 1 OF ANNEXURE-III) AS ANNEXURE-IX WE HAVE SOLD THE FINISHED GOODS MADE OUT OF THE RAW MATERIALS INCLUDING IMPORTED/HIGH SE AS PURCHASES & COLLECTED THE EXCISE DUTY ON THE FINISHED GOODS. IF THE HIGH SEAS PURCHASES WOULD HAVE BEEN SOLD IN THE MARKET AROUND DELHI THEN HOW COULD WE SOLD FINISHED MANUFACTURED GOODS IN OUR FA CTORY COLLECTING EXCISE DUTY. FOR THESE FINISHED GOODS SALES THE EXC ISE DEPT. HAS NOT OBJECTED ALSO. THEN THESE, GOODS CAN'T COME FROM AI R. THESE FINISHED GOODS REQUIRED RAW MATERIALS. THE EXCISE DEPT. HAS NOT FOUND FOR ANY CONTRA SOURCE FOR RAW MATERIALS OF THESE MANUFACTUR ED GOODS.........' [5.1] I HAVE CAREFULLY AND THOROUGHLY GONE THROUGH THE ABOVE CONTENTIONS OF THE ASSESSEE AND THEY ARE NOT ACCEPT ABLE IN VIEW OF THE GLARING EVIDENCES ON RECORD AND FACTS AVAILABLE IN THIS REGARD WHICH ARE AS DISCUSSED. ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 5 - [5.2] AS REGARDS THE CENVAT CREDIT TO THE TUNE OF 1,85,49,005/-, THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE SOLD THE F INISHED GOODS MADE OUT OF THE RAW MATERIALS INCLUDING IMPORTED / HIGH SEAS PURCHASES AND COLLECTED THE EXCISE DUTY ON THE FINISHED GOODS. HO WEVER, AS PER EXCISE DEPARTMENT, THE AVAILABILITY OF VEHICLES ON THE OTH ER CHECK POSTS AS PER REPORT OF TRANSPORT COMMISSIONER OF GUJARAT PROVES THAT SAID VEHICLES WERE NOT USED FOR THE TRANSPORTATION OF COPPER FROM NEW DELHI TO THE FACTORIES OF MANUFACTURERS OF COPPERS. SOME ENTRIES WERE EXPLAINED IN THE SCN. IT IS FURTHER STATED IN SCN THAT SHRI MEVA LA RAMPADHARATH RAJMAR OWNER OF VEHICLE NO.GJ-L-K-3800 CATEGORICALL Y ADMITTED THAT HIS VEHICLE NO.GJ-L-K-3800 HAS NEVER LIFTED/DELIVER ED GOODS FROM DELHI AS THE SAID VEHICLE IS NOT HAVING PERMIT TO ENTER D ELHI, WHICH PROVES THAT THE SAID LR NO.DLI-101-6541 ISSUED BY M/S TIME & SPACE HAULERS IS A FAKE LR AND NO GOODS HAVE BEEN TRANSPO RTED FROM DELHI AS MENTIONED THEREIN. [5.3] IN VIEW OF THE FACTS AND CIRCUMSTANCES NARR ATED IN SCN DATED 04- 10-2007, IT IS FOUND THAT THE ASSESSEE COMPANY HAS WRONGLY AVAILED THE CENVAT CREDIT AMOUNTING TO 1,85,49,005/ ON IMPORTED REMELTED COPPER INGOTS/WIRE BARS CLEARED FROM ICD TUGHLAQUAB AD AS DETAILED IN ANNEXURE-A TO THE SHOW CAUSE NOTICE ISSUED BY THE E XCISE DEPARTMENT. IT HAS BEEN CONCLUDED THAT THE MATERIAL IMPORTED HA S NOT BEEN UTILIZED FOR THE PURPOSE OF PRODUCTION AND SOLD IN AND AROUN D DELHI. THE ASSESSEE HAS AVAILED/CLAIMED WRONG CENVAT CREDIT TO THE TUNE OF 1,85,49,005/-WHICH IS IN FACT, BOGUS EXPENSES CLAIM ED FOR THE YEAR UNDER CONSIDERATION. THIS IS A NEW EVIDENCES/INFORM ATION GATHERED IN THE CASE OF THE ASSESSEE. SUCH INFORMATION WAS NOT PROVIDED BY THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT P ROCEEDINGS. THIS ACT OF THE ASSESSEE, IN NOT DISCLOSING TRUE AND CORRECT AFFAIRS OF ITS BUSINESS, IS DELIBERATE AND WITH A VIEW TO AVOID THE PAYMENT OF LEGITIMATE TAX DUES. THEREFORE, BAD CLAIM OF CENVAT CREDIT TO THE TUNE OF 1,85,49,005/- IS DISALLOWED FOR THE YEAR UNDER CONSIDERATION AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 6 - 4. THE ASSESSEE CHALLENGED THE IMPUGNED REASSESSME NT ORDER BEFORE CIT(A) ON BOTH COUNTS, I.E. THE JURISDICTION UNDER SECTION 147 OF THE ACT AS WELL AS ON MERITS. THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE ON MERITS ON APPRAISAL OF FACTS AND ACCORDINGLY AB STAINED FROM DECIDING THE LEGAL ISSUE RAISED TOWARDS LACK OF JURISDICTION UNDER SECTION 147 OF THE ACT. THE RELEVANT PARA OF THE ORDER OF THE CIT(A) DEALING WITH THE MERITS OF THE CASE READS AS UNDER:- 5.6 DECISION : I HAVE CONSIDERED CAREFULLY THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CO NTENTION RAISED BY THE AR OF THE APPELLANT. THE AO MADE ADDITION O N THE BASIS OF THE SHOW-CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE DEPARTMENT. THE FACTS OF THE CASE IS THAT THE CENT RAL EXCISE DEPTT. HAD FOUND THAT THE APPELLANT HAD APPARENTLY MISUSED CENVAT CREDITS ALTHOUGH THE IMPORTED RAW MATERIALS HAVE NO T BEEN USED FOR THE MANUFACTURING/PRODUCTION. ACCORDINGLY, THE Y ISSUE A SCN TO THE APPELLANT AND A COPY OF THE SCN WAS FORWARDE D TO THE AO. THE AO PROMPTLY REOPENED THE ASSESSMENT AND MADE DI SALLOWANCE OF RS.1,85,49,005/- AND ADDED TO THE INCOME OF THE APPELLANT IN SPITE OF THE OPPOSITION BY THE APPELLANT. THE LD.A R CONTENDED BEFORE ME THAT THE AO COMPLETELY IGNORED ALL THE MA TERIAL FACTS SUBMITTED BEFORE HIM FOR MAKING THAT ADDITION. THE AO HAS NOT BROUGHT ON RECORD HOW THE PROPOSED CENVAT CREDIT WI THDRAWN BY THE CENTRAL EXCISE DEPARTMENT BECOME THE INCOME COMPONENT IN THIS CASE. MORE SO, WHEN THE AO HAS NOT DISTURB THE BOTH SALES AND PURCHASES REFLECTED IN THE P&L A/C. OF THE APPE LLANT. ONCE MORE IMPORTANT ASPECT I.E. THE CENVAT CREDIT HAS NO T BEEN REFLECTED IN THE P&L A/C BUT THE AO DISALLOWED IT W ITHOUT REJECTING BOOKS OF A/C. OF THE APPELLANT. IN THIS FACTUAL MA TRIX, THE LD.AR ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 7 - MADE FURTHER CLARITY INTO THE WHOLE TRANSACTIONS BY HIS SUBMISSIONS MENTIONED ABOVE. IN THIS BACKGROUND IT IS IMPORTAN T TO UNDERSTAND WHAT IS CENVAT CREDIT AND DOES THE SO CALLED MISUTI LISATION OF CENVAT CREDIT AMOUNTS TO CONCEALMENT OF INCOME. IN OTHER WORDS, WHETHER CENVAT CREDIT MISUTILISATION HAS RES ULTED TO INCOME IN THE HANDS OF THE APPELLANT? CENVAT CREDI T IS LINKED TO THE IMPORT OF RAW MATERIALS AND PRODUCTION THEREOF. IN CASE A PARTY IMPORTS THE RAW MATERIALS AND SELLS DIRECTLY WITHOUT MANUFACTURING, IN THE COST OF THE IMPORTED RAW MATE RIAL IS RS.100/-, THE APPELLANT GETS A CENVAT CREDIT OF RS .10/-. WHEN THE GOODS ARE MANUFACTURED AND SOLD THIS RS.10/- IS ADJUSTED AGAINST THE PAYMENT OF DUTY. IN THE INSTANT CASE, THE APPELLANT FOLLOWS THE EXCLUSIVE METHOD OF ACCOUNTING I.E. A S EPARATE A/C. IS MAINTAINED FOR EXCISE DUTY. HENCE, THE CENVAT CRED IT HAS NOT BEEN ROUTED THROUGH P&L A/C. WHICH IS ALLOWED BY TH E PRINCIPLES OF AS. THEN, HOW CAN THE AO DISALLOW AN ITEM WHICH WAS NOT CLAIMED BY THE APPELLANT. THE NEXT QUESTION IS TO BE ANSWERED IS WHETHER DISALLOWANCE OF CENVAT CREDIT WILL RESULT I N INCOME OF THE APPELLANT? IN MY HUMBLE OPINION, CENVAT CREDIT DISALLOWANCE CANNOT FORM INCOME BECAUSE IF THE PU RCHASES ON WHICH CENVAT CREDIT HAS BEEN AVAILED AND CLAIMED AL LEGED TO BE BOGUS, THEN CORRESPONDING SALE FIGURES WILL ALSO GE T DISTURBED AS FAR AS INCOME TAX ANGLE IS CONCERNED. THE AO HAS N OT GIVEN HIS FINDINGS THAT THERE IS DEFICIENCY IN THE BOOKS OF A /C OF THE APPELLANT. IN MY VIEW THE AO HAS NOT APPLIED HIS MIND INTO THE CONCEPT OF INCOME VIS--VIS THE CENVAT CREDIT. THERE IS ALSO NOTHING ON RECORD TO SHOW THAT THE CENTRAL EXCISE DEPARTMENT H AS FINALLY CHARGED THE APPELLANT OF MISUTILISATION OF CENVAT C REDIT AS ALLEGED IN THE SHOW-CAUSE NOTICE. THE ADDITIONS ON THE BASIS OF SHOW-CAUSE NOTICE AND WITHOUT PROPER APPLI CATION OF CONCEPT OF INCOME WITH REGARDS TO THE CENVAT CRE DIT DISALLOWANCE AUTOMATICALLY CANNOT FORM PART OF INCO ME OF THE APPELLANT. ON THE OTHER HAND IF THE CENVAT CREDIT DISALLOWANCE IS CONSIDERED FROM THE INCOME TAX ANGLE, THE PROFIT S SHOWN WILL BE ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 8 - REDUCED THEREBY RESULTING TO LESS TAX LIABILITY, WH ICH THE APPELLANT MIGHT GLEEFULLY ACCEPT, DEFINITELY NOT A DESIRABLE ACTION FROM THE AO. HAVING CONSIDERED THE ABOVE AND FROM THE DETAI LS FURNISHED BY THE AR IT IS QUITE CLEAR THAT PURPORTED CENVAT C REDIT MISUTILISATION OF RS.1,85,49,005/- HAS EFFECTED NEI THER NET PROFIT NOR TAXABLE INCOME OF THE APPELLANT. HENCE, THE AO IS DIRECTED TO DELETE THE ADDITION MADE IN THIS GROUND. THEREFORE , THIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL. 6. THE LD.DR FOR THE REVENUE RELIED UPON THE RE-ASS ESSMENT ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE HAS MISUTILI SED THE CENVAT CREDIT WHICH HAS BEEN RIGHTLY BROUGHT TO TAX BY TH E AO. THE LD.DR SUBMITTED THAT THE ACTION OF THE CIT(A) IN BRINGING DOWN THE ADDITIONS MADE IS THUS UNCALLED FOR AND REQUIRES TO BE REVERS ED. 7. THE LD.AR, ON THE OTHER HAND, REITERATED ITS SUB MISSIONS MADE BEFORE THE LOWER AUTHORITIES AND CONTENDED THAT THE SHOW-CAUSE NOTICE (SCN) ISSUED BY THE CENTRAL EXCISE AUTHORITIES WHIC H IS THE SOLE BASIS FOR THE ENTIRE ACTION HAS NOT ACHIEVED ANY FINALITY . THE AO HAS NOT MADE ANY INDEPENDENT INQUIRY TO REBUT THE VARIOUS SUBMIS SIONS MADE BY THE ASSESSEE IN THE COURSE OF RE-ASSESSMENT PROCEEDINGS AS WELL AS THE APPELLATE PROCEEDINGS. THE BOOKS OF ACCOUNTS OF TH E ASSESSEE WAS NOT REJECTED. THE AO HAS MERELY ACCEPTED THE CONTENTS OF THE SHOW-CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE AUTHORITIES AS GOSPEL TRUTH. NO ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 9 - ENQUIRY WHATSOEVER WAS MADE TO CORROBORATE THE ALLE GATION MADE BY THE CENTRAL EXCISE AUTHORITIES. THE LD.AR, SECONDLY, O BJECTED TO THE ADDITION ON THE PREMISE THAT THE ALLEGED MISUTILISA TION OF CENVAT CREDIT HAS NOT BEEN ROUTED THROUGH THE PROFIT & LOSS ACCOU NT AND THEREFORE HAS NO EFFECT ON THE ULTIMATE PROFITS OF THE ASSESSEE. THE LD.AR NEXT CONTENDED THAT THE CIT(A) HAS RIGHTLY APPRECIATED T HE FACTS IN PERSPECTIVE. THE COUNTER VEILING CUSTOM DUTY (CVD) ACTUALLY PAID ON THE HIGH SEAS PURCHASE HAS NOT BEEN DISPUTED. THE CORRESPONDING MANUFACTURE OF GOODS AND SALE THEREOF OWING TO SUCH HIGH SEAS PURCHASE HAS NOT BEEN DISTURBED. THE LD.AR SUBMITTED THAT I N THE ABSENCE OF PURCHASE, THE CORRESPONDING PRODUCTION AND SALE CAN NOT HAPPEN. THUS, THE ACTION OF THE AO IS VITIATED ON THIS SCORE ALSO . THE LD.AR RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF FUTURA CERAMICS (P.) LTD. VS. STATE OF GUJARAT REPORTED I N [2013] 40 TAXMANN.COM 404 (GUJARAT) AND POINTED OUT THAT MERE LY BECAUSE EXCISE DEPARTMENT ISSUED A SCN CANNOT BE A GROUND TO PRESU ME AND CONCLUDE THAT THERE WAS EVASION OF EXCISE DUTY. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE O RDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE-LAW CITED BY THE LD.AR. WE FIND OURSELVES IN COMPLETE AGREEMENT WITH THE CONCLUSION ARRIVED AT BY THE CIT(A) ON MERITS. THE CIT(A) HAS OBSERVED AS NOTED SUPRA THAT THERE IS ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 10 - NOTHING ON RECORD TO SHOW THAT CENTRAL EXCISE DEPAR TMENT HAS FINALLY CHARGED THE ASSESSEE OF MISUTILISATION OF CENVAT CR EDIT AS ALLEGED IN THE SCN. WE FIND THAT THE AO HAS NOT SUPPORTED THE ALLEGATION MADE IN THE SCN BY ANY INDEPENDENT MATERIAL IN CORROBORATIO N THERETO. WE ALSO FIND FORCE IN THE ARGUMENT OF THE ASSESSEE THAT MAN UFACTURE AND SALE OF THE FINISHED GOODS WOULD NATURALLY INVOLVE CORRESP ONDING PURCHASE OF RAW-MATERIAL. IT WAS FOR THE AO TO ESTABLISH THAT THE IMPORTED/HIGH SEAS PURCHASE ON WHICH CUSTOM DUTY WAS PAID HAS NOT BEE N UTILIZED FOR MANUFACTURE/SALE OF FINISHED GOODS. THE AO HAS FAI LED ON THIS COUNT TOO. THE ALLEGATION OF MISUTILISATION OF CENVAT CREDIT I S THUS BEREFT OF ANY CREDIBLE CREDENCE. THUS, IN THE TOTALITY OF THE FAC TS AND CIRCUMSTANCES OF THE CASE, THE ACTION OF THE AO IN MAKING ADDITIONS TOWARDS MISUTILISATION OF CENVAT CREDIT IS DEVOID OF MERIT. THE CIT(A) IN OUR VIEW HAS RIGHTLY REVERSED THE ACTION OF AO. ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A). 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 05/ 01/2017 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 05/ 01 /2017 3..),.)../ T.C. NAIR, SR. PS ITA NO. 1449/AH D/2012 ASST. CIT VS. M/S.SUNMET INDUSTRIES ASST.YEAR 2005-06 - 11 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-1, VALSAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 3.1.17 (DICTATION-PAD 17- P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 4.1.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.5.1.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 5.1.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER