TMI Blog2023 (10) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... orted not to his premises but were transported directly to premises of the respondent. Once we ignore all these statements, the only evidence left are the letter of the Additional Director, DGCEI indicating that intelligence was received, the letter of the Additional Commissioner, Dhanbad, which is an alert notice indicating that Ganpati Enterprises was found to be non-existent and the letter of superintendent of Central Excise, Burdwan indicating that M/s Vedic Chemicals Pvt Ltd is also closed - It is true that if the manufacturer had not manufactured the goods they could not have been supplied by the manufacturer to the first stage dealer and further to the second stage dealer and to the respondent. It certainly creates enough reasons to doubt but the issue can only be decided through a thorough investigation. If the assessee says that it had received the goods, the question is, if the second stage dealer had supplied the goods. In this case, he says he had supplied the goods. The next question is to enquire if the first stage dealer had sold the goods to the second stage dealer. The third stage of investigation is ascertaining if the manufacturer had supplied to the goods to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, a show cause notice dated 13.02.2018 was issued to the respondent proposing to recover CENVAT credit of Rs. 89,91,247/- under rule 14 of the CENVAT Credit Rules, 2004 [CCR] read with section 11A (4) of the Central Excise Act , 1944 [the Act]. Interest was also proposed to be recovered under rule 14 of CCR read with section 11 AA of the Act. Penalty was proposed to be imposed under rule 15 (2) of CCR read with section 11AC of the Act. After considering the written submissions by the respondent and the submissions made during personal hearing, the Additional Commissioner passed O-I-O disallowing the CENVAT Credit and ordering its recovery along with interest as proposed in the show cause notice. He also imposed penalty of Rs. 89,91,247/- upon the respondent under rule 15 (2) of CCR read with section 11AC. He further imposed a penalty of Rs. 1 lakh each upon the noticees nos. 2 to 8 of the show cause notice. On appeal, the Commissioner (Appeals), by the impugned order, set aside the O-I-O. 3. Aggrieved by the impugned order, Revenue filed this appeal. 4. Revenue s submissions: On behalf of the revenue, learned authorized representative made the following submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized representative submits that the impugned order is NOT proper and legal as the Commissioner (Appeals) ignored the following findings; i. the Central Excise duty was not paid or credited to the Government Exchequer by the non-existent/ existent manufacturers and, therefore, the CENVAT credit availed on the basis of dealers invoices issued on the basis of invoices of the said manufacturer is irregular/invalid; ii. The Superintendent of Central Excise, Burdwan sent a letter dated 31.05.2016 to the jurisdictional excise authority of the respondent s jurisdiction informing that M/s Vedic Chemicals Pvt Ltd. (who was cited as the manufacturer in some of the invoices) had last filed excise returns on December, 2012 and thereafter stopped filing any returns. Investigations showed that the so called manufacturers M/s Vedic Chemicals did not exist at that address. It is also evident from NSDL website that they had not paid any excise duty from the month of January, 2013. iii. Insofar as Aditya Enterprises, Bokaro, the second manufacturer is concerned, the statement of Shri Sudarshan Singh, proprietor was taken under Section 14 of the Act. He confirmed the no production activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the statements made before the Central Excise Officers cannot be admitted as evidence. This assertion is not correct; personal hearing was fixed on 06.08.2018 and 11.02.2019 but nobody appeared from the respondent side. Of the three manufacturers the statement of only M/s Aditya Enterprises was recorded and it was called for examination/ cross-examination but the owner of this firm sent an email stating that he was no direct or indirect involvement with the case and framed by someone and his financial conditions did not enable him to seek legal advice. The consultant of the respondent appeared on 22.02.2019 for personal hearing and cross-examination. Thus, it is not proper to say that the opportunity for cross-examination was not provided. The authorized signatory of the second stage dealer appeared for cross-examination and he was cross-examined by the consultant of the respondent on 22.02.2019 during which he reiterated the statements made before the officers under section 14 and had not retracted them. Cross-examination of the truck drivers was not conducted due reasons that there were 106 invoices whose cross-examination was sought by the respondent but the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation or evidence of flow back of cash to the respondent. (e) Reliance has been placed on the judgment of Allahabad High Court in Commissioner of Central Excise and Service Tax, vs. Juhi Alloys Limited [2014 (302) ELT (481)], wherein it was held that it would impractical to require the respondent to go behind the record maintain by the first stage dealer to ascertain the original manufacture is issuing or not. The High Court held that CENVAT credit should be allowed if the respondent acted with all reasonable diligence while procuring goods from the dealer. The issuance of transaction can further be appreciated by invoices, consignment sent statue records / transpire cross-examination of drivers etc., but no efforts were made in this regard by the revenue. Therefore, revenue submissions are not applicable. (f) The truck drivers who were supposed to have transported the goods could have been cross-examined to ascertain if the goods were delivered or not but such cross-examination was not allowed by the adjudicating authority. (g) The investigation is incomplete and the show cause notice is not sustainable. (h) In view of above the impugned order may be upheld and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by the first stage dealer. The case of the revenue is that it implies that goods were never supplied at all. The explanation of the respondent is that the goods were sent directly to their premises without first transporting them to the premises of the second stage dealer. This assertion is also confirmed during cross-examination of Manoj Vijay. 11. We find that the show cause notice is based on 9 relied upon documents of which one is a set of the invoices in dispute (RUD-9). These are alleged to be ineligible for CENVAT credit based on five statements of Sudarshan Singh of Aditya Enterprises (RUD-2), Ajay Sharma of Hari Om Steel (RUD-5), Vakil Luhar of M/s Mahalaxmi Scrap (RUD-6), Manoj Vijay authorized signatory of M/s Mahalaxmi Scrap (RUD-7) and Dharamveer Singh, Director of the assessee (RUD-8). 12. For any document to be used as evidence in any proceedings it must be relevant and admissible. As per section 9D, statements made before the Central Excise Officers will be relevant if procedure prescribed in it is followed: 9D. Relevancy of statements under certain circumstances. (1) A statement made and signed by a person before any Central Excise Officer of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to any proceeding under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. 9. A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set out the 3 of 10 CWP No. 12714 of 2016 circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 10. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. vs. CCE, 2009 (242) ELT 189 (Del). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 11. As already noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the scrap which it procured from second stage dealer. The second stage dealer procured the goods from the first stage dealers, who, in turn, indicated that they purchased from the manufacturers. 17. The buyer of scrap or input is not required to launch an investigation to find out if his supplier had, in turn, purchased the goods properly from his suppliers (first stage dealer) and that first stage dealer had, in turn, purchased the goods from the manufacturer and if that manufacturer had, during the relevant time, manufactured the goods and also paid excise duty. All that is required is for the user is to obtain the goods under the cover of proper invoices which the respondent did. 18. It is true that if the manufacturer had not manufactured the goods they could not have been supplied by the manufacturer to the first stage dealer and further to the second stage dealer and to the respondent. It certainly creates enough reasons to doubt but the issue can only be decided through a thorough investigation. If the assessee says that it had received the goods, the question is, if the second stage dealer had supplied the goods. In this case, he says he had supplied the goods. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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