TMI Blog2014 (7) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... Dispatch Register prepared by Pratham Transport, Jamnagar. We find from the record that entries made in the Daily Dispatch Register shows diversion only in respect of 8 trucks. The said entries show supplies being made to Major Cement and not to New Kishan Cement. Supplies made to New Kishan Cement cannot be disputed in any event. However, while examining the issue as to whether the entries made in the Daily Dispatch Register with regard to supplies made to Major Cement could be accepted as correct, we find that there is no tangible evidence to support the said entries. Moreover, it is not the case of the Revenue that the said entries were made under the instruction of New Kishan Cement and Major Cement. New Kishan and Major Cement have absolutely no control over the said records. Therefore, we accordingly hold that the allegation of only receiving invoices from Radhey Vyapar Ltd without physically receiving pet coke, cannot be sustained. Commissioner while ordering for confiscation, imposing redemption fine and penalty, in connection with the Show Cause Notice dated 21.10.08, has not entered any categorical finding to sustain the said order - Impugned order is set aside - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ker and are duly registered with the Central Excise department. According to New Kishan Cement, the major raw material required for manufacture of cement and clinker are silica, lime stone, pet coke, clay, coke dust/coke breeze, fly ash, gypsum etc. The process of manufacture involved is that raw materials i.e limestone, clay, silica sand, pet coke are mixed proportionately and fed into Raw Mills. The same materials are grinded in the Raw Mill and resultant products are called as Raw Mill Mix , which is further fed into Vertical Shaft Kiln where it is heated at a temperature of 1300 to 1400 degree to obtain clinker. The said clinker is further grinded in Cement Mill along with gypsum and/or fly ash to get cement. 5. Acting on intelligence that New Kishan Cement is availing Cenvat Credit on the invoices of pet coke without physically receiving the same, unit was searched by the officers of Central Excise on 26.4.08. It was noticed during the search operations that New Kishan Cement had shown a quantity of 1153.735 MT of pet coke as stock on 26.4.08, in their Cenvat Account Register and nil stock of coke dust/coke breeze/other coke (non cenvatable inputs) in the Raw Material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again visited the factory premises of New Kishan Cement and drew representative samples once again and Panchnama was also drawn in this regard. The representatives samples drawn on 3.5.08 were sent for chemical test at National Small Industries Corporation Ltd (NSIC), Rajkot vide letter dated 5.5.08. The Manager (Testing) vide Test Report dated 7.5.08 forwarded the Test Report bearing No 10858 dated 7.5.08 confirming the contents of the samples drawn on 3.5.08. The Test Report dated 7.5.08, which is annexed with the Appeal Paper Book, as per the case of the Revenue, is to the effect that the sample drawn on 3.5.08 is not Pet coke. 8. Placing reliance upon the statements referred to hereinabove, Test Report dated 7.5.08 and computer print outs taken from the hard disk of one of the suppliers of Pet coke, 2 Show Cause Notices dated 21.10.08 and 29.3.2011 were issued to New Kishan Cement. The Show Cause Notice dated 21.10.08 was issued proposing confiscation of the alleged unaccounted stock of cement which was placed under seizure on 26.4.08. The Show Cause Notice dated 29.03.11 was issued alleging wrongful availment of Cenvat Credit on the basis of invoices of Pet coke without act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Corrigendum issued to New Kishan Cement reads thus: In the aforesaid Show Cause Notice at para No 3 the following words be deleted. The representative samples were, therefore, drawn for testing and ascertaining its actual description and composition. 12. Further, on 15.02.13, the Superintendent, Central Excise Headquarters, Rajkot issued a letter to New Kishan Cement informing that on verification of Panchnama dated 26.4.08, drawn at the factory premises of New Kishan Cement, it has been observed that there was no narration regarding drawal of any samples. In the absence of any narration for Pet coke regarding drawal of samples and sealing the same in the presence of independent panchas, it cannot be said that any samples were drawn from the factory premises of M/s New Kishan Cement Pvt Ltd on 26.4.08 and hence, the request made by New Kishan in this regard is not relevant for adjudication of the case. By the very same letter dated 15.2.13, the decision of the Adjudicating Authority regarding rejection of the request for cross examination of the persons named in the letter dated 11.9.09 was also informed to New Kishan Cement. Rebutting the allegation made in the Show Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Ashok Vasani, Partner of M/s Samrat Cement, xiv) Shri Bhavin Pabari, Proprietor of M/s RadheyVyapar Ltd, xv) M/s Pyramid Portland Cement, xvi) M/s Om Sai Ram Transport, xvii) Shri Pravin Bhandari, Managing Director of M/s Pyramid Portland Cement, xviii) M/s Pratham Transport, xix) M/s Nilkanth Cement, xx) M/s Kailash Cement Industries, xxi) M/s Tapee Cement, xxii) Shri Khodidas Sojitra, Director of M/s Nikant Cement, xxiii) Shri Arvind G Sakhiya, Parttner of M/s Tapee Cement, xxiv) Shri Dhiraj Rangani, Partner of M/s Kailash Cement Industries, xxv) Shri Shashikant Koticha, Director of M/s Jayshree Vyapar Ltd. xxvi) Shri Gautam Patel, Partner of M/s Karan Marketing, xxvii) Shri Chandrakant Patel, Partner of M/s Karan Marketing 15. The Commissioner, after considering the replies and submissions made during the personal hearing, vide Order-in-Original dated 25.3.13 has held thus: (i) Cenvat Credit of ₹ 1,36,00,295/- taken by New Kishan Cement is to be denied and liable to be recovered under Rule 14 of the Cenvat Credit Rules, 2004 [CCR, 2004] read with proviso to Section 11A (1) of the Central Excise Act, 1944 [hereinafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the appeals preferred by Major Cement and other connected appeals preferred against Order-in-Original dated 31.3.13. However, some relevant facts, which would be necessary to be referred to while deciding the present appeal also are stated in brief thus: 21. Major Cement is also engaged in the manufacture of Cement and Clinker and are duly registered with the Central Excise Department. Acting on an intelligence that Major Cement is availing Cenvat Credit on the invoices of pet coke without actually receiving the same, the Unit was searched by the Officers of Central Excise on 26.4.08. Simultaneous search was also conducted at the office premises of Major Cement at Rajkot. Samples were also drawn from the factory premises of Major Cement on 3.5.08 from the heap of Pet coke lying in the factory premises under Panchnama dated 3.5.08 and sent for chemical test at NSIC vide letter dated 5.5.08. The Manager (Testing), NSIC vide Test Report dated 7.5.08 confirmed the contents of the sample as Coke and not of Pet coke. The very same statements which have been recorded during the course of investigation in the case of New Kishan Cement has been relied upon in the Show Cause Notice date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , xx) Shri Sashkiikant Koticha, xxi) Shri Gautam Patel, xxii) Shri Chandrakant J Patel 24. New Kishan Cement and Major Cement are in appeal before us. Besides New Kishan and Major Cement, co-noticees against whom penalty has been imposed by the Commissioner are also in appeal before use. 25. On behalf of New Kishan Cement and Major Cement, arguments were addressed by ld. Counsel Mr. C. Hari Shankar along with Devashis K. Trivedi, Advocate. Connected appeals, were represented by Shri P.D. Racch and Mrs.Muskan Gogia, Advocates. 26. It is the submission of the learned Counsel appearing on behalf of New Kishan Cement and Major Cement that for sustaining the allegation against New Kishan Cement and Major Cement of availing cenvat credit on the basis of invoices without actually receiving Pet coke, the evidence relied upon by the Revenue falls under two categories, i.e. a) test report dated 7.5.08 of NSIC in respect of Coke found in the factory premises of New Kishan Cement and Major Cement on 3.5.08 which, though stated to be Pet coke, is alleged, as per the test report, to be Coke powder, b) statements of suppliers of Pet coke and some of the outstation buyers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent at Sl No 23 24 respectively of the annexure to the said panchanama but in the absence of any narration in the panchanama that samples were being drawn and separately packed in 2 packets, it cannot be said that any samples were drawn on 26.4.08. The only inference that can be drawn from the entries at Sl No 23 24 of the annexure is that 3 packets of pet coke and 3 packets of cement were taken into custody from their premises by the officers. Further, the statement dated 14.10.2008 of Shri Rajan Vadaliya, Director of M/s New Kishan also refers to samples drawn on 2.5.08 and there is no reference to any samples drawn on 26.4.08. There is a difference between formally drawing of samples of any goods for testing and mere taking into custody of ready-to-carry packets of such goods in the absence of any narration regarding actual drawal of samples in the panchanama, the contention of M/s New Kishan that samples were drawn on 26.4.08 is not supported by the facts on record. 30. The ld. Counsel further submitted that it was not open for the Revenue to rely upon the test report as per their convenience. In view of the discrepancies pointed out before the Adjudicating Authority it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese report. 31. The learned Counsel appearing on behalf of New Kishan Cement and Major Cement, further submitted that, even otherwise, the test report dated 7.5.08 was unreliable as there are two test reports on the Coke taken from the premises of Major Cement and the results are different in both the cases. Therefore, it is the submission of the learned Counsel that the Test Report would totally dependent on the method adopted for sampling. Had it been done as per BIS standards, the test report would, undoubtedly, have been in favour of New Kishan Cement and Major Cement. 32. As regards the allegation regarding taking of the credit in the past, it is the submission of the learned Counsel appearing on behalf of New Kishan Cement and Major Cement that the entire case has been based on the statements of various persons and third party documentary evidence especially in the form of data recovered from the hard disk of the computer in the premises of Kathiawad Industries. There is no documentary evidence in the form of any document or record, being maintained by New Kishan Cement and Major Cement or oral evidence which inculpates them in any manner, except one statement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is the submission of the learned counsel that there is no documentary or tangible evidence regarding non-receipt of pet coke in the factory of New Kishan Cement and Major Cement. As regards Radhe Vyapar Ltd, it is the submission of the learned Counsel that the credit of duty has been denied to New Kishan Cement and Major Cement on the basis of the statement of Shri Bhavin M Pabari, Proprietor of M/s Radhe Vyapar Ltd and a red colour diary seized from the premises of M/s Radhe Vyapar Ltd. It has been pointed out that Shri Bhavin M Pabari in his statement has admitted diversion of pet coke only in respect of 15 trucks which were consigned to New Kishan Cement and Major Cement. Therefore, even if the statement is accepted to be correct, only a quantity of 144.470 MT in case of New Kishan Cement and 128.650 MT in case of Major Cement could be said to have been diverted. Even in respect of the aforesaid quantity of 144. 470 MT and 128.650 MT (supra), it has not been clarified by the Revenue as to which specific invoices were given to New Kishan Cement and Major Cement without supply of Pet coke. No case could be made out on the basis of statement of Shri Bhavin M Pabari. Even the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence recovered from computers can be relied upon only if the pre-requisites of Section 36B(2) of the Act are strictly complied with. In the present case, there was nothing to indicate that the strict requirements of Section 36B(2) of the Act were complied in respect of the HDD printouts relied upon by the Commissioner. Reliance in this context was placed on the judgements of the Honble Tribunal in Jindal Nickel and Alloys Ltd v C.C.E, Delhi, 2012 (279) ELT 134 (Del) and Sri Chakra Cements Ltd v C.C.E. Guntur, 2008 (231) ELT 67 (Bang). (ii) Moreover, the computer printouts were tampered, as several pages had a caption inserted, on top of the page, in an added row, reading SUPPY OF COKE DUST(SOURCE-HARD DISC M/S. HINDUSTAN EXPORTS, MONTH JANUARY -2008. It is obvious that these words could not have figured in the original data as contained in the HDD, and have been inserted by the Departmental authorities. Once the Departmental authorities have tampered with the data contained in the HDD, the entire data becomes inadmissible in evidence, as its credibility is completely lost. (iii) Moreover, the HDD wherefrom the said evidence was supposedly retrieved, did not belong to N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26. They have relied upon the decision in Ispat Industries v CCE Cus, Aurangabad, 2008 (226) ELT 218. 39. The learned Counsel appearing on behalf of Hindustan Exports, Kathiawad Industries, Karan Chemicals and Karan Marketing have also submitted that revocation of Central Excise Registration was totally unjustifiable without establishing the fact that they have committed any offence under the Central Excise Act. Even otherwise, there are other provisions in the Act which duly takes care of a situation where any offence is committed by any person under the provisions of Central Excise Act. Without adopting such recourse, revocation of Central Excise Registration was totally unjustifiable. 40. The learned AR appearing for Revenue, in response to the submission made on behalf of New Kishan Cement, submitted that the learned Commissioner has passed the reasoned a detailed order and in view of the findings in the impugned order, the demand of duty and imposition of penalty was wholly justified. As regards the test report, it was submitted before us that the said report was given by NSIC which revealed that the samples drawn from the factory premises of New Kishan Cement and Majo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Test Report of NSIC and the statements of suppliers of Pet coke and of the out-station buyers of Pet coke who were allegedly interested in only getting Pet coke without any Cenvatable invoice. It could be found from the submissions referred to hereinabove that New Kishan Cement and Major Cement have strongly contended that representative samples of Pet coke were drawn for testing on 26.4.08 and the Revenue has deliberately failed to disclose the report to them for reasons best known to them. Though no evidence has been placed before us to ascertain as to whether samples drawn on 26.4.08 were actually sent for testing, we find from the records that the stand taken by New Kishan Cement and Major Cement cannot be faulted with. Para 3 of the Show Cause Notice dated 29.3.11 clearly states that representative samples were drawn for testing and ascertaining its actual description and composition. Further, this fact is also supported by the details entered in the Panchnama dated 26.4.08 at S. No 23 and 24 of the said Panchnama dated 26.4.08 which clearly shows that samples of Pet coke were actually drawn on 26.4.08. Further, the stand taken by the New Kishan Cement and Major Cement is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f samples drawn on 3.5.08, cannot be given much credence. We are unable to understand in the present case that why the samples drawn on 3.5.08 has been sent for testing to NSIC when there are reputed government laboratories for the undertaking the concerned test. The learned AR has also not been able to give any reasonable explanation in this regard. We find that New Kishan Cement and Major Cement have also disputed the methodology adopted for testing and drawing of samples. Our attention was drawn by the ld. Counsel during the course of hearing to the BIS standards specified for testing the pet coke. We find that in the BIS standards it has been clearly mentioned that samples collected from the surface of coke in piles, pins, cars, ships or barges are, in general, unreliable because of size segregation and should not be used for determining conformance to specifications unless the purchaser and the seller agree. We also find that BIS standards also specify the minimum quantity of sample of pet coke required to be drawn for testing. We find from impugned order that the Commissioner has not disputed the BIS standards. The Commissioner has sought to reject the submissions made with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request for cross-examination of person named in letter dated 11.9.09. In the impugned order, the Commissioner while addressing the issue of cross-examination has merely stated that the request for cross-examination was rejected considering the facts of case. The manner in which the adjudicating authority has dealt with the request of cross-examination is clearly incorrect. After having kept the request pending for almost two years, the Commissioner has rejected the request for cross-examination without giving any reason. In this context, it would be worthwhile to refer to the decisions cited by the ld. Counsel. Para 24 to 27 of the decision of Hon ble Delhi High Court in J K Cigarattes Ltd v CCE, 2009 (242) ELT 189, merits reproduction: 24. We may also point out at this stage itself that the power of the Parliament to make such a provision is not in question. It is also conceded by the learned senior counsel appearing for the petitioners in this case that such a provision could be incorporated in the statute, which is pari materia of Section 32 of the Evidence Act viz., to rely upon statements of certain persons even when they have not been produced for cross-examina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... miscarriage of justice. Similarly, provisions under Section 9D provide for relevancy of statements recorded under Section 14 of the Act, under certain circumstances, in criminal as well as quasi judicial proceedings, to meet the ends of justice. 27. We, thus, are intent to agree with the submission of the learned Addl. Solicitor General that if an Act of Parliament uses the same language which was used in a former Act of Parliament referring to the same subject, viz. relevancy of statement of fact by person who is dead or cannot be found under certain circumstances, passed with the same purpose and for the same object, the safe and well known rule of construction is to assume that the legislature, when using well-known words upon which there have been well known decisions, use those words in the sense which the decisions have attached to them. The provisions under Section 32 of the Evidence Act have not been found to be ultra vires of the Constitution. Therefore, the provisions under Section 9D of the Act, which are pari materia with the provisions under Section 32 of the Evidence Act, cannot be held as ultra vires of the Constitution. 28. The moot question that arises at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for forming the opinion. Only then, it would be possible for the affected party to challenge such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject to judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted. 46. Aforesaid decision, therefore, clearly holds that where the case does not fall within one of the circumstances contemplated by clause (i) of Section 9D of the Central Excise Act, then it is mandatory to allow cross-examination of the person whose statements have been relied upon. This legal position has once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70 Mts of pet coke. However, we find from the records that Revenue has failed to bring anything on record to clarify which specific invoices were given to New Kishan Cement and Major Cement without supply of pet coke . We, therefore, hold that the allegation of non-receipt of pet coke from Radhey Vyapar Ltd, is totally presumptuous. The inference drawn in the impugned order regarding non-receipt of pet coke, therefore, is not supported by the evidence on record. Regarding non-receipt of pet coke from Jayshree Vyapar Ltd, we find that the only documentary evidence is in the form of Daily Dispatch Register prepared by Pratham Transport, Jamnagar. We find from the record that entries made in the Daily Dispatch Register shows diversion only in respect of 8 trucks. The said entries show supplies being made to Major Cement and not to New Kishan Cement. Therefore, supplies made to New Kishan Cement cannot be disputed in any event. However, while examining the issue as to whether the entries made in the Daily Dispatch Register with regard to supplies made to Major Cement could be accepted as correct, we find that there is no tangible evidence to support the said entries. Moreover, it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not even the case of the Revenue that the data has been entered in the Computer as per the instructions of New Kishan Cement and Major Cement. We also find that there is nothing to indicate that the Computer Print outs taken from the Hard Disc of the said computer was in regular use by Hindustan Exports and Kathiawad Industries. In such an eventuality, we are constrained to hold that computer print outs taken from the Hard Disk of the computer recovered from Hindustan Exports and Kathiawad Industries. While taking such a view, we are also guided by the decision of the coordinate bench of this Tribunal in the case of Jindal Nickel and Alloys Ltd v CCE, 2012 (279) ELT 134 and in the case of Sri Chakra Cements Ltd v CCE, 2008 (231) ELT 67. In the case of Jindal Nickel and Alloys Ltd (supra), it has been held that if the computer print outs are taken from a Computer which is not under the control of the person against whom the demand has been raised, it would be hit by provisions of Section 36B(2) of the Act. In the case of Sri Chakra Cements Ltd (supra), it has been held that the computer prints outs have not evidentiary value in case the print outs have been taken from a Computer whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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