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2016 (9) TMI 478 - CESTAT ALLAHABAD

2016 (9) TMI 478 - CESTAT ALLAHABAD - TMI - Cenvat credit - channels, Joist, C.R. Strips, H.R. Coils, G.R. Strips, Angles etc. - Cenvat credit wrongly taken on the basis of invoices without actually receiving the inputs into the factory - respondents could produce all the witnesses whose cross-examination was sought but only the statement of witnesses were produced whom could not be produced in person - Held that:- the original authority has relied upon the findings only on the basis of statemen .....

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tured the goods. The failure of the Revenue to establish the source of Raw material in the absence of non-receipt of inputs on which Cenvat Credit was taken, brings us to the conclusion that the entire case of Revenue is on the basis of presumption. We have also found that there is sufficient force in the arguments put forth by the appellants and the various case laws cited by him, are squarely applicable in the present case. Therefore, the impugned Order-in-Original is not tenable in law. - Dec .....

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. 2. On the basis of investigation, Additional Director General DGCEI, New Delhi issued Show Cause Notice vide File No.DZU/26/INV/2004 dated 31.8.2007 to above stated four appellants. The appellants are engaged in the manufacture of M.S. Ingots falling under Chapter Sub-heading No. 7204.90 of schedule to Central Excise Tariff Act, 1985. On 25.5.2004, the appellants were visited by Central Excise Officers. Subsequently, the officers carried out investigations. Appellants had taken Cenvat Credit o .....

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ve the inputs and it was alleged that Cenvat Credit in respect of inputs, was availed by the appellants without actually receiving the inputs into their factory. The basis for such allegation was various statements obtained by Revenue from dealers who supplied materials and owners of Transport Company. Additional Director General, DGCEI, New Delhi, on the basis of said investigation, issued the said Show Cause Notice dated 31.08.2007, calling upon M/s Raj Ratan Casting Pvt. Ltd. to show cause as .....

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hy Cenvat Credit amounting to ₹ 17,78,078/- should not be recovered from them with the similar allegations and their Director, Shri Jai Kisan Khatri was also called upon to show cause as to why penalty should not be imposed on him under said Rule 26. 3. The appellants submitted their replies to the said Show Cause Notice. In the said reply before the original authority, the appellants contended that they purchased the inputs from the said dealers who purchased the goods from the manufactur .....

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hey further contested that in the statements recorded in respect of Shri Aatma Ram Khatri and Shri Sunil Khatri, it was nowhere admitted by them that they have not received the inputs. They further submitted that the department's case is based on statements. They had requested for cross-examination of 11 witnesses, out of 11 witnesses, Revenue could produce only four witnesses for cross examination. The appellant had filed a Writ Petition before the Hon'ble High Court of Allahabad for pe .....

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cerned authority. The appellant submitted before the original authority that out of the cross-examination of 4 witnesses namely Shri Girija Shankar Tiwari, Shri Kailash Kumar Sharma, Shri Mahaveer Prasad Jain and Shri Anand Prakash, revealed that the appellant had received the inputs in their factory and was consumed by appellant in their factory for manufacture of M. S. Ingots. The learned Original Authority decided the said Show Cause Notice through impugned order in Original No.11/Comm./MP/20 .....

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on Shri Jai Kisan Khatri. Against the impugned order, the appellants filed present appeals. 4. The grounds of appeal, inter-alia, include the grounds as follows: (i) It is well settled principle of law as held in following cases: 2005(188) E.L.T. 107 (TRIB) SANKET FOOD PRODUCTS PVT. LTD. VS. C. of C.EX. 2006(193) E.L.T. 48 (TRIB) CHANDAN TUBES & METALS PVT. LTD. VS. C.OF CUS; that the testimony of witnesses who could not be produced for cross-examination should not be relied upon as evidence .....

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inputs is a fiction. (iii) The affidavits and letters issued by the witnesses who did not present themselves for cross-examination cannot be treated as evidence since it cannot be establish that such letters are not obtained under threat. (iv) The first and second stage dealer from whom the appellants have purchased inputs are registered with Central Excise and are regularly filing their statutory returns and at no point of time any question was raised about the correctness of the information su .....

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entioned the vehicle number in some of the invoices. (vii) The appellant had used 19 trucks and only in few cases, the vehicle numbers were wrongly mentioned which was a human mistake. (viii) During examination Shri Mahaveer Prasad Jain admitted that they were clearing M.S. Bars, Shapes, Sections to M/s. Bansal Structures Pvt. Ltd, M/s V. K. Enterprises and M/s Bhagwati Traders, after payment of Central Excise Duty. Further Shri Anand Prakash Gupta during his examination, has stated that fresh m .....

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e department. (ii) The manufacturer from whom the dealers purchased the goods were in existence and genuine and clearances were made on payment of duty. (iii) Goods supplied by the dealers were duly covered with the proper GRs. (iv) Payment to the dealer were made through banking channels. However inputs of value of ₹ 1,35,79,412/- was received from the dealer M/S Bansal Stuctural Pvt. Ltd., Ghaziabad and ingots valued of ₹ 78,32,106/- was sold to them. The remaining payment of ͅ .....

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ment of duty from the factory of the appellant, not in dispute. (ix) No dispute that statutory records were maintained properly, monthly returns were filed and assessed by the department. 5.2 The learned counsel for the appellant further submitted that out of the 11 persons whose cross-examination was sought, the respondents could produce only three of theme He has relied on ruling of High Court of Delhi in the case of Basudev Garg Vs. Commissioner of Customs reported at 2013(294) ELT 353 (Del.) .....

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, 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, 1944. The circumstances referred to in Section 9D, as also in Section 138B, 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 .....

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n is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, 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 con .....

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he appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted. 5.3 The learned counsel for the appellant further contended that Commissioner erred in accepting the statements of witnesses, whom, he could not produce for cross-examination and, therefore, findings of Commissioner for confirming the demand based on acceptance of such statements of such witnesses who were not produced for cross-examination, is not tenable .....

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that only on the basis of third party statements, such demand cannot be made. Moreover, as rightly pointed out by the Tribunal, no investigation has been conducted at consignors place or at the place where the said goods are alleged to have been supplied. Under the circumstances, it cannot be said the Tribunal has committed any error in deleting the aforesaid demands. 5.5 He has further argued that the inputs were issued through statutorily required invoices and payments were made through banki .....

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hority has confirmed the demand, He has further pleaded that the impugned order is legal and proper and may not be interfered with. 7. We have carefully gone through the rival contentions. We have also gone through the order of the Hon'ble High Court at Allahabad, dated 18.12.2008 in Writ Petition No. 2304 of 2008, wherein it was directed that if prejudice is caused to the petitioners (appellants) on the basis of point which has been agitated, it is open to the petitioners to take the plea b .....

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