TMI Blog2015 (11) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... Shree Ganesh Transport who had transported goods from Mumbai godown of M/s SOL to M/s TEL but the same was found to be non existing. Neither the statement of Shri Ravindra Pingle, the godown Incharge nor the statement of Shri Paras Patidar points out any modus operandi in respect of M/s TEL having been issued duty paid invoices by M/s SOL, without actual delivery of goods. M/s TEL had produced the documents towards deposit of cash showing the receipt of the same from buyers/dealers of finished goods. These documents remained undisputed, as not found untrue, by the adjudicating authority, which shows that the contention made by M/s TEL is correct. No investigation has been conducted at Mumbai godown nor the records of said premises has been relied upon to show that the goods were not dispatched from the Mumbai Godown of M/s SOL and if dispatched having been diverted elsewhere. In case of goods received from M/s DCW, there is no investigation as to whether the goods were diverted elsewhere and not received by M/s TEL. The investigation is silent upon all these issues. Further it is not appearing on record that if the goods were not received by the Units of M/s TEL in that case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of M/s Signet Overseas Ltd.(SOL for short) and its associate concerns, residence of Shri Mukesh Sangla, residence of employees of M/s SOL, namely- Shri Kirti Kala, Cashier of M/s SOL, Shri Paras Patidar, Marketing Manager of M/s SOL and Shri Ravindra Pingle, godown incharge of M/s SOL, the Revenue officers seized various documents, unaccounted currency valued to ₹ 35 lakhs from residential premises of Shri Mukesh Sangla, three lap-top computers and several hand written slips at residential premises of Shri Kirti Maheshchandra Kala. Also records and documents were seized from residence of Shri Ravindra Pingle and Shri Paras Patidar. 4. It is further relevant to state that M/s.SOL had obtained registration from Central Excise Department for its depots at Indore, Daman and Mumbai. The managing director of SOL Mr. Mukesh Sangla is also director/other signatory for M/s.Kamdeep marketing Private Ltd., Indore (KMPL for short) and Swan petrochemicals Private Ltd., indore( SPET for short). M/s. SOL have manufacturing facility at Indore in the name and style of M/s logic poly products. That Shri Kirti Kala in his statement dated 06.12.2007 stated that the slips bearing deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended in show-cause notice that one of the files seized from office premises of Shri Mukesh Sangla contained a letter written by Shri Dilip Shirke of M/s SOL, Pune to M/s TEL, Jalgaon wherein he had informed M/s TEL that an amount of ₹ 23,50,000/- has been deposited by him in Punjab National Bank account of M/s TEL. In order to verify the contents of the letter, statement of Dilip Shirke was recorded on 28.04.2009 wherein he stated that the said money was given to him by some employee of M/s TEL and he had deposited the said amount in the bank account of M/s TEL, as requested. That he had received message from his Indore office to help the employee of M/s TEL in depositing the said amount in bank account of M/s TEL. That as per his knowledge the said amount has got no connection with business transaction between M/s SOL and M/s TEL., he had provided only assistance and that he does not know Shri Lohiya of M/s TEL. 6. The show-cause notices were issued on the basis of documents seized and statements of employees related to M/s SOL, buyers of some of the polymers in cash and documents seized from various places and premises. It was alleged that the transactions on Shri Kirti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. He also stated that they never received any cash amount from M/s SOL and cannot comment upon the entries in ledger maintained by Shri Kirti Kala in his laptop. The show-cause notice further alleged that M/s TEL has availed credit of duty paid on invoices issued by M/s SOL, whereas no goods were actually consigned by M/s SOL to M/s TEL. 7. dated 24.11.2009 wherein demand of Cenvat of ₹ 49,85,889/-(on unit No. 1) and ₹ 22,55,284/-(unit No.II) was proposed against them in terms of Rule 14 of the CCR, 2004 read with Section 11A of the Central Excise Act. 1944. It was also proposed to impose penalty under Section 11AC and interest under section 11AB. Shri Lohiya and Shri Mukesh Sangla were also called upon to show-cause as to why personal penalty under Rule 26 or 27 be not imposed upon them. 8. The appellants contested the show-cause notice and filed reply to show-cause notices on merits. M/s TEL also requested the adjudicating authority to grant cross examination of employees of M/s SOL, i.e Shri Kirti Kala, Shri Ravindra Pingle, Shri Paras Patidar as well as Shri Mukesh Sangla (Director). They also requested to grant cross examination of some other persons/purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terials from SOL since 2002, but only some purchase invoices for the period April 2006 to September 2007 are alleged to be bogus. Further investigation failed to verify the lorry Numbers or details of the owners. Further investigation have not found any errors or anything suspicious in their accounts and records maintained by the appellant in the normal course of business. The appellants maintain proper records of receipt, consumption and utilisation of inputs in the production. The investigation have also failed to consider the input-output norms applicable to the products of the appellant. No verification of physical stock have been done. Further no reconciliation have been attempted by the investigation as regards the alleged cash deposit with respect to cheques issued by TEL. Further total quantity of resin comes to 7,09,000 kg, allegedly purchased against bogus invoices. That there is no allegation as to bogus clearance of the inputs, as such, and/or any error in the production records. Further the explanation given by the appellant since the beginning as regards assistance provided by staff of SOL in depositing, in bank, the money belonging to the appellant have not been foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs by the appellant-manufacturer. 11. The Commissioner (Appeals) pursuant to remand, vide Order-in-Appeal No. RPS/17-19/NSK/2013 dated 21.01.2013 and RPS/20-22/NSK/2013 dated 21.01.2013 rejected the appeal of manufacturer-TEL and modified the adjudication orders to the extent that in case of appeal against Order-in-Original No. 84/Addl./Adj./2010 dated 31.03.2011 the penalty upon Shri Lohiya and Shri Mukesh Sangla was set aside whereas in case of appeals against Order-in-Original No. 83/Addl./Adj./2010 dated 31.03.2011 dated 31.01.2011 the penalty on Shri Lohiya was set aside and penalty upon Shri Mukesh Sangla was reduced to ₹ 5,04,839/-. 12. Aggrieved with the aforesaid Orders-in-Appeal both the units of M/s TEL and Shri Mukesh Sangla has filed the present appeals. 13. Learned Counsel for the Appellant-M/s TEL has raised the following grounds:- (i) The hand written slips retrieved from Shri Kirti Kala has got no evidentiary value. That the ledger maintained in the laptop computer of Shri Kirti Kala was not made in the ordinary course of business and hence not reliable. (ii) That there is no admission of return of cash either by Shri Mukesh Sangla or Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the correct facts in respect of alleged cash transaction, which was not allowed. More so, the copy of entries on the laptop were not furnished to the Appellant. The letter of Shri Dilip Shirke relied upon by the Commissioner (Appeals) was neither relied upon in the show-cause notice nor a copy given to the appellant, therefore such finding are based on assumption and presumption. (vii) That the demand has been confirmed only on the ground that the office of Shree Ganesh Transport one of the transporter who had transported goods from Mumbai Depot of M/s SOL to M/s TEL was not found. However the same cannot be the basis for confirming demand, as the registration numbers of vehicles were available on record, which was not investigated. The investigating officers did not verify the fact from the owners/ truck drivers of such vehicles. Hence demand is erroneous. (viii) That M/s TEL had produced copies of invoices, material reconciliation giving input-output norms, records of money receipt, entries of freight payments, which conclusively proves that the goods consigned by M/s SOL were received and consumed by M/s TEL. That none of the employee of SOL stated name of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e invoices without delivery of goods and that the cash receipts are not reflected in their accounts. That the persons connected with M/s SOL also accepted having arranged bogus transport documents and LRS. That Mr. Dilip Shirke, Marketing Officer, SOL who admitted to depositing cash of ₹ 23,50,000/- in bank account of TEL, at Pune. He further submits that in case of Appeal No. E/86760/13, the show-cause notice shows the deposit of cash of ₹ 3.85 crore in account of M/s TEL. That the statements of sales shown by M/s TEL against which cash was shown to have been received by M/s TEL, they did not show the details of goods sold against the cash deposited. That M/s. Ganesh Transport Co. is not in existence and hence it shows that the LRs shown to have been issued by said concern are bogus LRs and there has been no transportation of goods. The Ld. A.R. also relies upon the judgment in Collector of Customs, Madras and Others Vs. D. Bhoormull 1983 (13) E.L.T. 1546 (S.C.). He says that the cross examination of employees of M/s SOL and other persons are not necessary. He relies upon the judgment of Shalini Steels Pvt. Ltd. Vs. CCU C. EX., Hyderabad 2011 (269) E.L.T. 485 (A.P.), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed goods and in absence of any employee at Pune, M/s SOL helped them in depositing such amount in bank. 15.2 Further, I find that neither the statement of Shri Ravindra Pingle, the godown Incharge nor the statement of Shri Paras Patidar points out any modus operandi in respect of M/s TEL having been issued duty paid invoices by M/s SOL, without actual delivery of goods. M/s TEL had produced the documents towards deposit of cash showing the receipt of the same from buyers/dealers of finished goods. These documents remained undisputed, as not found untrue, by the adjudicating authority, which shows that the contention made by M/s TEL is correct. 15.3 I find that M/s TEL had sought cross examination of the employees of M/s SOL and other persons whose statements were relied upon. The adjudicating authority refused permission on the ground that the investigation shows that the cash was deposited by M/s SOL and the statements supported the allegation, hence cross examination cannot be granted. This finding of the adjudicating authority was upheld by the Appellate Commissioner. I find that the refusal to grant cross examination is not legal in the given circumstances. As except th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these aspects the demand is not sustainable. 15.5 The Cenvat demand is also based on the premise that the transporter - Shri Ganesh Transport was not found at the given address and it did not exist at the address given in the LR. The counsel for M/s TEL has urged that only on the basis that the transporter was not found to be existing at the stage of enquiry, it cannot be said that no goods were transported from Mumbai godown of M/s SOL to M/s TEL. The Revenue did not ascertain the facts from the vehicle owners or the drivers in spite of the fact that vehicles registration numbers were appearing in LR. That it can be seen that Shri Lohiya had produced the relevant record i.e freight ledger showing payment of freight to the transporter and other records showing the receipt of goods which is not disputed. I accept the contention of the appellants and I hold that Cenvat demand cannot be made on the ground that the transporter was found to be non existent, at the later stage of investigation. 15.6 The Revenue has relied upon the documentary evidences seized from residential premises of the employees of M s. SOL, data retrieved from lap top of employee of M/s. SOL and statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he records do not disclose infirmity of any sort inspite of the fact that some of the final products revealed absence of PFY element therein, nor the records disclosed any discrepancy which could reveal and/or co-relate to the inputs allegedly diverted to other parties. In fact, as rightly observed by the Commissioner, there appears to be no attempt made at any point of time in the course of investigation to establish such co-relation between the inputs alleged to have been diverted and the final product which was found without the presence of the PFY element. In fact, it was purely elementary which the investigation agency ought to have known in order to establish the charge of clandestine disposal of the inputs without utilization thereof in the manufacture of the final product. This aspect should have been clearly established by the investigation machinery. In this regard, neither there was any proper investigation nor appropriate efforts on the part of the department to bring on the record the appropriate and cogent evidence. 14. Merely because the numbers and dates of LRs and GRs in the statement of the representatives of the manufacturer of the inputs and the representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. At this stage we may discuss the various decisions relied upon by the ld. Advocate. Tribunal in the case of M/s. Tejwal Dyestuff Industries [2007 (216) E.L.T. 310 (Tri.-Ahmd.)], by majority decision it was held that if it is not disputed that the inputs were used for the final product and statutory returns were filed, the lethargy of the Revenue officers in not verifying the relevant statutory records and invoices, as to what exact quantity of raw materials was used in the final product and that in how many final products such inputs could have been used, altogether create a doubt as to the correctness of the contents of the statements. The preponderance of probabilities in the context of all other evidences vis-a-vis the confessional statements do not lead to the conclusion of inadmissibility of Modvat/Cenvat credit, as reached by the Commissioner. In the present case also, as we have already discussed, the entire case of the Revenue is based only on wrong mentioning of vehicle numbers in the invoices issued by the dealers, which stand duly explained by the appellant and there being no other effective evidence to show that such inputs were not used in the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I), CCE, Mumbai Vs. Nimesh Engineering Pvt. Ltd. 2009 (237) ELT 726 (TRI) and Tejwal Dyetuff Ind. Vs. CCE, Ahmedabad 2007 (216) ELT 310. 15.10 In case of CCE, Ludhiana Vs. Parmatma Singh Jatinder Singh Alloys Pvt. Ltd. 2011 (266) E.L.T. 67 (Tri. - Del.), the Tribunal held that- The Revenue has reiterated the same very reasoning adopted by the original adjudicating authority for denial of credit. It is seen that apart from the wrong vehicle numbers, there is virtually no other evidence available on record to reflect upon the fact that the inputs were not actually received by the respondent and were diverted to the other SSI units. The observation of the original adjudicating authority as regards diversion of the inputs is based on conjectures and surmises inasmuch as there is virtually no evidence on record showing such diversion. Further, the appellants have also entered the said inputs in their RG-23A Part-I records and have shown the consumption of the same for manufacture of the final product. The said plea of the appellant does not stand rebutted by the revenue. If that be so, the allegation as regards diversion cannot be upheld. Once the assessee takes the modvat cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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