TMI Blog2023 (12) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... t thereon, in absence of any cogent evidence regarding either diversion of such goods by suppliers or replacement thereof by the Appellant from any other local source - Also, when it comes to the issue of availing Cenvat Credit on MS scrap, the allegation is that the domestic scrap was received by the Appellant Company on which no Central Excise duty would have been paid, whereas the credit was availed on basis of invoices raised by the dealers. There revenue department has doubted the factum of dealers themselves receiving duty paid MS scrap. The cross examination of various witnesses was granted to the Appellant, wherein it transpires that most witnesses have either stated that they do not remember the details of the transaction or that the statements did not correctly bring out the factual matrix involved, leading to the evidentiary value of the oral evidences to be diminished. In certain occasions, the contradicting stand taken by some witnesses in first retracting their statements and then during the course of later proceedings stating that they mistakenly retracted it, leading to strong suspicion on the genuineness of the manner in which the statements were recording and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order confirmed the demand on the basis that Cenvat Credit was availed without receipt of SS articles as such and also imposed personal penalty on the Managing Director Shri. Ashok Malhotra as well as on M/s. Jankilal Nandlal Metal Pvt Ltd as also M/s. Keyur Impex, who were the registered dealers who had supplied the goods to the Appellant. In addition, penalties are imposed on M/s. Manohar Manak Alloys P. Ltd. as also other suppliers of SS Patta/Patti, SS Circle, SS Flat, SS sheet etc. as well. Personal penalties are also imposed on the various suppliers of SS articles to the Appellant, who had purportedly raised invoices to show supply being made to the Appellant Company. 1.1 A somewhat similar dispute is involved in the second lot of appeal Nos. E/12275/2019, E/12431/2019, E/12429/2019, E/12307/2019, E/12306/2019, E/12308/2019, is that whether M/s. Panchmahal Steel Ltd. has correctly availed the Cenvat Credit on the duty paid inputs viz MS scrap, which were allegedly not received by the Appellant in their factory. The prime reason to deny credit is on the basis that at the time of visit in factory, only household / domestic non industrial MS scrap was found (which would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 5 - CESTAT AHMEDABAD (Para 13) Gobinda Das 2023 (7) Centax 201(Tri- Cal) Motabhai Iron and Steel Industries 2015(316) ELT 374 (Guj.) Jindal Drugs Pvt. Ltd 2016(340) ELT 67 (P H) Prakash Raghunath Autade 2022(380)ELT 264 (Bom) 2.3 It is his submission that the documentary evidences anyway supersede oral evidences. In the present case, there is ample evidence in form of receipt of goods and its usage in factory premises. The Appellant had always stated that the goods received were seconds/off cut pieces/defective material and never prime grade material anyway, whereas the revenue has assumed it to be so, suo motu, which cannot be the basis to allege non receipt of goods per se. The Appellant had even prepared GRN and entered stock as scrap of SS, as a matter of semantics, since such second /defective grade goods received for melting was only scrap for them anyway. The allegations at Para 62.6 of the SCN (running page no.181) and Para 65.1 of the impugned order (running page no. 90) are baseless and contrary to documentary evidences adduced and also contrary to description mentioned in Annexure A and Annexure B to the SCN itself. 2.4 He further submits tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit could not be denied. 2.10 In any case, the records or statement of the transporters could not be proof of any alleged contravention of law by the consignee or the consignor. Reference is made to the Tribunal decision in the case of Raj Petroleum Products Versus Commissioner of Central Excise, Mumbai-I 2005 (192) ELT 806 (Tri. - Mumbai). The transporters merely stated that they did not transport SS prime grade items, whereas the truck owners are not competent to understand the difference between second grade/off cuts/rejects of SS Patta/Patti etc. compared to prime grade goods anyway and nothing turns on their statements as such. Anyway, the drivers were the ones to have transported goods, who were never questioned on actual transport or nature of goods transported. 2.11 The transporters never said that no goods were transported to the Appellant, whereas their version is that SS prime grade goods were not transported to the Appellant. This is also the stand of the Appellant, and insofar as duty paid goods are received by them, irrespective of description construed by transporters or the revenue department, the credit of duty paid thereon cannot be denied to the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II/Vad-I/17-18 dt.31.5.17 as well. The said consignment pertained to duty paid by the manufacturer one M/s. Apar, for which no credit stands availed since the goods were found to be domestic waste anyway, by the Appellant. In that sense of the matter, since it is proven that in case of receipt of non-industrial MS scrap, the Appellant does not avail any credit anyway, the present proceedings must be dropped/vacated in limine against them. 2.17 Be that as it may, the impugned order has generalized all the past procurements by assuming that since for one instance, the domestic scrap was received in factory of the Appellant (no credit availed by the Appellant anyway), even for all past procurements, industrial cenvatted scrap must not have been received, which is a baseless presumption to hold. This cannot be a basis to confirm demand for over 9000 MT inputs received by the Appellant in the past. 2.18 Further, during Panchnama proceedings at M/s. Jankilal Nandlal, actual MS scrap (not domestic scrap) was found, which also means that they were supplying only duty paid goods to the Appellant, and not domestic scrap, as wrongly presumed in the present proceedings. 2.19 Also, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de whereas the Appellant requires only scrap material, is baseless. 2.24 The 9078 MT of MS scrap was procured by the dealers and as involved in the present case, if domestic scrap was procured locally to substitute this, not a single supplier for domestic scrap (which presumably was sent to the Appellant) is identified by revenue. Such huge quantity of MS scrap if was sold to other buyers by the Dealers, again it is not shown to whom it was sold as well. There is no proof of receipt or payment for domestic scrap by any person to any other person as well. 2.25 That even the yield obtained from scrap cannot be high from domestically sourced scrap, whereas the Appellant, for its own production purposes, would require heavy MS scrap, which is not possible from domestic scrap anyway. 2.26 Para 6.2, 6.5, 6.6, 6.7, 10.2 of the SCN clearly shows that duty paid industrial scrap was sold to the Appellant and not domestic non-cenvatted scrap at all. The cross examination and various Affidavits for retraction of statements on record, show that the statements were obtained under duress and coercion and in any case, mere statements of co-accused or transporters cannot form sole basis to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cenvat Credit thereon or otherwise. 6.1 At the outset, it is seen that while the Appellant Company had specifically sought to cross-examine various witnesses, the lower authority has rejected such request and still relied upon the various statements recorded during the course of the investigation. While in light of the various decisions rightly relied upon by the Appellant to the effect that refusal to grant cross-examination renders the statements as inadmissible evidence, especially in light of the judgment by the jurisdictional High Court of Gujarat in the case of Motabhai Iron and Steel Industry (supra), we otherwise find that the documentary evidence otherwise available on record in fact would show that the invoices under which the SS scrap was supplied by the manufacturer / suppliers through the dealers to the Appellant, otherwise shows that the goods supplied are pieces/seconds/rejects/ cutting etc. of SS patta/patti/coils/plates etc. One such sample invoice is reproduced below for reference: 6.2 It is the case of the revenue department that the Appellant does not require virgin material but only scrap of SS articles, for its manufacturing operations. The revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either diversion of such goods by suppliers or replacement thereof by the Appellant from any other local source. 6.5 Also, when it comes to the issue of availing Cenvat Credit on MS scrap, the allegation is that the domestic scrap was received by the Appellant Company on which no Central Excise duty would have been paid, whereas the credit was availed on basis of invoices raised by the dealers. There revenue department has doubted the factum of dealers themselves receiving duty paid MS scrap. 6.6 The stray instance where the domestic scrap of 10585 Kg was found in the premises of the Appellant, it is generalized in the present proceedings that the Appellant invariably receives only domestic (non-duty paid) MS scrap from the dealers. Demand of Cenvat Credit on almost 9000 MT of MS scrap is confirmed on this presumptive basis, assuming that on no occasion such scrap was received by the Appellant. Interestingly, it is already on record that the Appellant Company had not even availed any Cenvat Credit on such domestic MS scrap as per OIO No.03/Jankilal/AC/D-III/Vad-I/17-18 dt.31.5.17, meaning thereby that if one has to generalize in the manner done by revenue department, the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuttings of HR Coils, Sheets etc., procured from the registered dealers. Such goods were loosely known as scrap in trade. The main allegation is that in the Cenvat invoices the description of goods (raw material) is HR Coils, HR Sheets, MS Rounds, MS Wire Coil etc., whereas in commercial invoices and other documents the goods (raw materials) are described differently as MS scrap. The department thus alleges that assessee has not received any goods in nature of HR coils, MS rounds, Sheets etc., and therefore has availed credit fraudulently. 8. Cenvat credit scheme allows to availcredit on invoices of duty paid on inputs/raw materials supplied by the manufacturers and registered dealers. Only first stage and second stage dealers are permitted to transfer the credit of duty involved in the inputs as the Cenvat credit Rules 2002/2004. In the case before are M/s. Sree Vishnu Steels and M/s. Lakshmi Traders are second stage dealers whereas M/s. R.K. Steel and Alloys and M/s. Ubique Alloys are first stage dealers. Apart from these, department has recorded statement of Shri. Periakaruppan, who is also a first stage dealer.ShriA.Periakaruppan, Proprietor of M/s. Sri RaaghavendraSteels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iption is given as scrap . However, as to supplier s invoices only cut to size HR Coils/SS sheets/ plates etc., as purchased from manufacturers like M/s. JSWSteel or Salem Steel Plant were mentioned. The dealers/suppliers prepared the Central Excise invoices on the basis of goods received by them from the said steel plant s. Appellant has consistently asserted that this is the precise reason of calling the goods as scrap and that the test reports have also indicated the same. We find merit in these contentions. Interestingly, the previous case booked against the appellants which resulted in the earlier CESTAT Order No.946-947/05 dt. 06.07.05,alleging that the dealers had purchased HR steel, coil sheets /plates etc. from various manufactures and supplying cuttings to SRIPL. While there was no dispute over this factum, the department in that case found fault with the factum of the dealers, even after such cutting having issued invoices with the same description and classification as was described in the invoicesunder which they purchased from manufacturers. 10. Viewed in this light, there is no reason for us not to give credence to the statement of Shri A.Periakaruppan both in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal products by procuring locally manufactured scrap , is also not backed up by any corroborative evidence and can at best be termed as an assumption. If the department alleges that appellant has not received any goods as per the Cenvat invoices and has only received scrap which is locally procured then, the department has to establish from where and how appellants have procured such local scrap. There is no evidence of suppliers of local scrap, transporters, payment to such suppliers etc. The case of the department therefore does not sustain on merits. 12. We also find merit in the plea of limitation raised by the appellants. The SCN has been issued on 05.09.2007 against SRIPL Unit I (Impugned order for Appeal No.E/390/2009) for the period August 2002 to October 2006 invoking extended period under proviso to Section 11A (1) of the Central Excise Act on the ground that SRIPL, Unit-I have deliberately taken ineligible cenvat credit on non-duty paid scrap by committing fraud with an intention to evade payment of duty and utilising the said credit during the said period. So also, in respect of Appeal E/219/2010, the period involved is September October 2006 and the SCN dt. 09.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word wilful preceding the words mis-statement or suppression of facts which means with intent to evade duty. The next set of words contravention of any of the provisions of this Act or Rules are again qualified by the immediately following words with intent to evade payment of duty . It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be wilful. 14. In the impugned Order-in-Appeal No. 06/2010 to 10/2010-CE dt.29.01.2010 (Impugned order for Appeal No.E/219/2010, E/189/2010, E/297/2010) the lower appellate authority therein in para 4.8 of the order has addressed this contention of the appellant and has restricted the demand proposed in the SCN only to the normal period. We therefore find that in the appeals filed by SRIPL unit I II and other co-noticees, there is no justification for invoking extended period of limitation. 15. In the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the visit to the factory of the appellant was made with such specific intelligence, the minimal action that even a rookie officer would be expected to do is firstly to conduct a stock taking, at least of the raw material inputs lying in the factory and secondly, take samples of such types of inputs being used by the appellant. In fact, we are at a loss to understand how and why such basic protocols were given the go-by. Drawal of the samples of the inputs received by the appellants and their testing etc. may have revealed their actual nature and composition which would definitely have helped vindicate, or as the case may be, dispel the suspicion that was created as per the intelligence . That was not done. 5.5 On the other hand, the investigative action appears to have been restricted to verification of records for the purchase of raw materials cenvat credit account and detecting discrepancy in the records maintained by appellants between description of goods actual received as per material inward register and that furnished in the respective dealer s invoices. 5.6 In any case, during the course of the hearing, Ld. Consultant for the appellants has explained that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the depositions made were not corroborated with any tangible or material evidence; that they received payments from the appellant for the supplies and it could not be alleged that they had issued only their invoices. In the circumstances, we find that even the slender thread of supporting evidence namely the statement of Shri G. Baskaran, Proprietor of Amman Steels, also stands neutralized. This being so, any allegation based on that sole statement will surely lose their bite. 5.10 Further, in the cross examination held by the adjudicating authority on 22.03.2011, Shri N. Gopinath, Manager (Accounts) of the appellants from whom statement dt. 25.02.2009 had been recorded during investigation, clarified that the officers had noticed only commercial invoice number and date of the dealer instead of Central Excise invoice number / date and apart from this, there was no discrepancy in the material supplied by the dealer. Shri Gopinath further deposed that the department had conducted four Central Excise audits in the past and that no discrepancy in the availment of cenvat credit by appellant was pointed out by audit. It was also deposed that scrap dealers had supplied scrap to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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