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2023 (9) TMI 1189 - AT - Central ExciseCENVAT Credit - imported scrap - denial of inputs on the ground that the destination mentioned in the DLRs was Bhiwandi, the said imported inputs were diverted to local markets and sold in cash and that the imported inputs so diverted were substituted with bazaar (local) non-duty paid scrap - penalty - HELD THAT:- This Tribunal in various cases has held that since there is not even an iota of evidence of disposal of the goods at Bhiwandi/ Navi Mumbai, there being not even a single buyer of the goods who is identified and there being no evidence of receipt of any cash against such alleged disposal, the Cenvat Credit cannot be denied merely on the ground that the destination mentioned in the DLRs/ MLRs of the transporter, Pankaj Shipping and Transport Co was Bhiwandi/ Navi Mumbai. This Tribunal has further held that in the absence of any evidence of procurement of the scrap from alternate source/ bazaar scrap, it cannot be assumed that the imported duty paid scrap was substituted with local non-duty paid bazaar Scrap and the Cenvat Credit of the duty paid on the imported scrap cannot be denied. Reliance can be placed in M/S SUNLAND ALLOYS, PRAVIN KUMAR A RANKA, SHIVRAJ SINGHAL VERSUS C.C.E. & S.T. -VAPI [2015 (10) TMI 1104 - CESTAT AHMEDABAD] and M/S SUNLAND METAL RECYCLING INDUSTRIES, SHRI SURENDRA P. KACHHARA VERSUS COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VAPI [2016 (2) TMI 534 - CESTAT AHMEDABAD]. In the instant case, it can be observed that at the time of search of the factory on 1-12-2006 no bazaar scrap was found in the factory, there is absolutely no evidence of procurement of local non-duty paid bazaar scrap for substitution of the imported duty paid scrap. In fact, Rajeshwar R. Dubey has in his Statement dated 29-11-2007 stated that the Appellants were not purchasing any Scrap from the local market. There is not a single buyer identified to whom the imported duty paid scrap was allegedly sold and there is no evidence whatever of any cash received by the Appellant for such alleged sale. In that view, it is impossible to hold that there is diversion of 842 M.Tons worth Rs. 5 crores without even a single buyer being identified and without any evidence of receipt of cash payment by the Appellant of such a large amount; all the imported duty paid inputs have been duly accounted for in RG 23 A Register and the final products have been manufactured and cleared on payment of duty. Since, the DRI has withdrawn all the records, the Appellants cannot be expected to produce documents showing transport of the imported scrap to the Appellants’ factory - On identical facts in the case of Sunland Metal Recycling Industries and Ors v CCE, Vapi, this Tribunal has held that where DRI had just prior to investigations by DGCEI taken away all records pertaining to the import of scrap, the manufacturer cannot be expected to produce documents showing transport and receipt of the goods in the factory. Further, since none of the deponents of the Statements recorded by DGCEI have been examined in the adjudication proceedings, as required by Section 9D of the Central Excise Act 1944, the same cannot be considered as evidence. Thus, the revenue could not establish that the appellant have not received the input in their factory, hence the demand of Cenvat credit in the present case is not sustainable. Consequently the penalties are also not sustainable. Appeal allowed.
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