TMI Blog2016 (2) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and merely proceeded on the basis of statement of third party. The inference of non-receipt of inputs and denial of Cenvat Credit on the basis of the statements of third party, who had failed to disclose the details of supply of inputs in mid-way, cannot lead any conclusion, the assessee in their statements stated the receipt of the inputs and used in the manufacture of final product and duly recorded in the statutory records, which cannot be discarded by mere assumption and presumption. Search was conducted at the premises of appellants, but, not a single evidence was found of purchase of bazaar scrap by the appellant as alleged in the show cause notice. - the said allegation is totally on the basis of assumption and presumption. - Demand set aside - Decided in favor of assessee. - Appeal No. E/333,334/2012 - ORDER No. A/10101-10102/2016 - Dated:- 3-2-2016 - Mr. P.K. Das, Hon'ble Member (Judicial) And Mr. P.M. Saleem, Hon ble Member (Technical) For the Petitioner : Shri Alok Barthwal, Advocate, Shri R K Jain, Advocate For the Respondent : Shri L Patra, Authorised Representative ORDER Per : Mr. P. K. Das These appeals are arising out of a com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and its partner filed these appeals against the impugned order. 4. The Ld Advocate on behalf of the assessee and its partner submits that the assessee during the investigation as well as in reply to show cause notice and at the time of personal hearing before the Adjudicating Authority categorically submitted that they have received the duty paid inputs in their factory and used in the manufacture of final products, cleared on payment of duty and duly recorded in statutory records. The assessee produced the records before the investigating authority. During the investigation and in reply to show cause notice, the assessee categorically stated that some of the documents were seized by the officers of D.R.I and therefore they could not produce all the documents. He further submits that the show cause notice was issued and the adjudication order was passed on the presumption that imported inputs were diverted into the local market and the inputs shown in the factory at Silvasa appears to have been substituted by bazaar (local) non-duty paid scrap. He submits that the stocks of finished goods and inputs were tallied with the records and there is no single evidence of selling o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and seized the records viz., import files from April to November 2006 RG23, Part I and Part II Register etc. The said officers also recorded the statements of Shri Ashokendu Kumar Gupta, General Manager cum Authorised Signatory of the assessee and others, where they stated that they had received the imported goods at their factory and used in the manufacture of final product. The Central Excise Officers during the investigation directed the assessee to produce the transport documents in respect of receipt of inputs at their factory. It is seen from the show cause notice that the assessee vide letter dtd 29.8.2009 during investigation stated that the documents requisitioned by DGCEI NZU were lying with Directorate of Revenue Intelligence (DRI) since 26.4.2006 and furnished copies of Panchnama dtd 25.4.2006 and another one dtd 25.4.2006 at the factory premises of the assessee at Silvasa. The assessee in their reply to show cause notice also stated in detail, as under: (i) It is alleged that our firm diverted some imported scrap consignments into the local market and took credit of CVD paid on these goods in our CENVAT account without actually receiving them in our fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded that inputs were not received in our factory. (iv) The officers of DGCEI who conducted the investigation in this case were informed by us that the records for the period March, 2004 to 11.05.2006 were seized earlier by the officers of DRI, Surat Regional Unit. Non-submission of these records by us to the officers of DGCEI cannot lead to a conclusion that the impugned goods were not received in our factory. They ought to have obtained the records from DRI in order to clarify their doubts in the matter. (v) The so called evidence relied upon in the SCN is not admissible for arriving at a conclusion that the impugned goods were diverted into the local market and not received in our factory premises. I do not know as to why the transporter was maintaining his records in the manner in which he was maintaining them, That is not our concern. I submit that we cannot be charged on the basis of the statements of some other parties. (vi) Our firm has always been taking credit of CVD paid on imported scrap only on the basis of duty paying document viz the Bill of Entry and along with it the delivery challan issued by the transporter is also available. Before taking credit of CV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of search from the premises of M/s PSTC. The DLRs had been prepared by the loading Supervisor of the transporter M/s PSTC. It has also prepared Monthly Loading Report (MLR) by the drivers of the trucks, which were submitted by them to their employer M/s PSTC. The entire case was made out on the basis of the DLRs and MLRs recovered from the premises of the transporter. The Adjudicating Authority proceeded on the basis of the said records as supported by the statements of the employees of the transporter viz., Shri Dilip Namdeo Aher, Dock Clerk and Shri Rajeshwar Prasasd R Dubey, Proprietor of M/s PSTC. We find that the proprietor of M/s PSTC in his initial statement had not stated the diversion of the goods. Subsequently, it has stated the diversion of goods in midway, but, it was not disclosed to whom the goods were delivered by them. The subsequent statements of the proprietor of M/s PSTC are contradictory to the initial statement. The other statements of employees of M/s PSTC had not disclosed any material to whom the goods were delivered. Hence, it is difficult to rely upon such statements, which are un-corroborative nature. It is well settled that the duty cannot be levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed scrap is first taken to the godowns in Bhiwandi and unloading of the imported Cargo from the container is done for the further transportation. That at Bhiwandi godown the imported goods were not only unloaded from the container but also stacked in there godown till further transportation were made. In the subsequent statement dated 19/12/2008, after three months Shri Rajeshwar 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 stated by Shri Ahok Kumar that the matter was very old and numerous documents have been taken over during searches but it was confirmed that Cenvat Credit was taken by the main appellant after goods were received at their factory. In these circumstances when the same person Shri Rajeshwar Prasad R Dubey was giving contradic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard 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 Court, as they apply in relation to a proceeding before a Court. 14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that 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 circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 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 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 production. Moreover, payment was made through banking channels and no investigation had been made at the consignor end in this regard. Under the circumstances, no error can be found in the findings recorded by the Tribunal so as to warrant interference. (17) Thus, from the evidence on record, it appears that all the goods supplied by M/s. Motabhai Iron Steel had nowhere admitted that the assessee was issued only invoices and that there was no delivery of goods to the assessee. Besides, all the payments that were made to M/s. Motabhai Iron Stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case records that raw materials in the stock of the main appellant showed any variations. 7. Learned Authorised Representative relied upon the case of CESTAT Mumbai in the case of Ahmednagar Rolling Hills Pvt. Ltd. Vs. CCE Aurangabad [2014 (300) E.L.T. 119 (Tri-Mumbai)]. It is observed from the facts of this case that suppliers of scrap raw materials in this case admitted receiving consideration in case without proper document. Further charge of clandestine production and removal was established by duty payment of ₹ 60,00000/- 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 witness and cross examination was not necessary. Similarly in the case of Gopal Industry Ltd. Vs. CCE Indore [2007 (214) E.L.T. 19 (Tri-LB)] Larger Bench held as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destine 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 production of the tin containers, which was recorded in these daily record books and which were removed, did not appear in the statutory record i.e. RG. 1 register of the appellant. This not a case where mere private record without anything more is relied upon. The private record was recovered from the factory of the appellant, and it is established beyond doubt and not even disputed that it was so recovered and that it belonged to the appellant. The nature of particulars contained in this private 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 privat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was having overall control of the affairs of the unit. It was, therefore, rightly held that he was aware that the goods clandestinely manufactured and removed in the name of his partnership firm were liable to be confiscated. 7. In view of the above facts involved 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 proceedings there is no confessional statement regarding diversion of inputs by the main appellant. The statements of Shri Rajeshwar Prasad R Dubey, proprietor of PSTC, recorded at different times are contradictory, and cannot be relied upon as evidence in the absence of any cross-examination and corroboration. 10. The purpose of narration of the case of M/s Sunland Alloy (supra) in detail to show that the facts of the present case are squarely covered by the said decision. In addition to, we observe that the non-receipt of inputs and non-use of the same in final product are based upon the statements and the records of transporter. But, the assessee during investigation categorically s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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