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2015 (7) TMI 497 - CESTAT NEW DELHI

2015 (7) TMI 497 - CESTAT NEW DELHI - TMI - Denial of CENVAT Credit - Bogus invoices - third party evidence by way of documents/laptop printout seized recovered - Imposition of penalty - Held that:- Third party evidence by way of documents/laptop printout seized recovered from the custody of ShriKirti Kala are not admissible piece of evidence to deny the credit. Further, I find that the statements of Shri Kirti Kala, Paras Patidar and Shri Mukesh Sangla were also relied upon but these statements .....

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y is proved by such person, it is presumed that the content of the said documents true. In this case, the Revenue has not been able to prove any contrary to the seized documents recovered from the custody of the respondent. Therefore, the same are admissible evidence in favour of the respondent as held by this Tribunal in the case of Rhino Rubber (1994 (4) TMI 196 - CEGAT, MADRAS).

In fact no statement of the driver have been recorded to ascertain the truth whether the vehicle in que .....

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ing that there are no sufficient ground to confirm the demand .and the said order has been accepted by the Revenue. No appeal has been filed against the said order.

On examination of that statement, although the statement retracted by Shri Karni Singh Kothri, this statement is required to be examined independently. On independent examination of the said statement, I find that the goods/inputs were not available in the Indore and the respondent have procured the inputs from the open ma .....

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rmity in the impugned orders, the same are upheld - Decided partly in favour of Revenue. - Appeal No. E/50825-50827/2014-EX(SM) With E/CROSS/52304-52305/2014, Appeal No. E/51365-51367/2014(SM) With E/CROSS/52954-52955/2014 - Final Order No. 51910-51915/2015 - Dated:- 17-6-2015 - Hon ble Mr. Ashok Jindal, Member (Judicial),J. For the Appellant : Shri Devender Singh, AR For the Respondents : Shri Alok Bharthwal, Advocate ORDER Per Ashok Jindal : Appeal No.E/51365-51367/2014(SM) The Revenue is in a .....

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Director of the Respondent No.1 and Respondent No.3 is the Managing Director of a different manufacturing unit/company namely M/s.Signet Overseas Ltd., Indore. The Respondent No.1 is also availing the facility of cenvat credit o duty paid on inputs & Capital goods as per the provisions of Cenvat Credit Rules, 2004. 2.2 The officers of DGCEI, Regional Unit, Indore acting upon an intelligence that a number of manufacturing units/company namely, M/s.Signet Overseas Ltd., M/s.Kamdeep Marketing .....

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searches on 06.12.2007 at the following premises:- 1. Office premises of M/s SOL and its associate companies namely M/s KMPL M/s SMA, M/s SPET & M/s LPP. All office premises are situated at Indore; 2. Factory and godown premises of M/s LPP. 3. Residential premises of Shri MukeshSangla (Appellant No. 3), Managing Director of M/s SOL and the authorized signatory or the proprietor of associate companies viz. M/s KMPL, M/s SMA, M/s SPET & M/s LPP; 4. Residential premises of Shri Kirti Mahesh .....

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, three lap-top computers at residential premises of Shri Kirti Maheshchandra Kala were seized by the DGCEI Officers, RU, Indore. At residential premises of ShriKirti Kala, the departmental officers recovered and seized a file marked A/3 containing several handwritten slips indicating details of transactions on a given date. In his statement recorded by the Officers on the spot, he revealed that the said file contains slips bearing details of case transactions which had been prepared by himself .....

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tex lap-top seized from his residence, he had maintained all the cash accounts in the same in the accounting Software namely Tally , for the period October, 2005 to December, 2007, as per instructions of the Respondent No. 3. 2.4 The transactions pertaining to receipts and payments made in cash, as appearing in the ledgers, maintained on the laptop of Shri Kala were compared with the hand written entries on slips seized from the residence of Shri Kala. The date on lap-top was found to be tallyin .....

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tually sold. These documents indicated that M/s SOL and its other associates had sold the duty paid polymers to different buyers without issuing any invoice. 2.5 In his statement dated 6.12.07 recorded by the DGCEI Officers, the Respondent No. 3 had stated- that M/s SOL had been purchasing plastic polymers i.e. HDPE/LDPE/LLDPE granules etc. from M/s Haldia Petochemicals Ltd. Kolkata, M/s DCW Ltd. Shahaupuram and M/s South Asia Petrochemicals Ltd. Haldia. He stated that M/s SOL, registered as a f .....

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ayment in case (ii) receipt by cheques & (iii) VAT, in his statement dated 18.02.09 of Shri Kirti Kala recorded by the DGCEI Officer, Shri Kala had stated that they supplied invoices of polymers to the Respondent No. 1 without actually supplying the goods as mentioned in these invoices. Accordingly, payment received from the Respondent No. 1 through cheques against such fraudulent invoices was returned in case to them. Further, Statement dated 20.02.09 of Shri Paras Patidar, revealed that M/ .....

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and associates which indicated that the entire amount which has been received by M/s SOL and its Associates by cheque was in respect of bogus or fake invoices issued by them to the Respondent No. 1. 2.6 The difference in value of sales as per details in the ledger on Kala s laptop and in the statutory ledgers indicates the extent of bogus invoices provided by M/s.SOL and associates to the Respondent No.1 during 1.10.05 to 5.12.07. In all 114 invoices out of 154 invoices issued by M/s. SOL durin .....

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.SOL to the appellant No.1 and vehicles were never attached to Blue Bird Transport Corporation/ Bombay Goods Freight Cargo. Further, Statement of the Respondent No. 2 was recorded on 13.3.09 wherein he stated that they had been purchasing material from M/s SOL. He stated that the payment to transporter is made either by them or trough suppliers. On being shown the statement of owners of vehicles shown to have been used in transportation of PVC resigns under invoices issued by m/s.SOL to the Resp .....

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. This act of the Appellant no.1 with support of appellant No.2 and No.3 appeared to be tantamount as wilful suppression of facts, mis-declaration and contravention of the relevant provisions of Central Excise Act, 1944, Central Excise Rules, 2002 and Cenvat Credit Rules, 2004 with sole intent to evade payment of Central Excise duty. As such, all the three appellants were appeared to render themselves liable for appropriate punishment by the concerned tax department of Govt.of India. 3. A show c .....

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enalty on all the respondents. Aggrieved with the said orders, the Revenue is in appeals before me. 4. Ms.Ranjana jha, learned AR submits that the allegation against M/s.Rajshri Plastwood is that they have availed cenvat credit on the strength of invoices issued by M/s.KMPL and M/s.SMA without actually receiving the goods. To support this allegation, she submits that the following main evidences are in favour of the Revenue:- (i) Recovery of hand written slips and one lap-top from the residence .....

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of M/s.Rajshri Plastwood, Plot No.100/100A, Sector-II, Pithampur (respondent No.1) and exchanging it for cheques from non-Banking financial companies. (v) Recovery of Goods Receipts Slips, dispatch challans and sheets containing day wise list of dispatches etc from the Godown of M/s SOL from the residence of Shri Ravindra Pingle, Godown in charge. (vi) Statement of Shri Paras Patidar, Marketing Manager of M/s SOL admitting that he used to buy L.R. from M/s Bombay Goods Freight Charges (BGFC) an .....

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rom M/s.SOL to the premises of respondent No.1. (viii) Statement of the respondent No.2 the managing director of the respondent No.1 wherein he denied to have purchased or received any material from M/s.SOL. 5. She further submits that the Commissioner (Appeals) has not appreciated the fact that the investigation revealed that the respondent No.1 took the credit without receipt of goods. It is also revealed that from the investigation that the supplier of the goods did not supply the goods to th .....

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o the respondent No.1, 114 were genuine and remaining invoices were bogus. It is also admitted that Shri Kirti Kala has admitted that slips were showing cash transactions undertaken by them and cash was sent by the respondent to M/s.SOL against the invoices issued in the name of respondent No.1. The Commissioner (Appeals) failed to consider the statement of transporter who has categorically denied of having even transported the goods to the respondents No.1. Shri Mukesh Sangla, respondent No.3 h .....

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ead to conclusion that the respondent No.1 have availed the credit on the invoices against which no goods have been received by them physically. Therefore, the impugned order requires to be set aside. Consequently, the demand of duty alongwith interest to be confirmed against the respondent no.1 and penalty are requires to be imposed on all the respondents. Appeal No.E/50825-50827/2014-EX(SM 6. The Revenue is in appeals against the impugned order dropping the demand of central excise duty alongw .....

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ector of a different manufacturing unit/company namely M/s.Signet Overseas Ltd., Indore. The respondent No.1 is also availing the facility of cenvat credit of duty paid on inputs & Capital goods as per the provisions of Cenvat Credit Rules, 2004. 7.2 The officers of DGCEI, Regional Unit, Indore acting upon an intelligence that a number of manufacturing units/company namely, M/s.Signet Overseas Ltd., M/s.Kamdeep Marketing Pvt.Ltd., and M/s.Saurabh Marketing Agency [M/s.SOL,M/s.KMPL& M/s.S .....

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f M/s SOL and its associate companies namely M/s KMPL M/s SMA, M/s SPET & M/s LPP. All office premises are situated at Indore; 8. Factory and godown premises of M/s LPP. 9. Residential premises of Shri Mukesh Sangla (Appellant No. 3), Managing Director of M/s SOL and the authorized signatory or the proprietor of associate companies viz. M/s KMPL, M/s SMA, M/s SPET & M/s LPP; 10. Residential premises of Shri Kirti Mahesh chandra Kala, Cashier of M/s SOL & aforesaid associate companies .....

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heshchandra Kala were seized by the DGCEI Officers, RU, Indore. At residential premises of Shri Kirti Kala, the departmental officers recovered and seized a file marked A/3 containing several handwritten slips indicating details of transactions on a given date. In his statement recorded by the Officers on the spot, he revealed that the said file contains slips bearing details of case transactions which had been prepared by himself or by Shri C.K. Joshi, an employee of M/s SOL. On being interroga .....

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cash accounts in the same in the accounting Software namely Tally , for the period October, 2005 to December, 2007, as per instructions of the Appellant No. 3. 7.4 The transactions pertaining to receipts and payments made in cash, as appearing in the ledgers, maintained on the laptop of Shri Kala were compared with the hand written entries on slips seized from the residence of Shri Kala. The date on lap-top was found to be tallying with the entries on the hand written slips. The handwritten seiz .....

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associates had sold the duty paid polymers to different buyers without issuing any invoice. 7.5 In his statement dated 6.12.07 recorded by the DGCEI Officers, the respondent No. 3 had stated- that M/s SOL had been purchasing plastic polymers i.e. HDPE/LDPE/LLDPE granules etc. from M/s Haldia Petochemicals Ltd. Kolkata, M/s DCW Ltd. Shahaupuram and M/s South Asia Petrochemicals Ltd. Haldia. He stated that M/s SOL, registered as a first stage dealer with the Central Excise Department, had been se .....

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atement dated 18.02.09 of Shri Kirti Kala recorded by the DGCEI Officer, Shri Kala had stated that they supplied invoices of polymers to the respondent No. 1 without actually supplying the goods as mentioned in these invoices. Accordingly, payment received from the respondent No. 1 through cheques against such fraudulent invoices was returned in case to them. Further, Statement dated 20.02.09 of Shri Paras Patidar, revealed that M/s SOL had purchased the subject bogus invoices from M/s Bombay Go .....

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has been received by M/s SOL and its Associates by cheque was in respect of bogus or fake invoices issued by them to the Resonde No. 1. Besides, scrutiny of consignment-wise record of dispatches maintained by staff at Godown of M/s SOL and its Associates revealed that no dispatches of polymers were made from these places to the Respondent No. 1 during the period from 1.10.05 to 5.12.07. Further, it came to know by the DGCEI Officers that large number of consignments cleared under invoices issue .....

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these invoices without actually receiving the corresponding goods. Besides, it was found that the Resondent No. 1 had manifested receipt of polymers under 25 invoices issued by M/s SOL whereas Mr. Kala s laptop did not contain any entry representing sales from M/s SOL and associates to the Respondent No. 1 during the relevant period. Therefore, all such invoices were identified as bogus in terms of Shri Kala s ledger. Further, enquiry from the owners of some of the vehicles (statements recorded .....

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d they only procured certain invoices from them for which they had made payment by cheques to them and taken back equal amount of cash from the Appellant No. 3. On the strength of such bogus of fake invoices they had availed cenvat credit. The Respondent No. 1 had cleared excisable goods manufactured by them after payment of duty from inadmissible credit, thus such goods were cleared by them without payment of appropriate duty. In such a way, the cenvat credit amounting to ₹ 35,51,805/- wa .....

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liable for appropriate punishment by the concerned tax department of Govt. of India. 8. A show cause notice was issued to all the respondents and the same was adjudicated by the adjudicating authority demanding duty from the respondent No.1 alongwith interest and imposed penalty on all the respondents. On appeal before the Commissioner (Appeals), filed by the respondents, the Commissioner (Appeals) without going into the factual matrix of the case dropped the charge of availing cenvat credit wi .....

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8.2.2009 of Shri Kirti Kala explaining the entries. (iii) Statement dt.6.12.2007 of Shri Mukesh Sangla admitting the modus operandi and the fact that the case transaction mentioned in the laptop were not reflected in their books of accounts. (iv) Statement of Shri Pankaj Kalani, Chartered Accountant, admitting receipt of cash from Respondent No. 2 i.e. Shri Mukesh Sangla, Director of M/s SOL and exchanging it for cheques from non-Banking financial companies. (v) Corroboration of data entered in .....

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hat he used to buy L.R. from M/s Bombay Goods Freight Charges (BGFC) and M/s Blue Bird Transport Company (BBTC) at the rate of ₹ 100/- Per L.R. without supplying the goods. (x) Statement dt.18.2.09 of Sh. Kirti Kala, cashier of SOL about retaining VAT amount. (xi) Statement dt.26.2.2009 of Shri Mukesh Sangla clarifying why sale not mentioned in ledger of M/s.Parag Pentachem. (xii) Transactions pertaining to M/s.Parag Pentachem on Kala s ledgers during the period 1.10.05 to 5.12.2007. (xiii .....

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have transported any goods from M/s SOL to premises of Respondent No. 1. (xvi) Statement of Proprietor of M/s BGFC and M/s BBTC in which he admitted that he had provided bogus L.R. @ 100/- per L.R. without providing for any truck for transportation to M/s SOL and M/s KMPL. (xvii) Statement of the Respondent No. 2 the Managing Director of the Respondent No. 1 wherein he denied to have ever purchased or received any material from M/s SOL and admitted procurement of only invoices to avail and utili .....

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from M/s.SOL were not found reflected in the Kala s laptop. 10. He further submits that from the investigation it is evident that the suppliers of the goods did not supply the goods. Therefore, there was no possibility of receipt of goods by the respondent No.1. From the circumstantial evidence it has been proved that the goods have not been received by the respondent No.1 and they have made entries in the accounts to show the receipt of the goods. Non receipt of the goods have also been admitte .....

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eived there at depot of M/s.SOL and the same has been utilized by M/s.SOL whereas credit has been availed by the respondent No.1. Further, respondent No.2 who works as the Director of the respondent No.1, in his statement dated 15.12.07 has categorically accepted that they have purchased the goods from the local market of Delhi and arranged the invoices from M/s. SOL for the purpose of availing the cenvat credit. He also admitted that they have never purchased received any material from m/s.SOL .....

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t retraction of any statement should be made to authority before whom statements were given, thus, it is between the giver of the statement and person before whom the statement was given. He also relied on the decision of the Tribunal in the case of Mahesh Kumar Goyel vs. CCE, Calcutta-II-2004 (177) ELT 561 ((Tri-Kolkata) to say that merely retraction without any evidence of duress or coercion do not deflect from evidentiary value of statements, especially if facts stated therein are corroborate .....

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tached to the transporters namely, M/s.Bombay Goods Freight Cargo (BGFC) and M/s.Blue Bird Transport Company (BBTC). Shri Vishal Agarwal representing the main transporters i.e. BGFC and BBTC has confessed that though no trucks were provided by them to m/s.SOL, they have charged ₹ 100 to ShriPatidar for providing the LRs. Shri Paras Patidar, Marketing Manager of M/s.SOL in his statement dated 20.2.2009 has accepted that the purchase of LRs from M/s. BGFC and M/s. BBTC for ₹ 100/- each .....

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ndents. Therefore, he submits that the impugned orders may be set aside and the adjudication order be restored. Grounds on behalf of the all the respondents. 14. On the other hand, learned Counsel appeared on behalf of all the respondent opposed the argument advanced by the learned AR and submits that the case has been made out against the respondent is based on the written slips and laptop seized from the residence of Shri Kirti Kala, cashier of M/s.SOL and on the basis of the statement of Shri .....

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of the goods. The statement of Shri Karni Singh Kothari, director of respondent No.1 is also relied upon who denied the receipt of the goods from M/s.SOL. 15. The contention of the learned Counsel is that documents relied upon by the Revenue was seized solely from the premises of third party i.e. Shri Kirti Kala who was not maintaining the record in the regular course of business but in personal capacity and were provided the documents have no connection with the respondent No.1. Third party do .....

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e persons associated with M/s.SOL. Therefore, as per decision of Apex Court in the case of CBI vs. V.C.Shukla- AIR SC 1406, the demand cannot be sustained on the basis of these records. 16. He further submits that the same investigation was conducted against M/s.Narmada Extrusion Ltd. wherein the same set of evidences has been relied on and the Commissioner (Appeals) have set asdie the demand vide Order-in-Original No.IND/CEX/000/APP/80 & 81/2013 dt.21.2.2013 and the said order has been acce .....

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e purchasing the goods from the Delhi market without any cover of invoice. He submits that this cannot be relied upon when the goods are available in the Indore against duty paid invoices and why the respondent no.1 take risk to purchase the goods from the Delhi marker without cover of invoice. Therefore, the said statement is not reliable piece of evidence. Therefore, the statement itself proves that the said statement was given under pressure and duress as there is no evidence that the respond .....

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e submits that the statement cannot accepted as held by Hon ble Allahabad High Court in the case of Vikram Cement Pvt.Ltd.2014 (303) ELT A82 (Alld.). 17. During the course of investigation, the officers resumed input invoices, RG-1 register, the raw material register, finished goods register RG23-A Part & and Part II. The goods were fully accounted and issued for production and no discrepancy in records were found and said record/documents Therefore, the same cannot be alleged fabricated or .....

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statement of 3 vehicle owners and out 32, who refused to have transported the goods. The said allegation is not sustainable. From his statement, it can be seen that he issued the bilties only when he talked to the driver of the vehicle for which he charged commissions of ₹ 100/-. This clearly shows that the goods were transported from godown of M/s.SOL to the respondent No.1 and the statement has been deliberately misinterpreted by the Revenue. The Revenue has relied upon the statement of .....

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er documents or record to prove that the allegation of Revenue that the credit was availed without the receipt of the goods by the respondent No.1. There is no evidence that the goods from the factory were diverted elsewhere. He further submits that in case the goods consigned by DCW, the goods were consigned directly by DCW and there is no evidence how the goods have been diverted. There is no dispute that the inputs have been used in the manufacture of final products on which the duty has been .....

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and Shri Paras Patidar, Marketing Manager were made noticees. Even Shri Vishal Agarwal who alleged to have accepted the issue of bilty by charging ₹ 100/- and without transportation of goods was made noticee which shows that the show cause notice was based on assumption/presumption. In these terms, the impugned orders are to be set aside. 18. Heard both sides, considered the submissions in detail and perused the records. 19. As the facts in the case of M/s.Prag Pentachem Pvt.Ltd. and M/s. .....

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he goods in question. In the case of M/s.Prag Pentachem Pvt.Ltd., the statement of Karni Singh Kothari, director was also relied upon by the revenue. Therefore, to deal with the cases, the evidence is to be examined as under:- 21. The documents received from the custody of Shri Kirti Kala and a laptop seized from him. Shri Kirti Kala was not maintaining the records in the regular course of business but these records were his personal records and it became third party evidence. Moreover, on exami .....

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ooks of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in a sufficient degree a probability of trustworthiness (Wigmore on evidence ? 1546). Since, however, an element of self interest and partisanship of the entrant to make a person behind whose back and without whose knowledge the entry is made liable cannot be rules out the additional safeguard of insistence upon other independent evidence to fasten h .....

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t and the entries in the bother books and loose sheets (which we have already found to be not admissible in evidence under Section 34) are have already found to be not admissible in evidence under Section 34) are admissible under Section 9 of the Act to support an inference about the formers correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. I .....

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. So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. According to the prosecution case itself his name finds place only in one of the loose sheets (Sheet No. 8) and not in MR 71/91. Resultantly, in view of our earlier discussion, Section 34 cannot at all be pressed into service against him. 22. Similar view was taken in the case of TGL Poshak Corporation vs. CCE, Hyderabad-2002 (140) ELT 187 (Tri.-Chennai) wherein this Tribunal in para .....

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purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, .....

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to prove clandestine manufacture and removal to have been purchased by one Mr. Augustin on behalf of the manufacturer - Such person not traced by the authorities nor his statement recorded - Manufacturer disowning the purchase of the raw material from the third party- Third party s records also showing names of the other purchasers but some of such purchasers of carbon black. HELD: It is not safe to rely only on the third party s records evidence when no direct links of the transaction establis .....

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aras Patidar and Shri Mukesh Sangla were also relied upon but these statements have not been corroborated by any tangible evidence. I further find that during the course of investigation various statutory records resumed by the investigating team and the same have not been discarded by the authorities. Therefore, the said records are admissible evidence as per section 36A of the Central Excise Act, 1944 wherein it has been stated that any documents produced by any person or has been seized from .....

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ement of Shri Karni Singh Kothari, director of the respondent No.1 i.e. M/s.Prag Pentachem to say that he has admitted that they have not received any goods from M/s.SOL and procured the goods from open market in Delhi without any cover of invoice to cover those purchases they have obtained invoices from M/s.SOL. 25. On examination of that statement, although the statement retracted by Shri Karni Singh Kothri, this statement is required to be examined independently. On independent examination of .....

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en recorded from the transporter in order to ascertain that the goods have been procured without cover of invoice from the Delhi market. The statement has not been supported with tangible evidence, the same cannot be relied upon in view of the decision of Hon ble Allahabad High Court in Vikram Cement Pvt.Ltd.. Another evidence relied upon by the Revenue is the statement of the transporter. Shri Vishal Agarwal, proprietor M/s. BGFC and authorised signatory of M/s. BBTC has stated that they have i .....

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