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2015 (10) TMI 1104 - CESTAT AHMEDABAD

2015 (10) TMI 1104 - CESTAT AHMEDABAD - TMI - Disallowance of fraudulent CENVAT Credit - allegation that inputs imported in certain containers were diverted elsewhere instead of taking these inputs to their factory and only Cenvat Credit was taken on the basis of documents/ Bills of entry without receipt of inputs - Penalty u/s 26 - Held that:- Revenue has relied upon certain letters written by M/s J.N. Baxi and M/s NYK Link (I. Ltd.), who are the container providers in which imported scrap was .....

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his cross-examination was must. On the issue of taking of Cenvat Credit on an allegation that inputs were not received by an asessee Gujarat High Court in the case of Commissioner Vs. Motabhai Iron and Steel Industries [2014 (10) TMI 723 - GUJARAT HIGH COURT] - in this case larger bench held that oral evidence made by the Managing Director of the appellant and the positive documentary evidence recovered from the factory were of clinching nature. However as already mentioned in the present proce .....

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spondent : Shri L Patra, AR ORDER Per H K Thakur These appeals have been filed by the appellants against OIA No. SA/173-175/VAPI/2011 dated 11/11/2011 passed by Commissioner (Appeals), VAPI under which OIO No. 08/JC/OA.VAPI/2011-2012 dated 18/08/2011 passed by Adjudicating Authority has been upheld by the first appellate authority. Under OIO dated 18/08/2011. Adjudicating Authority disallowed a credit of ₹ 16,35,297/- to the main appellant M/s Sunland Alloys works, Silvassa under Rule 14 o .....

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Alluminium, Brass and Copper ingots from raw materials Scrap of Alluminium, Brass and Copper. That main appellant is importing scrap and availing Cenvat Credit of these inputs used in the manufacture of final products in its factory situated at silvassa. That a case was booked against the main appellant and others on the grounds that inputs imported in certain containers were diverted elsewhere instead of taking these inputs to their factory and only Cenvat Credit was taken on the basis of docum .....

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ority Signatory of main appellant were recorded to suggest that imported scrap was only transported upto Bhivandi by PSTC and after there no transportation details were available with the main appellant or PSTC that how inputs were taken to the factory premises of the appellant. That Revenue has also made its case on the logic that Cenvat Credit on imported Scrap was taken on an earlier date at the factory from dates of containers reaching back in Mumbai. 2.1 It is the case of the main appellant .....

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e statements is lost. That in statement dated 24/09/2009 of Shri Pravin Kumar A Ranka, Partner of the main appellant, has stated that imported goods were received, recorded in the statutory records and used in the manufacture of finished goods. It is the case of the appellant that Credit was taken on the basis of Bills of entry and there could be a difference in the date of receipt of goods and credit taken because sometimes duty paying document are received late. It was also argued by the Learn .....

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Commissioner Vs. Motabhai Iron and Steel Industries [2015(316) E.L.T. 374 (Guj.)] (ii) Commissioner of Cental Excise, Ludhiana Vs. Peejay International Ltd. [2010(255) E.L.T. 418 (Tri-Del.)] (iii) Commissioner of Central Excise, Chandigarh Vs. Neepaz Steels Ltd.-2008 (230) E.L.T. 218 (P&H) (iv) Commissioner of Central Excise, Daman Vs. Dhakad Metal Corporation-2012 (285) E.L.T. 382 (Tri-Ahmd.) (v) R.A. Castings Pvt. Ltd Vs. Commissioner of Central Excise, Meerut-I 2009 (237) E.L.T. 674 (Tri- .....

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Hyderabad 2002 (140) E.L.T. 187 (Tri.) (xi) Basudev Garg Vs. Commissioner of Customs-2013 (294) E.L.T. (353) Del (xii) Johnson Matthey Chem. India Pvt. Ltd. Vs. Commissioner of Central Excise, Belapur-2009 (240) E.L.T. 673 (xiii) Coromandal Fertilizer Ltd. Vs. Commissioner of Central Excise, Visakhapatnam-IV-2009 (239) E.L.T. 99(Tri.) (xiv) Commissioner of Central Excise, Chandigarh Vs. Ashoka Steel Corporation-2014 (306) E.L.T. 666 (Tri.-Del.) 3. Shri L. Patra (Authorised Representative) appea .....

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light that containers provided by M/s J.M. Baxi and M/s NYK Link have been confirmed to have received empty containers after unloading of imported scrap and that the date of returned to Mumbai prior to the taking Cenvat Credit by the main appellant. Learned Authorised Representative, therefore, strongly defended the orders passed by the lower authorities. He relied upon the following Case Laws in Support of his arguments:- (i) Ahmednagar Rolling Mills Pvt. Ltd. Vs. CCE, Aurangabad [2014 (300) E. .....

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bills of entry have been diverted at Bhiwandi as per the statements of Shri Rajeshwar Prasad R Dubey, Proprietor writer of PSTC. Further Revenue has relied upon certain letters written by M/s J.N. Baxi and M/s NYK Link (I. Ltd.), who are the container providers in which imported scrap was transported from the port of import. As per the date of containers received back by the container provider, as reported by container provider, containers have returned back in certain cases before taking of cre .....

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ajeshwar Prasad R Dubey gives a different version that the hired transporter never transported any imported goods after they were unloaded at Bhiwandi or New Bombay after their reciet from JNPT. On the other hand questions were put by the investigation to Shri Pravin Kumar A Ranka, the partner of the main appellant as of how the goods reached from Bhivandi to appellants factory. Shri Pravin Kumar could not produce any documentary evidence except the freight payment document of PSTC . It was also .....

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d party witnesses. This was more so required when the importer and user of inputs has never confessed to have not received the inputs and that only documents were received. On the issue of granting of Cross Examination CESTAT, in the case of Debu Saha Vs. Commissioner of Custom 1990 (48) E.L.T. 302 Tri., held that no doubt Cross Examination may not be granted in all cases but need for extending Cross Examination will depend on the circumstances of each case. Delhi High Court in the case of Basud .....

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ty of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd.(supra) and Laxman Exports Limited (supra). Apart from this, the decision of this court in J&K Cigarettes Ltd.(supra) clinches the issue in favour of the appellant. In that case, the validity of Section 9D of the Central Excise Act, 1944 reads as under:- "9D. Relevancy of statement under certain circumstances.- (1) A stateme .....

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elay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) When the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under this Act other than a proceeding before a Cou .....

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those circumstances have been stipulated in Section 9D, of the Central Excise Act, 1994. The circumstances referred to in Section 9D, as also in Section 138 B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable. It is c .....

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ct tat the statement of such a person can be treated as relevant only when the specified ground is, it is obvious that there has to be objective formation of opinion based on 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 .....

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n by us in the case of Sakeen Alloys Pvt Ltd. Vs. CCE Ahd, [2013 (296) E.L.T. 392 (Tri-Ahmd.)]. Revenue did not accept this order and filed appeal in the jurisdictional High Court Hon'ble Gujarat High Court in this case held that confessional statements solely, in the absence of any other corroborative evidence, cannot make the foundation for levying excise duty. Appeal filed by the department against this order of Gujarat High Court has also been dismissed by Supreme Court as reported in [2 .....

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Motabhai Iron and Steel Industries 2015(316) E.L.T. 374 (Guj.) made following observations in para-15, 17 and 19:- "(15) Thus, the demand of ₹ 3,26,188/- was based upon the fact that the vehicles which were shown to have transported the goods were not capable of carrying such goods. However, the Tribunal upon appreciation of the evidence on record has found as a matter of fact that the goods were duly found to have been recorded in the assessee's factory and were consumed in prod .....

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e payments that were made to M/s. Motabhai Iron & Steel were made through bank drafts. The Tribunal has also noted that, in all, demand was made in respect of 44 consignments. However, it was only in respect of two transporters, who had transported merely three consignments that the alleged discrepancy had been pointed out, whereas, in case of other transporters, no discrepancy has been found. In the light of the aforesaid findings recorded by the Tribunal, it cannot be said that there is an .....

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the assessee and the goods were also found to be entered in its statutory records. That the Department had not made any investigation of the unit of the assessee, which could have supported the findings of the adjudicating authority. None of the consignors of the goods have denied the clearance of goods to the assessee. There was no evidence on records to show that the records maintained by the assessee were not correct. The Tribunal, was according of the view that on the basis of statements of .....

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the department, then by mere tallying numbers and dates of LR's and GR's in a statement, cannot be made a conclusive and satisfactory basis for diversion of inputs. In present case there is no evidence that diversion of imported goods took place. In case imported goods were diverted by the main appellant then what was the source of alternate raw materials procured by the main appellant for manufacturing finished goods. There is also no indication in the case records that raw materials in .....

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000/- towards such duty evaded. It is in these Factual Matrix of the case where CESTAT held that cross-examination of the witnesses was not necessary. In the case of Shalini Steels Pvt. Ltd., Hyderabad Vs. CC Hyderabad [2010 (258) E.L.T. 545 (Tri-Bang)] also the supervisor of the appellant in that case gave the confessional statement which was also accepted by the Managing Director of the appellant. It was held by CESTAT that an employ of the appellant cannot be considered as a third party witne .....

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ly in respect of the appellant firm which tallied with the figures shown in the 'Daily report tin factory' which contained figures both for the 'new' tin factory as well in the name of the appellant. In this context, it will be noticed that the managing partner Shri Yogesh Garg confirmed in his statement recorded on 29-9-1998 that the documents recovered under the panchnama on 1-9-1998 were pertaining to production and clearance of tin containers by their factory. He stated that .....

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wn to him were withdrawn from the factory of the appellant in his presence and that he had put his signatures on the said documents at the time of withdrawal on 1-9-1998. The Electronics Engineer, Shri Awadesh Kumar Saxena in his statement dated 28-9-1998 admitted that the portion of daily production reports note-book pertaining to the appellants was prepared by him and that challans and daily production reports which bear his signatures, were prepared by him and they were of the appellant firm. .....

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pellant and that the record, namely, the daily production reports, challans etc. were pertaining to the clandestine production and removal of tin containers without payment of duty. We have perused copies of these two note-books containing the private record and we find that there were signatures of Awadesh Kumar Saxena, Electronics Engineer at various places. The daily report showed particulars of the opening stock, production and the closing stock of the said excisable goods. Admittedly, the p .....

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e record clearly go to show their intrinsic authenticity about the clandestine production and removal of the excisable goods by the appellants who had obtained the excise registration for the manufacture of such goods in the firm name. There cannot be more authentic evidence than recovery of the said private record from the appellant's factory which admittedly was prepared and bears the signatures of the supervisors of the appellant, and which is proved to have been maintained in the factory .....

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at these contained information regarding production and clearance. He also stated in reply to question No. 19 that all challans were prepared by Shri Rajeev Agarwal and others whose signatures he recognized. The authenticity of the recovered documents was admitted by the partner Yogesh Garg [noticee No. (2)] and noticee No. (6) (Girijesh Rai) who also admitted that the record pertained to unaccounted for production and clearance of the tin containers by the appellant. Any subsequent retraction b .....

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