TMI Blog2018 (1) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... stice if the assessee is not allowed to cross-examine the witnesses whose statements are being relied by the department. The department has failed to establish that there is shortage of raw materials - demand set aside - appeal allowed. - E/300/2009 (By Assessee) E/365/2009 and E/CO/64/2009 (By Deptt.) - Final Order Nos.43371-43372/2017 - Dated:- 22-12-2017 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri S. Venkatachalam, Advocate for the Assessee Shri P. Anbuchelvan, Superintendent (AR) for the Respondent ORDER Per Bench Since both the appeals arise out of a common impugned order, they are heard together and are disposed by this common order. For the sake of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1,00,000/- under Rule 15 of the CENVAT Credit Rules, 2004, the assessee has filed appeal No.E/300/2009. The Department has filed Appeal No. E/395/2009 being aggrieved by the non-imposition of penalty under section 11AC. 3. On behalf of the assessee, Shri S. Venkatachalam, ld. counsel submitted oral and written arguments which can be broadly summarized as under:- a. The allegation in the show cause notice is that the assessees have irregularly availed CENVAT credit of 24,36,013 MTs of scrap / sponge iron found short on 16.2.2007 when the Preventive Unit visited the assessee s factory. The allegation that there is shortage of raw materials is without any basis. The department has not conducted any physical verification of the stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y margin though they very well knew the aforesaid fact of mixing of unwanted raw materials with the scrap imported / purchased. CENVAT credit was availed on the duty paid on the scrap imported / purchased. The shortage could have been due to removal of such unwanted materials from the scrap. e. The assessee had requested cross-examination of four witnesses. The adjudicating authority has denied the request stating that it is a delay tactics. He submitted that the assessee had not taken even a single adjournment during the proceedings and the denial of cross-examination of the witnesses has resulted in denying an opportunity to the assessee to establish their case. To support his argument, he relied upon the decision of the Hon ble Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, no discrepancy was found with regard to the quantity of raw materials imported by the assessee. The assessee could not produce the weighment slips of the containers although the transporters stated that they issued weighment slips. So also trip sheets for the movement of the cargo was not maintained by the assessee. Since the stock was found short during the time of visit of the officers, the availment of credit is irregular. The basic document for accountal of inputs is Form - 4 register maintained by the assessee. This clearly did not tally with the physical stock and established improper accountal of inputs and the availment of irregular CENVAT credit. Though the assessee contends that the imported raw material contains unwanted thin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king itself. That therefore they cannot later raise objections. It is also stated that the Director and other staff have admitted the shortage. We do not find much favour with this reasoning put forward by the adjudicating authority. Eye assumption cannot be the method for stock taking when the sole allegation is shortage of raw materials. Further, the director and other staff have admitted variation in the stock with respect to book of accounts and have explained that the shortage may be due to the unwanted materials in the scrap imported / procured by them. It is also pertinent to say that during investigation the officers had conducted detailed enquiry at the end of the CHA, C F Agent as well as transporters. They could not find any disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose statement is relied upon was not present at the time of stock taking cannot be the sole basis for concluding shortage of raw materials and demanding duty thereon. 7. Another grievance put forward by the assessee is that they were not permitted to cross-examine four witnesses. In Arya Abhushan Bhandar (supra), the Hon ble Supreme Court had observed that it would be denial of natural justice if the assessee is not allowed to cross-examine the witnesses whose statements are being relied by the department. Similar view was taken in the case of G.Tech Industries (supra). 8. From the above discussions, we are able to safely conclude that the department has failed to establish that there is shortage of raw materials. The impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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