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M/s J.V. Industries Pvt. Limited, Shri Sushil Kumar Jain, Shri Vishal Sharma, Shri Manoj Kumar Jain, M/s Ganpati Rolling Mills Pvt. Ltd., M/s JMW India Pvt. Limited, Shri Vinod Kumar Jain And Shri Shivji Gupta Versus Commissioner of Central Excise, Delhi/J&K

2018 (1) TMI 467 - CESTAT NEW DELHI

CENVAT credit - duty paying documents - fake invoices - Section 9D of the Central Excise Act - absence of cross-examination - non-appraisal of evidence - burning loss - principles of natural justice - difference of opinion - Held that: - as there are difference of opinion on the various issues, the matter is being referred to Third Member for decision - matter referred to Third Member. - E/55324/2013-EX[DB] with E/Stay/55389/2013 & E/Misc/50266/2015, E/55325-55330/2013-EX[DB] with E/stay/55390-5 .....

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f investigation on the allegation mainly that the appellants M/s J.V. Industries (P) Limited (JVIPL), Shahdara, Delhi-93 and M/s Ganpati Rolling Pvt. Limited (GRPL), Shahdara, Delhi have diverted copper cathodes (inputs) to M/s JMW India Pvt. Limited (M/s JMWIPL), Jammu, during the period in dispute being 2006-07 and 2007-08. Further, copper scrap purchased from market without bills was utilised by JVIPL for their own use and further JMWIPL obtained fake purchase invoices of copper scrap from va .....

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med on the ground that M/s JMWIPL had received copper cathodes from M/s J.V. Industries Pvt. Ltd. and M/s Ganpati Rolling Pvt. Ltd. instead of copper scrap on which they could have availed cenvat credit. Non-availment of cenvat credit has resulted in excess refund to the extent of the duty demand under Notification No.56/2002-CE dated 14.11.2002 On JVIPL & GRPL & others Order-in-Original No. 165-CE/PKJ/CCE/ADJ/2012 dated 15.10.2012 Show Cause Notice dated 11th November 2010 Period of dis .....

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of credit on the ground of alleged diversion of inputs (copper cathodes) by M/s. J.V. Industries Pvt. Ltd. and M/s. Ganapati Rolling Pvt. Ltd. from factory without use in the manufacturing activities. 2. The brief facts of the case are that M/s JVIPL is engaged in the manufacture of copper ingots/ rods, copper wire, copper scrap, copper alloys, ingots and refined copper ingots whereas GRPL was engaged in manufacture of copper rods and copper scrap. During the material period 4/2006 to 3/2008 the .....

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for manufacture of their final products namely ingots/ rods. Statement of one Shri Shivji Gupta (Production Manager) of JVIPL was recorded on 26.03.2008 wherein he inter alia stated that nickel was not being used in their factory in the manufacture of ingots. He also stated that they have not used copper cathodes in the manufacture of copper ingots whereas they have actually used copper scrap instead of copper cathodes which they have purchased from local sources without bills and the copper cat .....

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wherein he stated that they have used copper cathodes in the manufacturing of copper ingot which was at variance with his earlier statement dated 26.03.2008. However, relying upon his earlier statement and based on certain other inquiries, a show cause notice was again issued on 11.11.2010 alleging that GRPL had fraudulently availed cenvat credit on 824.583 MT of copper cathodes during the disputed period and wrongfully availed cenvat credit to the tune of ₹ 4,63,09,268/-. Further, JVIPL .....

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e manufacture of copper rods falling under chapter heading 74 of the First Schedule to the Central Excise Tariff Act. They are also availing the benefit of refund under 'Area Based Exemption' Notification No.56/2002-CE. The proceedings against JMWIPL are the connected or corrollory proceedings which were initiated against JVIPL and the GRPL, as stated herein above. In the show cause notice dated 11.11.2010 against JVIPL, GRPL and others, M/s JMWIPL was also made co-noticee, proposing pen .....

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JMWIPL it has been alleged that they indulged in receipt of copper cathodes which were diverted by JVIPL and GRPL by showing the same as copper scrap in their records only to avoid taking of cenvat credit on the said copper cathode with an intent of availing of erroneous refund under Notification No.56/2002-CE (Area Based Exemption). The duty has been calculated on the premise that JMWIPL had purchased total 2411.099 MT of copper cathodes valued at ₹ 83,73,69,279/-. They have also consume .....

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tates that the whole case of the department is based upon statement of Sh. Shivji Gupta dated 26.03.2008. Ld. Commissioner have erred in relying on the statement as on the basis of the said statement show cause notice was issued on 30.12.2008 which was for denial of cenvat credit on nickel. The said denial of cenvat credit on nickel was confirmed by the Id. Commissioner. The said order was challenged by JVIPL before the Tribunal, and this Tribunal allowed the appeal by way of remand vide Final O .....

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Ld. Commissioner have erred by selectively relying on totally unconnected statement dated 26/03/2008 of Shivji Gupta, in preference to his latter statement dated 30/08/2010, wherein he had categorically stated that copper cathode were used in the manufacture of copper ingots, by JVIPL. Nowhere in the show cause notice, it has been alleged that the contents of the said statement of Shri Shivji Gupta dated 30/08/2010 are incorrect or false in any manner. On the contrary, this statement has been d .....

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recorded with regard to the inquiries, pursuant to which the present show cause notice dated 11.11.2010 was issued. 7. Shri Shivji Gupta was cross-examined by the counsel of JVIPL, GRPL and JMWIPL with respect to his statements. Sh. Shivji Gupta was specifically cross-examined with respect to answers to question number 13 and 14 of his statement dated 26/03/2008, wherein he had stated that except one or two instances, copper cathode which was purchased from M/s Hindalco industries and M/s Sterli .....

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s a dictated one. He also stated that one cutter was available in the factory of JVIPL which was used to cut copper cathode. He also stated that he stood by the contents of his later statement dated 30/08/2010. The Id. Counsel further urged that it is pertinent to mention that the adjudicating authority before whom this cross examination took place, did not examine or re-examine the witnesses, meaning thereby that he did not dispute the averments of Shivji Gupta tendered by him in his cross-exam .....

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y to the settled position of law. It has to be appreciated that statement which is recorded under Section 14 of the Act, during investigation and enquiry is not sacrosanct and is subject to examination as provided under Section 9D of the Act, which mandates that a statement can be accepted in evidence only after examination of the witness during the proceedings. The learned Commissioner failed to examine or re-examine Sh. Shivji Gupta during the adjudicating proceedings and therefore the obvious .....

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h. Shivji Gupta categorically stated that he stood by his statement dated 30/08/2010. 8. Further, in the earlier statement dated 26/03/2008 of Sh. Shivji Gupta, he had stated that he had done the entire work of preparing invoices, GR, etc. on the instructions of Sh. Sushil Kumar Jain and She Vinod Kumar Jain. However, Sh. Sushil Kumar Jain was never summoned and no statement from him was ever recorded. Under the circumstances, there is no evidentiary value of the statement of Sh. Shivji Gupta da .....

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igating officers had put a specific question to Mr Vinod Kumar Jain as to whether they had ever used nickel in JVIPL during the period 2005-06 to 2007-08. Sh. Vinod Kumar Jain was never asked about the alleged diversion of copper cathode as stated by Sh. Shivji Gupta. He was not confronted with the statement of Sh. Shivji Gupta. Further, Sh. Manoj Kumar Jain on whose instructions he had issued sale invoices of JMWIPL-Trading unit and GR's which were attached with the sale invoices. The state .....

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nt relied upon certain inquiries which were made with regard to procurement of copper scrap by JMWIPL, Jammu and alleged, various suppliers of copper scrap were bogus and documents are fabricated for the purported purchases, with a view to cover up illegal diversion of duty paid copper cathode purchased by JVIPL and GRPL. Learned Counsel urges that such allegation against the company namely, JMWIPL, Jammu, which was not situated within the jurisdiction of Central Excise Commissioner Delhi-II was .....

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ed be placed in the gunny bags which were loaded in the trucks by Labour. He was specifically asked whether he could identify the premises or godown of JVIPL to which he answered yes. He was further asked whether it was possible that the goods transported by the transport company were actually loaded from the premises of JVIPL. In answer, he categorically stated that it was not possible. He categorically stated that they used to load goods from JMWIPL Delhi, and did not load any goods from JVIPL .....

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f the said transporter during the period in dispute and had been driving the trucks of the said transport company, including transporting of raw material from godowns of JMWIPL (trading unit) Delhi, to the factory of JMWIPL at Jammu. Normally the goods used to be copper scrap packed in gunny bags and some time it uses to be copper packed in bundles. They further confirmed that the goods as per description given in GRs only were transported by them. They were asked if there could be any chance of .....

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machinery to melt copper scrap/ copper ingots/ copper cathode for manufacturing of copper rods. Such inquiry report was in response to enquiries which were being conducted by the anti-evasion branch of the Central Excise Commissionerate, in the case of the appellants-JVIPL, JMWIPL and GRPL. On receipt of requests for report from Central Excise Commissionerate, Delhi-Il dated 09/04/2010 the Central Excise, Commissioner, Jammu conducted intensive enquiries to find out whether JMWIPL, Jammu was ha .....

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hode from M/s Hindalco industries and M/s Sterlite industries Ltd. Further, the report of Commissioner, Jammu also states that the District Industry Center (DIC) authorities were regularly visiting the unit, and verifying the purchase of raw materials. All such verifications were duly recorded by DIC authorities in the raw material register maintained by JMWIPL, Jammu, which was known as import register. The Id. Commissioner in the impugned order have erred in ignoring this crucial evidence whic .....

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by JMWIPL, Delhi or copper scrap which was purchased by JMWIPL, Jammu from the open market was diverted to the premises of JVIPL. Further without there being any manner of concern as regards copper scrap purchased by JMWIPL, Delhi or Jammu the same has been made Annexure to the show cause notice issued to JVIPL and GRPL, when it is not the Department's case that the said scrap was in fact of JVIPL and GRPL, who in turn diverted the copper cathode to JMWIPL Jammu. 13. Further, in the show ca .....

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eged and held that the Bhatti (furnace) in which JVIPL for manufacturing copper ingots were having Crucible's of mouth opening size of 16 inches diameter and another bhatti was having Crucible of mouth opening 27 inch and 33 inch diameter. No electric cutting machine was available in the factory of JVIPL, during search on 10/07/2010. One hand cutter fitted with one hand operated lever was found in the factory. It is alleged in the show cause notice that it was not possible to feed copper cat .....

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Mittal, but the learned Commissioner failed to produce him for examination and cross-examination. Thus, his statement is not reliable. The learned Commissioner have erred in relying on the same. Further, the appellant JVIPL stated that their Crucible was 20 inch and not 16 inch, which have not been found to be untrue by the learned Commissioner. It is further stated that JVIPL used to give two cuts on each piece of cathode thus cutting the same into three pieces and each piece of the diameter of .....

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ellant had given a proposal during the adjudicating proceedings that a pilot experiment may be conducted. But the said request was not granted, nor rejected in the impugned order. Further, the appellant JVIPL also brought on record a Chartered Engineer's certificate dated 11/10/2011. A copy of which is available in the appeal paper book, wherein the said Chartered Engineer, after paying visit to the factory of JVIPL have categorically stated the process of manufacture of copper ingots, by us .....

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gs by the learned Commissioner. 15. It is further stated learned counsel that the learned Commissioner have erred by acting as an expert in merrily on his personal knowledge, not appreciating the facts on record. Further, the learned Commissioner observed that JMWIPL, Jammu had shown a wastage - burning loss of approximately 0.2% as against burning loss shown by JVIPL at 1%, is wholly fallacious as the type of furnace used by JVIPL in their factory at Delhi and the furnace (type and make) used b .....

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ed some alternative raw materials, and if so how the payments were made to the sellers. Further, there is no allegation or evidence in the show cause notice as to how the payments were made by JVIPL and GRPL to M/s Hindalco Industries and M/s Sterlite industries, on the alleged diversion of the cathodes. 16. The learned counsel also urges that the show cause notice dated 11/11/2010 on JVIPL is hit by limitation as extended period of limitation is not invocable. The SCN have referred to the earli .....

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Ltd, 520-A, G.T. Road, Shahdara Manufacturing Unit Sushil Jain, Manoj Jain & Ashish Jain (Father & Sons) JMW (1) Pvt. Ltd, 29, Saboli Industrial Area, Shahdara Regd. Dealer at Delhi Manufacturing Unit in Jammu Sushil K Jain & Manoj Jain (Father & Son) 18. Mr. Shivji Gupta the - Production Manager of JVIPL in his statement dated 26/03/2008 had admitted that they only used copper scrap (procured from local sources without any bill) in production of copper ingots. He further in his .....

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ereas nickel was not physically available. Also stated that they did not use nickel nor manufactured CuNi ingots during 2005 - 06 to 2007 - 08. Further stated that they had not use any metal other than copper scrap. That most of the cathodes where diverted without any invoice from JVIPL, but on invoices of JMWIPL - trading unit, to JMWIPL manufacturing unit at Jammu after availing Cenvat on them, purchased from Hindalco and Sterlite. Further JVIPL had not manufactured any copper ingots out of Co .....

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was visited by revenue officers on 8 July 2010, no stocks were found. No plant and machinery was found to be installed. Shri Lalji Dubey, Manager who was present, informed that GRPL were manufacturing copper wire rods and copper strips out of copper ingots till October 2008, where after had closed down and sold plant and machinery comprising of Annealing furnace, nine roll stands with the two electric motors of 300 HP and 250 HP and two coilers. They had not surrendered manufacturing registratio .....

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at credit availed by GRPL was ₹ 4,63,09,268. JVIPL the job worker showed 1% burning loss in the job work - conversion of cathode into ingots. The ingots received from job worker - JVIPL and purchased from Jammu units were commonly entered in the form - IV register without any distinction. GRPL showed 1% wastage and 2% scrap generation for producing copper rods out of copper ingots. Similarly for producing copper strips out of rods they had shown 2.5 to 3% of waste generation. 21. During th .....

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vailable in factory, nor they got the cathodes cut from outside. Hand cutting of such quantity of cathodes appeared not feasible. Without cutting of the large cathodes, they could not have been fed in furnace. 22. JMWIPL - trading unit was situated in the adjacent premises to JVIPL, During April 2006 to March 2008 - showed purchase of 2380.445 MT of copper scrap and copper cathodes (rejects), from six Rajasthan-based suppliers. All material was sold to Jammu unit on trading invoices, without Cen .....

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ad operated from small offices space without any good down or had good down for just a few months. Some of the firms having Sales Tax/ VAT registration, the proprietors had residential address at Delhi, on which they were not found. Out of 96 vehicles shown to have been used to transport goods from Rajasthan, on verification of 79 vehicles, where goods were received, 19 vehicles were found to be motorcycle, auto-rickshaw, two vehicles were found to be MCD vehicles, three where Tata pickup, one w .....

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dimensions could not have been fed, without cutting into appropriate size. If cathodes had been in use regularly, proper machinery/ equipment would have been in place for cutting them into appropriate sizes. Only one hand cutter fitted with one hand operated scissors was found in the factory. 23. JMWIPL - Jammu, plant was capable of using copper cathode as input for manufacture of oxygen free copper rods. They were also preparing test certificates for their finished goods and supplying them to .....

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copper cathodes containing 99.99% copper conforming to LME grade alone and raw materials like copper scrap/ ingots, could damage their graphite dies, besides producing poor quality of copper wire rods. Further, if they manufacture from scrap/ ingots their output copper wire rods will not be oxygen free. Trading unit of JMWIPL-Delhi showed purchases of 2380 MT of copper scrap/ cathodes from non-existing firms and sold to Jammu unit which is equivalent to 2411.99 MT of copper cathodes purchased by .....

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shifted from trucks coming to the address of godown of trading unit located adjacent to JVIPL premises. That bills of trading unit and GR issued by person of trading unit, used to be sent with this trucks to Jammu unit. That he never loaded any goods from the non-existent traders. The trading unit did not purchase cathodes from Hindalco. Thus, it appeared that the cathodes shifted to such trucks were those purchased by JVIPL/GRPL. Further, purchase of cathodes by the trading unit of JMWIPL were .....

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f Jammu unit for the period 2006 - 07 and 2007 - 08 shows Copper Cathode and Copper Scrap to be principal input. During 2008 - 09 they declared Cathode Scraps and ingots and during 2009 - 10 only as Cathode as principal input. All these years, they indicated use of 1.02 KG of principal input to yield one kg of Wire Rods - their finished goods irrespective of the quality of raw material. Thus, it appeared they were all along using Cathodes. The low burning loss by Jammu Unit was possible only whe .....

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t when he was produced before the Magistrate. 27. According, the learned AR for Revenue prays for dismissing the appeals. 28. We have considered the rival contentions and perused the records. The earlier statement of Shri Shivji Gupta (SG for short) were recorded on 17/01/2008, 30/01/2008 and 26/03/2008. He was arrested on 25-26/03/2008 along with Mr. Sushil Jain. In the subsequent investigation the statement of Shri Shivji Gupta recorded on 30/08/2010, in which he stated that JVIPL had used cop .....

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g the cross-examination that SG is telling lies at the instance of directors of the appellant companies. In his subsequent statement as well as during cross-examination SG stated that JVIPL have used copper cathode for manufacture of ingots. This statement of fact prevails in view of the provisions of Section 9D of the Central Excise Act. We further notice that the learned Commissioner have selectively relied upon the statement of SG, which is against the provisions of law. We further notice tha .....

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athodes. He was not even confronted with the statement of SG. We further hold that in the facts and circumstances, No reliance can be placed on the uncorroborated statement of SG dated 26/03/2008. 29. The next issue is whether JVIPL was having the necessary infrastructure to manufacture copper ingots or rods from copper cathode. The main reason, which weighed with learned Commissioner is that JVIPL was not equipped to use copper cathode. We note that SG in his subsequent statement dated 30/08/20 .....

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ppropriate test in their factory, to ascertain the facts. We also notice that it is not the case of Revenue that copper cathode cannot be used in the manufacture of copper ingots. We further find that the Commissioner have relied upon the statement of one Shri V.K. Mittal-Partner of M/s Veekay Gen. Industries who in his statement dated 08/09/2010 has stated that copper cathodes cannot be cut into pieces by using hand Cutter or through hand operated scissors because of its thickness and hardness. .....

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ore burning loss at JVIPL, Delhi, we notice that it is admitted fact that JMWIPL, Jammu, have a close furnace, whereas the furnace of JV IPL Delhi is an open furnace. It is an admitted fact that burning loss is bound to be more in their open furnace. Thus, we hold that the allegation in the SCN, regarding capacity to utilize copper cathode by JVIPL is not tenable. 30. The next ground/ contention of the Commissioner for denying Cenvat Credit on copper cathode is that the trading unit of JMWIPL, a .....

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on the copper cathode source from Hindalco and Sterlite. We further notice that the Commissioner Delhi, having jurisdiction over JVIPL and GRPL, had written to Commissioner Jammu, having jurisdiction over JMWIPL factory to probe the affairs of JMWIPL. In response to such letter dated 09/04/2010. The Commissioner Jammu wide enquiry report dated 24th May, 2010 have given a detailed report stating that the Jammu unit was having instruments/ machinery to melt copper scrap, copper ingots and copper .....

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ter maintained by the Jammu unit. This register have got regular endorsements-post inspection, by the officers of District Industry Center. (DIC). We find that the Id. Commissioner Delhi, have ignored the factual report received from Commissioner Jammu, for no good reason only based on the earlier statement dated 26/03/2008 of Shri S. Gupta. 31. Another reasoning which has been given by the Commissioner is their plant and machinery installed at M/s JMWIPL Jammu was capable for operating on coppe .....

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the evidentiary value of which we have already discarded. Secondly the enquiry report of Commissioner of Central Excise Jammu, clearly states that appropriate machinery was installed in the factory of M/s JMWIPL-Jammu, to melt copper scrap, copper ingots and copper cathode. Thirdly the department did not prove that if JVIPL and GRPL had diverted copper cathode, how they were able to manufacture their finished Goods. Fourthly in support of their allegation that M/s JMWIPL-Jammu was only using cop .....

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that in order to manufacture oxygen free copper wire rods, the raw material required was copper cathodes. But if copper scrap is used the copper rod manufactured would not be of oxygen free quality, and the purity of such copper rods will be of lower grade depending on the quality of scrap used. 32. We are therefore of the view that findings of the Id. Commissioner on the above issue are not sustainable. We further find that JVIPL had purchased copper cathodes to the extent of 2380.445 MT from H .....

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ls during the disputed period. This Quantity was sent for conversion into copper ingots on job work basis. It is seen that no evidence has been brought on record to prove that there has been any flowback of cash to them. We agree with these submissions of the learned counsel both JVIPL and GRPL. We also agree with the contention of the learned counsel that no evidence has been brought on record that if the copper cathodes was actually diverted to JMWIPL-Jammu, how the payments which was made by .....

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Hindalco Industries Ltd. In these invoices, consignee has been shown either JVIPL or GRPL, Delhi. There is no dispute that GRPL had got the copper ingots manufactured from JVIPL on Job work basis. No statement of any of the drivers of the vehicles who had transported the copper cathodes, were recorded to find out the place where the copper cathode was unloaded. Further Sh. Manoj Yadav prop. of M/s Kanpur Kashmir Roadways, who was solely responsible for transportation of copper scrap from the Del .....

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oth by JVIPL and GRPL. There is no dispute on the quantum of manufacture of finished goods by JVIPL on their own behalf or on behalf of GRPL, and/or quantum of payments of Central Excise duty, on the said finished goods. 35. We therefore hold that no credible evidence has been brought on record to prove that JVIPL and GRPL had diverted the copper cathode to JMWIPL-Jammu. Consequently, we set aside the duty demand and penalty confirmed by the Commissioner both against JVIPL and GRPL. Since we hav .....

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under Rule 26 of Central Excise Rules, 2002. Whereas another show cause notice 02-06-2011 was independently issued to JMWIPL more or less issued on the identical grounds. 38. Even relied upon documents of show cause notice dated 30-12-2008 and 11-11-2010 to JVIPL and GRPL, are part of this show cause notice. The only distinction is that in the show cause notice dated 11-11-2010 there was a proposal to deny Cenvat Credit on copper cathodes to JVIPL and GRPL, whereas in the show cause notice issue .....

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by JVIPL and GRPL on which Cenvat Credit of ₹ 15,88,37,495/- was presumably available to them during the period in dispute. Hence, this amount was demanded under Para 2C(g) of the Notification No.56/2002-CE dated 14-11-2002, as amended, and Section 1 IA of the Central Excise Act, 1944. The Commissioner vide impugned order has confirmed the said demand and imposed equal amount of penalty. 39. The learned counsel has advanced the following submissions: 39.1. That, the whole proceeding again .....

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JMWIPL had shown false purchase of copper scrap for which he had no jurisdiction. 39.3. He drew our attention to the PBC checks conducted by the Superintendent of Central Excise on 03.01.2007 and 22.08.2007. There are notings in the RG-1 Register on 3.01.2007, where Superintendent of Central Excise had stated that principal raw material of the unit was copper scrap and rejected copper cathodes and it was also stated therein that in the month of December 2006 the unit had purchased 2,57,847 kgs .....

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WIPL Jarnmu was copper scrap. The Commissioner in the impugned order has nowhere questioned the veracity of the above PBC checks. 39.5. That, the officers of Commissioner of Central Excise, Delhi-II, on their own conducted inquiries as to whether JMWIPL had received copper scrap or not, when they were conducting enquires against JVIPL and GRPL. However, neither JVIPL/ GRPL nor JMWIPL were confronted with any such evidence which was straightway relied upon in the show cause notice dated 11-11-201 .....

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ess of which could not be questioned without conducting any independent inquiry. 39.6. He relied upon the enquiry report dated 24-05-2010 of the Commissioner of Central Excise, Jammu, who after making thorough enquires, categorically informed the Commissioner of Central Excise, Delhi-II, that JMWIPL Jammu, were receiving both copper scrap and copper cathodes and having necessary infrastructure/ machinery to melt copper scrap, copper ingots and copper cathodes. The allegation of Delhi-II Commissi .....

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ontended that JMWIPL had also used material copper cathodes in substantial quality as their raw material. 39.8. He questioned the veracity of enquiries with regard to purchase of scrap from various dealers located in the State of Rajasthan and Delhi which was conducted in the mid half of the year 2010, whereas the purchases of copper scrap were made in the year 2006-07 and 2007-08. The dealers from whom the scrap was purchased normally do not have permanent address and keep on changing their loc .....

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ise, Jammu in his enquiry report dated 24-05-2010, the officers of Commissioner of Central Excise, Delhi-II, Commissionerate had also recorded statement of Sh. Manoj Kumar Yadav dated 11-08-2010. In this statement She Manoj Kumar Yadav had categorically stated that they were transferring both copper cathodes which were shifted to their trucks with the help of crane, chain pulling or lifter and copper scrap which used to be packed in gunny bags which were loaded on the trucks by the labour. 39.10 .....

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) through the banking channels. 39.11. That, all the trucks were duly checked at the sales tax check post at Lakhanpur, J&K. No discrepancy was ever found in the description of the goods at the check post except in one case. Even in that case the Appellate Commissioner of Trade Tax had decided the issue in their favour. 39.12. That, the provisions of para 2C(g) of Notification 56/2002-CE were not applicable of the facts of the present case as in the present case they had not availed the cenv .....

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nature. The department never reviewed the sanctioning of the refund claim by the Assistant/ Deputy Commissioner of Central Excise, Jammu. Hence the said refund orders have attained finality. The said sanctioned refund(s) cannot be allowed to be recovered by issuing a show cause notice, that too under extended period of limitation under section 1 IA of the Central Excise Act. 39.14. That, the Department did not bother to take any expert opinion to verify as to whether copper rods can be manufact .....

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u, was well equipped for using copper scrap as well as copper cathodes as input/ raw material for making copper wire rods. 39.15. That, the Id. Commissioner has erroneously relied upon website of M/s JMWIPL, wherein it was claimed their finished goods are made only from high quality LME GradeA copper cathodes. It was submitted that the website was launched only in 2008-09, when they had started using 100% copper cathode. 39. 16. It was contended by the Ld. Counsel that the duty demand was barred .....

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. In the earlier said show cause notice dated 11-11-2010, JMWIPL-Delhi (which was their trading unit) was also made a party and penal action was proposed against them under Rule 26 of Central Excise Rules, 2002. The Commissioner of Central Excise, Delhi, vide his order dated 15-10-2012 imposed the penalty of ₹ 1 crore upon JMWIPL, Delhi, under Rule 26 of the Central Excise Rules, 2002, which we have already set aside, as mentioned hereinabove. We note that the only difference in the allega .....

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n receipt of copper scrap in their records only to avoid taking of Cenvat Credit on the said copper cathodes with and intent of availing of erroneous refund under Notification No.56/2002-CE dated 14.11.2002. Hence the duty was demanded under Para QC (g) of Notification No.56/2002-CE and Section 11A of the Central Excise Act, 1944. In this case the department has demanded the same amount which was availed as cenvat credit, both by JVIPL and GRPL during the financial year 2006-07 and 2007-08. 42. .....

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dated 24.05.2010 of the Commissioner of Central Excise, Jammu while disposing of the appeals filed by JVIPL, GRPL and others. 45. This enquiry report was furnished after examining the plant & machinery of JMWIPL and their statutory records. In this report, it was clearly informed that M/s JMWIPL Jammu had the necessary infrastructure/ machinery to melt copper scrap/ copper ingots and copper cathodes. A copy of the manufacturing process and list of machinery installed was also enclosed. It wa .....

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d copies of their raw material reports. It was observed in this enquiry report that raw material purchased through JMWIPL - trading unit, Delhi was transported by single transporter namely M/s Kanpur Kashmir Roadways Delhi. The invoices of the trading unit were accompanied by GRs issued by the above-mentioned transporter. As soon as the goods reached the border of J&K State, there is toll tax barrier. It is mandatory for every vehicle carrying the goods to pay toll tax, and for this purpose .....

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et of documents was enclosed with this enquiry report. 47. It has been observed in this report that on arrival of each consignment of raw material in the unit of M/s JMWIPL, they were informing the DIC Jammu and such authority had been regularly visiting the unit and verifying the purchase of raw material. All such verifications are duly recorded by DIC authority on the Raw material Register maintained by M/s JMWIPL. Statement of Sh. Manoj Kumar Yadav Prop. of the transporter was recorded 06.05. .....

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s enquiry report on the ground that it was based upon the records which were being maintained by JMWIPL, Jammu. According to him their records were falsified and this fact was not in the knowledge of the then Commissioner. He has also relied upon a letter of Deputy Commissioner of Commercial Tax, Lakhanpur, where is it has been stated that trucks carrying goods for imports were checked randomly and in one case in respect of vehicle no, PB08AQ5499 where goods were physically verified, the same we .....

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t it was prepared after making extensive enquires by the office of Jammu Commissionerate i.e. by the jurisdictional Central Excise officers where the unit JMWIPL Jammu is located. The Commissioner as an adjudicating authority cannot overlook the detailed enquiry report of his predecessor. In fact, the said enquiry report was by his own office, and till date it has not been withdrawn. Hence the Learned Commissioner while passing the impugned order have erred in taking contrary view. The said enqu .....

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photographs of the same. The visiting officers did not find any discrepancy in the records which were being maintained by JMWIPL. Even in all the statements which were recorded during the course of investigations which included two statements from Sh. P. K. Saxena General Manager dated 08.07.2010 & 25.08.2010 and one statement of Sh. Vishal Sharma Director dated 27.08.2010, the focus of enquiry was limited to the type of plant and machinery which was installed in the factory of JMWIPL, and n .....

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on-receipt of copper scrap into their factory. Neither Sh. P. K. Saxena nor Sh. Vishal Sharma were confronted with the evidence which was gathered by the officers of Delhi -II Commissionerate relating to alleged fake purchases of the copper scrap by them, during the period 2006-07 and 2007-08. The investigating officers also did not doubt the receipt of copper scrap which was duly shown in the statutory records of JMWIPL. 50. We further find that the Commissioner of Central Excise, Jammu in his .....

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the Commissioner of Central Excise, Jammu in his enquiry report dated 24.05.2010. However, he has not doubted or given any findings on the statements of Sh. Manoj Kumar Yadav dated 11.08.2010 which was recorded by the officers of the Central Excise, Delhi-II Commissionerate, and this statement has been relied upon in the instant Show Cause Notice. Sh. Manoj Kumar Yadav in his statement had stated that they were transferring both - copper cathode which were shifted to the trucks with the help of .....

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ding that the said purchases were shown to have been made from non-existent parties. However, we find that the copper scrap/ copper cathode was received by JMWIPL Jammu on the strength of invoices of suppliers, which bore TIN (Sales - Tax) numbers of the said suppliers. We have gone through the accompanying documents with the said invoices, which include GR of the transporter Kanpur Kashmir Roadways and Form VAT 58 (Road permits). The said VAT-58 forms bear the stamp of check post situated at La .....

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012. He was asked whether copper scrap purchased by JMWIPL from the market could be used in their plant to which he answered that if copper scrap was used, the copper rod manufactured would not be oxygen free quality and the purity of such copper rods would be of lower grade depending of the quality of scrap used. We find that from the cross examination it is evidently clear that plant and machinery installed at JMWIPL Jammu was capable to melt copper scrap apart from use of copper cathode. This .....

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or melt copper scrap as one of the raw materials, it was incumbent upon it to have brought on record technical or expert opinion. Capability to use scrap is also certified by certificate dated 16.11.2011 from the manufacturer of the plant China International Limited' Hongkong, wherein they have certified that plant of JMWIPL which they had supplied was well equipped for using copper scrap as well as copper cathode as raw material for making Copper Wire Rod. The Ld. Counsel for JMWIPL brough .....

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terial and further hold that they have actually reviewed and used the quantities of copper scrap as reflected in their statutory records. 55. The next issue which calls for our decision is whether the Commissioner is justified in denying JMWIPL, the benefit of the Notification no.56/2002-CE dated 14.11.2002. The relevant portion of Notification 56/2002-CE dated 14.11.2002 is reproduced below: "In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 19 .....

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structure development centre or Export promotion Industrial Park or Industrial Estate or Industrial area or Commercial Estate, or scheme area, as the case may be, specified in annexure -II appended hereto, from so much of the duty of excise, as the case may be, leviable there on under any of the said Act, as is equivalent to the amount of duty paid by the manufacturer of goods, other than the amount of duty paid by utilisation of Cenvat credit under the Cenvat credit Rules, 2002. 1A. In cases wh .....

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aw materials in the manufacturing of copper rods and since the said quantity of copper scrap was purchased from the open market no, Cenvat credit was available to them on the same. On the contrary the Commissioner has given findings that since M/s JMWIPL had used diverted quantities of copper cathodes in the manufacturing of copper rods and since they did not use non-duty paid copper scrap which they were even otherwise technically not capable to use, hence by not taking cenvat credit they had b .....

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ntities of non-duty paid copper scrap we hold that JMWIPL, Jammu did not violate any condition of para 1A of Notification No.56/2002-CE. We have also held hereinabove (disposing of appeal no.E/55324-30/2013 in respect of JVIPL and others) that there was no evidence that JVIPL and GRPL had diverted copper cathodes. Since the impugned order proceeds on the basis that JMWIPL Jammu had used the said diverted quantities of copper cathodes, and the benefit of Notification no.56/2002-CE has been denied .....

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ity. According to him once the refund or self credit orders have attained finality, the said act of grant of refund or self credit, the Department could not have issued a show cause notice for recovery of the said duty, that too under extended period of limitation. We have gone through the copies of some of the refund orders. The refund orders were passed after calling the verification report from the jurisdictional Range Officer who furnished the figures of duty paid through account current and .....

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59. In view of the above findings discussion we set aside the impugned order and allow the appeal. 60. In this appeal, JMWIPL has raised the issue of demand being hit by time bar. Since we are allowing the appeal on merits, we are not required to go into the issue of time bar. 61. To sum up:- (a) Both the impugned orders are set aside, (b) all the appeals are allowed with consequential benefit (s). (c) Ground of limitation (invocation of extended period) is left open. (B. Ravichandran) Member ( .....

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as the order prepared by the learned Member (Judicial). The following points require re-appraisal for a proper conclusion on the appeals by the appellant (a) the various statements and the deposition during cross-examination of Shri Shivji Gupta formed the main basis in the submissions made by the appellants as well as analysts of the learned Member (judicial). Shri Shivji Gupta was the Production Manager of JVIPL and is apparently well versed with the processes and the day-to-day activities of .....

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fferent version at the time of cross-examination the same shall automatically over-rule the earlier statement given by the same person. The Adjudicating Authority is required to examine the facts and circumstances of initial statements and the outcome of cross-examination. Corroborations from other sources will help in analysis of such deposition. It is also to be noted that the earlier statement, which was relied upon by the Original Authority was sought to be discounted on the ground that the .....

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e outcome of cross-examination and also collate the facts revealed in such deposition with corroborative evidence in order to arrive at a finding ; (2) the capacity and infrastructure available with JVIPL for manufacture of copper ingots/rods using copper cathode was also a matter of dispute. Here again, the later statement of Shri Gupta cannot be automatically relied in the presence of other corroborative evidence which supported the earlier statement of Shri Gupta to the effect that JVIPL coul .....

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L to manufacture copper ingots/rods using copper cathode has to be arrived at independently even without reliance on the statement of Shri V.K. Mittal ; (3) I find that one of the serious allegations in the proceedings against the appellants is regarding bogus purchase of copper scrap by the Delhi trading unit of JMWIPL. Perusal of appeal records and the impugned order reveals enough evidence regarding such improper documentation, non-existing sellers/ vehicles and other corroborative evidences. .....

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t actually copper cathodes ; (5) the evidences gathered by way of statements and records from various transporters were relied upon by the Original Authority. These were contested by the appellants with illustrative rebuttals. While there are serious allegations of diversion of Cenvat credit availed raw materials and substitution of items by scrap, it is necessary for a careful analysis the evidences and contest made by the appellants on such evidences. Prima facie, the various evidences gathere .....

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ell as during cross-examination. Similarly, the evidences collected with reference to various transport vehicle/ transporters also require for close examination and a detailed finding. The burning loss which was one of the basis on which the Original Authority concluded about the diversion of goods has been contested by the appellant as attributable to technical reasons of nature of furnace and not due to nature of raw material. This requires a clear analysis and finding. 2. On careful considera .....

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r a more comprehensive appraisal of all the evidences and to give findings on all points raised by the appellants. As such, I find that the matter requires to be remanded to the Original Authority for a fresh decision. (B. Ravichandran) Member (Technical) In view of the different findings recorded by the Member (judicial) and Member (Technical) in this appeal, the point of difference as emerges is that : whether the appeal can be allowed as held by the Hon ble Member (Judicial) or the matter sho .....

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26th March, 2008 (RUD) is not reliable, as the same was not freely given and did not stand the test of cross examination and subsequent statement dated 30th August, 2010 (RUD) is reliable, as it stood the test of cross examination and is also in compliance with the provisions of Section 9D of the Central Excise Act. OR As held by Learned Member (Technical), the re-appraisal of evidence, i.e., the statement of Shri Shivji Gupta is required with regard to other corroborative evidences and as such .....

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