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TMI Blog2018 (8) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... to the production and clearance. Show cause notice dated 21.1.2009 was issued to appellant inter alia, alleging clearance of inputs as such without reversing the proportionate CENVAT credit during the period October 2006 to August 2008 resulting in payment of duty liability of Rs. 2,89,14,030/-. It therefore appeared that appellant had taken CENVAT credit on the raw materials and such aluminum ingots etc. however have removed them without reversing such credit and without any invoices. After due process of law, the adjudicating authority vide order dated 31.3.2010, confirmed the demand of Rs. 2,89,14,030/- proposed in the show cause notice along with interest and imposed equal penalty under Rule 15(2) of CENVAT Credit Rules, 2004 r/w Section 11AC of the Central Excise Act, 1944. He also imposed penalty of Rs. 25,00,000/- on Shri P. Nallendra Kumar, Authorized Signatory of M/s. GMT Alloys under Rule 26(1) of Central Excise Rules, 2002. Aggrieved, the appellants are now before the Tribunal. 2. When the matter came up for hearing, Id. counsel Shri S.Jaikumar made oral submissions which can be broadly summarized as under:- 2.1 Prime raw materials for manufacture of various alloy ingo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, one Shri M.S. Ayyappan partner of M/s. Premier Pigments was not allowed for cross-examination by the adjudicating authority. 2.7 In respect of statement given by Shri Azhagu, Manager of M/s.. Promptekk Metal Alloys and Refining Corporation Ltd., it is pointed out that the clearances to buyer was less than 1% of the total clearances of the appellant and hence waiver of cross-examination and acceptance of Azhagu statement would not render any sort of credibility or add substance to the allegations of the department. 2.8 Out of the 80 and odd buyers, only 4 were investigated by the department and the only inquiry made was regarding percentage of lead contained in the ingots supplied by the appellant. Merely basing upon the statements that the ingots contain purity of 96 o 99%, the entire duty demand has been made. The department has not conducted any scientific test for arriving at the conclusion of the purity composition of the ingots supplied by the appellant. There is also no evidence as the diversion of the raw materials / inputs as such. Nothing is brought out to whom the appellants have diverted the alleged raw materials. 2.9 It is contended that the appellant has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. From the narration in Para 5 of the notice, it is seen that in the two statements dated 12.02.2008 and 14.03.2008, Shri Nailendra Kumar has "accepted" or "agreed" to the contents of the statements recorded from factory staff, those recorded from the buyers of final products as well as suppliers of raw materials. 5.2 From para 4 of the Show Cause Notice, we find that in the statements that were recorded from the Factory Supervisor, Site Supervisor and another Authorized Signatory of the appellant, the main aspect of these statements brought out is that, though unit is a proprietary concern, day-to-day operations of the factory were being looked after by P. Nallendra Kumar, Authorized Signatory and husband of the Proprietrix. 5.3 The statements recorded from the suppliers of raw materials appear to indicate that these suppliers have sold materials such as lead sub-oxide, red lead, aluminium scrap, lead scrap, foundry slag, etc. to the appellant, that they receive payments for the sales by way of demand drafts or cheques and that delivery of goods was taken by appellants themselves in their vehicle. 5.4 From the initial statements recorded from some buyers of the finished g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the adjudicating authority is that "the undersigned perused the statement given to investigating officers by Shri M.S. Ayyappan and others who have been cross examined by you and it is felt by the undersigned that cross examination of Shri M.S. Ayyappan may not be necessary". In our view, such refusal for cross-examination is in direct contradistinction to the legal requirement and statutory provisions in this regard. 5.7 While the notice has blithely alleged that the raw material of zinc/tin/ aluminium ingots, etc., have not been used to manufacture ingots, but have been removed as such, we are unable to fathom why the investigation did not extend to any buyers of such cleared raw material. In a case where there is a serious allegation that as much as 655 metric tonnes of aluminium ingots, 17.688 metric tonnes of tin ingots and 619.138 tonnes of aluminium ingots, amounting to a huge total quantity of 1291.875 metric tonnes of raw material, have been removed as such in a clandestine manner and sold without raising invoices, there surely was a responsibility as well as necessity to have traced out at least some, if not all of the alleged buyers who were the recipients of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... built up on statements of only a few suppliers of the impugned raw material, and a few buyers of lead ingots; almost all these persons have retracted their initial statements during cross-examination. Such unfounded and unsubstantiated charges made in the show cause notice have been mechanically upheld by the adjudicating authority without any application of mid and without taking cognizance of the counter arguments made by the appellants by discarding the retractions and statements made by key persons and in cross-examination, and, to top it all, relying upon the statement of a buyer whose cross-examination was refused by him. We, thus, find that the case attempted to be built up against the appellants, does not have any legs to stand on. 6. In passing, we note that even the CBEC, vide Circular 1063/2/2018-CX dated 16th January, 2018, has inter alia conveyed that it has accepted the order of the Hon'ble High Court of Delhi in the matter of Flevel International Vs. Commissioner of Central Excise [2018-TIOL-2230-HC-DEL-CX] where the Hon'ble Court set aside the order of the Tribunal by inter alia holding that the department did not concede to the assessee's request for c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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