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2018 (2) TMI 282

ster Batches, whereas study of consumption of power supplied by NDPL and Generators installed in their factory would reveal that the main appellant actually manufactured less quantity of PVC Compound and Master Batches - issue of invoices without the issue of goods - It was also alleged that the main appellant had not used the said resin in their final product and diverted to the manufacturer of Battery Separator, who are SSI Units and the main appellant availed Cenvat Credit thereon - Held that: - this Tribunal already decided the case in respect of other customer, namely M/s Paramount Communication Ltd., [2018 (1) TMI 350 - CESTAT NEW DELHI] located outside Delhi-I jurisdiction, where the main appellant issued the invoices. In that case, the Tribunal has taken a consistent view that Cenvat Credit cannot be denied merely on the basis of statements, which are un-corroborative in nature. - The case of the Revenue is that the buyers made payment of the cheques and the main appellant returned cash after deducting 2-3% commission. The Investigating officer had not made any attempt to examine the Bank Account. No cash was recovered at any place, as the matter involved huge amount of .....

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intelligence that one M/s. Chemplast Sanmar Limited (for short, M/s. Chemplast) a Chennai based company, having its depot at Delhi manufactures different grade of PVC Resins, one of which is Battery Separator grade resin. It is also gathered information that certain PVC Compound manufacturers are buying Battery Separator Grade Resin just to avail more Cenvat Credit as the said resin is costlier than the ordinary grade at least by 60%. The PVC Compound manufacturers are showing the use of the resin in the manufacture of PVC Compound and then showing the supply of the compound so manufactured out of the said resin to the wire and cable industries and it is a mere paper transaction. On the basis of the said information, on 26.05.2006 the Central Excise Officers visited the factory and office premises of the main appellant and conducted thorough search and seized several records and documents. It has also recorded the statements of the buyers, transporters etc. of the main appellants. A Show Cause Notice dated 12.02.2007 was issued to 36 Noticees including the appellants herein. 2. By the impugned Order, the Adjudicating authority confirmed the demand of Cenvat Credit of ₹ 9,73,5 .....

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st for availing higher amount of Cenvat Credit. The Learned Counsel elaborated the manufacturing process to establish that the said grade was used in the manufacture of final products. (h) The Test Results nowhere indicate that CP 172 SG Resin cannot be used for manufacture of PVC Compound. (i) As per Panchnama dated 14/15.02.2006, the representative samples of PVC Compound/ Master Batches were drawn and did not send the same for test to ascertain whether CP 172 SG Resin was contained and/or used therein or not. (j) The scrap generated during the process of manufacture of finished products was available in the factory as evident from the Panchnama dated 30.07.2004 and 14.02.2006, which would establish that the PVC compound were manufactured at their factory. (k) The Adjudicating authority proceeded on the basis of power consumption. It is admitted fact on record that the appellant having three generators, two of them was 125 KVA each in running condition installed in their factory. (l) During the material period, the main appellant had supplied PVC Compound/Master Batches to 86 buyers, out of which 25 buyers are located in Delhi-I Commissionerate and remaining 61 buyers are located .....

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ings of the Adjudicating authority. He has filed a Written Submission along with Case Laws. The Learned A.R. mainly submitted that the Director and the other employees of the main appellant in their statement had admitted that they have not manufactured the goods and issued invoices through the buyers to facilitate availment of inadmissible Cenvat Credit. It is further submitted that the main appellant used to purchase the resin costlier from M/s. Chemplast to avail more Cenvat Credit, after which the same was diverted to Battery Separator manufacturers working under SSI exemption. It is submitted that statements of the various transporters would reveal that there was no movement of the goods and the buyers availed credit only on the basis of the cenvatable invoices. The Learned A.R. highlighted relevant portion of the statement in its written submission. It is also submitted that 25 parties located in Delhi had accepted and deposited the amount in respect of Cenvat Credit on the basis of the invoices issued by the main appellant. There are other 22 parties, who had approached settlement commission and had admitted their duty liability in respect of Cenvat Credit demand on the basi .....

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main appellant. It is seen from the records that the amount of ₹ 2,60,54,730/- was recovered from the buyers in Delhi-I Commissionerate and the same amount cannot be recovered from the main appellant. 9. The Adjudicating authority observed that the main appellant had issued Cenvatable invoices without delivery of the goods to facilitate the Cenvat Credit benefit to the buyers. The buyers had issued the cheques to the main appellant, who returned money in cash after deducting 1 -3% against the cheque received from the customers. These facts are based on the statement of the various persons recorded by the Central Excise Officers. On the other hand, the Learned Counsel submitted that the said statements are contrary to the records in so far as there is no evidence that the appellant had encashed such big amount from the Bank, except for meeting their day to day work. We find that the Factory premises and the residence of the main appellant were searched and not a single discrepancy was found in the Accounts. The Investigating officers had not examined the Bank Account. Thus, we find force in the submission of the learned Counsel that money has not been returned by the buyers. .....

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ax declaration. The Check Post authorities put the stamp on the documents on some cases. In other cases, the goods were weighed on Dharmkanta before entering into the Inward Register of the factory. In such situation, the statement of the transporter cannot be relied upon, by ignoring the evidences available on record. 13. The Adjudicating authority observed that CP 172 SG grade Resin is costlier than the other resin which cannot be used in the manufacture of the final products as purchased from M/s. Chemplast. It is presumed that the main appellant purchased the said resin for claiming more Cenvat Credit. The Adjudicating authority relied upon the statement of the employees of the main appellant. In this context, the Adjudicating authority had discussed the different technical aspects of the use of the said resin. On the contrary, the Learned Counsel submitted that during the material period, the average consumption of the said resin with total consumption of other resin was 10.94% only and this was confirmed by the Director of the main appellant in his statement dated 14.02.2006. It is contended that insulation resistance, tensil strength, elongation, capacitance and thermal stab .....

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nd / Master Batches and scrap as shown in the records and monthly returns cannot be possible on the basis of power consumption; thus, the main appellant diverted the inputs in the local market. It is noticed that on 30.07.2004 and on 14/15.02.2006, when the officers conducted the stock verification, there was no shortage in the stock of finished goods. The investigating officer did not find out any raw materials from the premises of the supplier or from the market. The Learned Counsel submitted that the gross purchase of the main appellant during the material period was 14,415.572 M.T and 5,000 Tempo and Track were required to dispatch the materials. There is no evidence of transportation of such goods, except some statements. The Learned Counsel submitted that the Adjudicating authority had overlooked the purchase of diesels during the material period. We find that there is no dispute that three generators, two of them were of 125 KVA, in running condition installed in their factory. There is no corroborative evidence of diversion of the raw materials and therefore, such stand of Revenue cannot be accepted. 16. The Learned Counsel for the main appellant submitted that during the r .....

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ayments towards purchase of raw materials have been made by crossed cheques by the main appellant. They have also produced ledger accounts to this effect. There is no evidence regarding any flow back of cash from KPIPL to the main appellant or any arrangement to that effect. We note that while examining the lack of evidence regarding flow back of money, the Original Authority records that the event happened more than 3-4 years and hence, no evidence could be left behind. However, while examining the admissibility of certain statements of truck drivers recovered 3-4 years back, it is noted that the same is admissible and some of them have stated that they have not delivered any goods to the main appellant from KPIPL. Such divergent approach in appreciating the evidence is not tenable. Further, we note that there is no discussion regarding how could the main appellant manufacture such quantity of final products in the absence of inputs as recorded in their statutory records. Admittedly, during the impugned period, the main appellant did manufacture final products and cleared them on payment of duty. No examination of this aspect has been made either in the investigation or by the Adj .....

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officer had not made any attempt to examine the Bank Account. No cash was recovered at any place, as the matter involved huge amount of cash. The Tribunal in the case of Aum Aluminium Private Limited Vs. Commissioner of Central Excise, Vadodara - 2014 (311) ELT 354 (Tri.- Ahmd.) observed that un-accounted sales proceeds in substantial cash from factory or office premises or anywhere else in direct control of the assessee are not recovered and therefore, the charge of clandestine removal of goods cannot be sustained. There is no further investigation on the recovery of the cash as alleged. At this stage, the investigating officers should have examined the records and documents including Cenvat accounts and not merely relied on the statement of the third party. The Tribunal in the case of Tejwal Dyestuff Vs. CC, Ahemdabd - 2007(216) E.L.T 310 (Tri.-Ahmd.) observed as under:- The receipt of these inputs in the factory premises of the assessee having been established, coupled with the fact that, as per the declarations and returns and other statutory record, the inputs were in fact used in the final products by the assessee, the lethargy of the Revenue Officers in not verifying the rel .....

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eneral Mills Vs. C.I.T [ 1997 (31) ELT 325 (SC)] held that non-payment of duty could be bonafide and there may be reason for the assessee to opt for settlement and not contest the Show Cause Notice. The Larger Bench of the Tribunal held that mere filing of application before the Settlement Commission under Section 32E of the Act for waiver of interest and penalty and immune from prosecution may not necessarily be construed as admission of the allegation. The relevant portion of the said decision of the Larger Bench in the case of Bosch Chesis Systems India Private Limited (Supra) is extracted herein below:- 13. In the above view of the matter, Issue Nos. 2 and 3 are answered in the negative, that is, in favour of the assessee and against the Revenue, and it is held that the mere filing of application before Settlement Commission under Section 32E of the Act for waiver of interest, penalty and immunity from prosecution and suo motu payment of duty as per show cause notice may not necessarily per se construed as admission of the allegations in the show cause notice as regards the fraud, collusion etc. Inference in this regard may be drawn from the contents of the application, that is .....

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