TMI Blog2024 (1) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... iency in the investigation and held that there is no sufficient evidences to establish fraudulent availment of credit. It is also noticed that in case of LLOYDS METAL ENGINEERING LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI [ 2003 (11) TMI 502 - CESTAT, MUMBAI] it was held that burden to prove non-receipt of the inputs is required to be discharged by Revenue by sufficient evidence. Where disputed consignments are entered in RG-23A Part I and Part II in chronological order, the allegations of non-receipt of the inputs cannot be upheld - there are no fault with the discussions and the view taken by the Ld. Commissioner in regard to the issue of alleged fraudulent availment of Cenvat credit. In the disputed matter transportation of the goods was arranged by the Brokers through whom the scrap was purchased by the Respondent. Merely on the ground that the owners of the transport vehicle have denied the transportation to Respondents factory it cannot be concluded that the scrap was not received in the respondent s factory - the credit availed on the basis of invoices issued by the registered dealer, cannot be denied on the ground that the transporters have admitted the fact of non-tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent for the period April 2006 to March 2010. After completion of the investigation, show cause notices were issued to the respondent seeking to recover the Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 read with with proviso to Section 11A(1) of the Central Excise Act, 1944, to impose penalty under Rule 15 of the Cenvat Credit Rules 2004 read with Section 11AC of the Central Excise Act, 1944. The notice also proposed penal action against the dealers/brokers/ who allegedly connived with the respondent in the fraudulent availment of CENVAT credit. The said notice was adjudicated vide impugned order and demand was dropped by the Ld. Adjudicating authority. Aggrieved from the same, the revenue is in appeal before us. 2. Shri Ashok Thanvi, Learned Superintendent (AR), assailed the impugned order by reiterating the grounds of the appeal and submits that all the statements of Ship Breakers of the Alang/Sosiyo/ transporters/ vehicle owners/ scrap brokers/ scrap traders/ and persons of the respondent were recorded voluntarily and without any threat, coercion or fear. There is nothing on record to prove that these statements were recorded under threat, coercion or fear. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er province. The said statement is not acceptable as no documentary evidence has been put by Shri Minaz Niyani like payment to the vehicle owners, booking register, bhada chitthi, toll slip, weighment slip etc. The retraction of Shri Minaz Niyani is not legal. He placed reliance on the decision reported in 2017(346) ELT 477 (Tri. Mumbai) in the case of D.M Mehta Bros Vs. Commissioner of Customs (General), Mumbai. 2.4 He also submits that the deposition made by Shri Vikas Gupta, Scrap Broker and Pro. Of M/s Yes Roadlines during the cross examination regarding the question of vehicle owners of M/s Yes Roadlines etc. contrary to his statement, is nothing but an after-thought, as he does not give any documentary evidence for his transport frim like booking registers, delivery challan, advance payment of driver, name and address of the vehicle owners, bhada chitthi, broker payment etc., if he has hired the vehicle. The submission made by Shri Pawan Agarwal, Shri Samir Thakkar, and other scrap broker in the cross examination on various dates are similar and stereotype. This suggest that these versions made by them during the course of cross examination is an after-thought and appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial value. The impugned order is not correct and legal. 3. Shri J.C. Patel Learned Counsel with Shri Rahul Gajera, learned advocate for the respondents, defended the impugned order by reiterating the findings of the Ld. Commissioner. 3.1 He also submits that the present appeal is not maintainable in law since the review order dated 19.07.2017 by the Committee of Chief Commissioner directing filing of the present appeal has been passed after the lapse of the period of three months provided in Section 35E(3) of the Central Excise Act 1944 and there is no order of the board under the proviso to Section 35E (3) granting extension of time. In the present case, the Commissioner s order is dated 28.03.2017 and it was issued on the same date i.e 28.03.2017. In the form of appeal filed by the department, no other date of communication is mentioned and in fact in Sr. No. 2 against the date of communication, it is mentioned -------(dash). The date of communication is therefore to be taken as 28.03.2017. Since the order under Section 35E (1) has been passed on 19.07.2017 after the 3 months from 28.03.2017 and there is no extension of time granted by the Board, the same has been passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cash would have been found and seized during the search operations conducted on 30.03.2010. The very fact that no such cash was found itself demolishes the reliance placed on the said loose papers containing some handwritten figures. Such rough records recovered during the search cannot by themselves establish the case of the department in absence of there being corroborative evidence. In the present case there is no such corroborative evidence in the form of seizure of cash. He placed reliance on the decisions of tribunal in the case of Arya Fibres Pvt. Ltd. Vs. CCE- 2014(311)ELT 529. 3.6 He also submits that there is absolutely no evidence in support of the allegation that in place of the Ship breaking scrap, the Respondent used local non-duty paid bazar scrap consisting of old and used household articles. However in the absence of such evidence, the case of the department that duty paid inputs had been diverted cannot stand. The show cause notice has placed reliance on the hand written scrap receipt notes recovered during the search, which as per the statement of the said Mr. Pravat Mallik was for scrap received and used to manufacture unaccounted MS Ingots. However, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from Ship-Breakers, whose names he has given. He has later given contradictory version stating that only invoices were received from the Ship-breaking units and no goods were received. In view of such inconsistency and contradiction in his statement, no reliance can be placed on such statement to draw any adverse inference against the respondents. Further, the said Minaz, apart from retracting his first statement, has in his cross-examination, not stood by his statements and on the contrary maintained in his cross examination that the goods covered by every invoice sold through him as Broker, were in fact supplied to the respondent and payment for the same was made by the Respondent through Bank. 3.10 He also submits that likewise, the other Broker, Vikas Gupta, Samir Thakkar and Pawan Agarwal have, in their cross examination all maintained that goods sold through them by the Ship breaking units had in fact been supplied and transported to the Respondent. 3.11 He placed reliance on the following decisions in which it is held that where witnesses whose statements are recorded by the department, have in their cross-examination not supported the department s case , such stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the demand is legal and proper and it is accordingly prayed that the department s appeal be dismissed. 4. Heard both the sides, considered the submissions in detail and perused the records. The case of the Revenue for denial of credit is that the Ship-breaking Scrap cleared by the Ship-breaking units under Cenvat Invoices on which the Respondent took credit was diverted and supplied by the Ship-breaking units to Re-rolling units and that the payment made by the Respondent by cheque/ RTGS to the Ship-Breaking units for the purchase of Ship-breaking scrap was returned by the Ship-breaking units in cash through anagdias after retaining the Ship-breaker s commission and further that in place of the ship breaking scrap, the respondent used local non-duty paid bazar scrap. To arrive at this, the department has relied on the statements of brokers i.e Shri Mianz Asagarli Nayani, Shri Vikas Gupta, Shri Pawan Agarwal and Shri Sameer Thakkar ; statements of transporters; statements of owner of vehicles ; and loose papers/ sheets /documents resume from the common office of M/s Vishal Casteels, M/s Vishal Engineering, M/s Jalaram Isapt Pvt. Ltd. and Ankur Traders, Vapi ; statement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficient evidences to establish fraudulent availment of credit. We also noticed that in case of M/s. Lloyds Metal Engg. Co. vs. CCE, Mumbai, 2004 (175) E.L.T. 132 (Tri.-Mumbai) it was held that burden to prove non-receipt of the inputs is required to be discharged by Revenue by sufficient evidence. Where disputed consignments are entered in RG-23A Part I and Part II in chronological order, the allegations of non-receipt of the inputs cannot be upheld. 4.4 In view therefore, we do not find any fault with the discussions and the view taken by the Ld. Commissioner in regard to the issue of alleged fraudulent availment of Cenvat credit. 4.5 We also find that in the whole matter department has relied upon third party records and statements. The Cenvat demand alleging fraudulent availment of Cenvat credit on strength of invoices without receiving inputs cannot be sustainable solely based on statements of third party and their records. The Ship Breakers Units and dealers no where admitted that they have not supplied the goods to the respondent. Respondent also produced documentary evidences in respect of receipt of inputs, use thereof in manufacture of final product, statutory recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be account books maintained in regular course of business. They cannot be constitute evidence, as there is no corroboration for the huge amount of said cash entry. We also find that in the case of Gurpreet Rubber Industries v. CCE reported in 1996 (82) E.L.T. 347 it has been held:- Demand cannot be sustained only on basis of a private diary without considering production capacity, raw material purchased, labour employed, power consumed, etc. At the most it may raise a doubt but that cannot take place of proof. There is a long distance between may be true and must be true and the whole distance must be covered by legally reliable and un-matchable evidence. In another decision reported in Kashmir Vanaspati (P) Ltd. v. CCE - 1989 (39) E.L.T. 655 (CEGAT) it has been held that the Demand based on note book maintained by labourers containing un-authenticated entries cannot be sustained, unless the same is supported by other evidence, such as raw material consumed, goods actually manufactured, packed, etc. 4.7 In the present matter no corroborative evidence was provided by Revenue. We are of the view that the findings arrived at by the Ld. Commissioner in the present mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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