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TMI Blog2024 (12) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... checks alognwith two independent panchas and searched their factory premises. During the search shortage of 230982 kgs of Cenvatable raw material (Plastic Granules) and 75701.45 Kgs. of Finished goods was noticed. The said shortage has been accepted by partner of Appellant. Further it was alleged that the Appellant have availed the Cenvat credit on the basis of invoices issued by M/s Sidhhi Trading Corporation, Thane, M/s Eskay-Bee International P. Ltd., M/s Deluxe Karran Imports Pvt. Ltd. and M/s Kookey Multitrading Pvt. Ltd. To give the genuine colour of transactions between them, they have managed the LRs of transporters. Revenue recorded the statement of various witnesses. Accordingly, a show cause notice was issued to the Appellants demanding Central Excise Duty equivalent to the Cenvat Credit taken amounting to Rs. 72,91,056/- and in respect of finished goods involving Central Excise Duty of Rs. 9,93,922/- alognwith interest and imposition of penalties. In adjudication, the original authority confirmed the demand along with interest and imposed penalty. Aggrieved by such order, the appellants preferred appeal before the commissioner (Appeals) who upheld the same vide impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department. 2.2 He further submits that from the cross-examination of 3 persons, i.e. Shri Jagdish Bhadra, proprietor of M/s. Kaveri Roadlines and Jatinbhai Naginbhai Bhandari, Ex-Managers of Western Transport and Leherbhai Bhanushali which is para 10 of the appeal it can be seen that nothing increment is coming on record regarding diversion of input or clandestine clearance of the goods. Thus, said statement cannot be relied upon by the department. 2.3 He also submits that Shri Kishor T. Bhanushali partner of Appellant firm retracted his statement dated 03.12.2015 vide affidavit dated 04.12.2015 and statement dated 07.04.2016 vide affidavit dated 07.04.2016, thus the above statement does not have evidentiary value, hence cannot be relied upon by the department. 2.4 He further submits that no investigation was made from the driver of the vehicle who transported the goods as statement of the driver of the transporter who had loaded the goods from Mumbai port and the actual place of delivery if any other then the factory premises of the Appellant could have been determined. Thus, inquiry made by the department is incomplete and the inputs has been genuinely received by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CCE, Ludhiana v. Nexo Products (India) reported in 2015 (325) E.L.T. 106 (P & H) and to another decision of the Hon'ble Punjab & Haryana High Court in the case of C.C.E. & S.T., Ludhiana v. Anand Founders & Engineers reported as 2016 (331) E.L.T. 340 (P & H). It stand held on the above decisions that the clandestine removal charges based on shortages in stock cannot be upheld in the absence of any other evidence brought on record by the Revenue showing such illegal activities on the part of an assessee. The said decisions stand followed by the Tribunal in many numbers of cases. 4.2 Inasmuch as in the present case the entire case of the Revenue is based upon the shortages detected at the time of visit of the officers, without there being any other evidence. It is seen that the judicial view is that the stock taking would be conducted in a proper manner and considering all the stock lying in the factory. It cannot be on the basis of eye estimation or otherwise. The Hon'ble Gujarat High Court in the matter of Commissioner of Central Excise, Customs & S. Tax, Daman v. Nissan Thermoware Pvt. Ltd. reported in 2011 (266) E.L.T. 45 (Guj.), observed that mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passes in question being fictitious hinges on the evidence of the Partner/Director of the concerned firm of Alang (Rajkot), who according to the gate passes resumed in the instant case were consignors. From the Final Order (as extracted above) No. A/245/92-NRB, dated 25-5-1992 passed by the Tribunal, it is clear that, earlier the case was remanded to the adjudicating authority for affording an opportunity to the appellants to cross-examine the concerned persons whose statements were relied upon in the Show Cause Notice. We find from the impugned Order that still the opportunity to cross-examine the witnesses whose statements were relied upon in the Show Cause Notice was not given to the appellants. The adjudicating authority, that is to say, the Additional Collector of Central Excise, Chandigarh, has recorded his finding in paragraph 4 of the impugned order-in-original as follows: - "4. Personal hearing along with cross-examination of the witness, whose statements were relied upon in the Show Cause Notice, was fixed for 27-10-1992, 9-11-1992, 12-12-1992, 23-1-1993, 10-2-1993, 30-3-1993 which was finally held on 17-5-1993. None of the witnesses turned up for cross-examination, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the witnesses also was given. But the persons summoned to appear for cross-examination before me did not turn up. It was explained to Counsel L. Chandrasekaran that the persons summoned for cross-examination appeared to keep away from their proceedings and as such the adjudication process will not be completed." 6. xx xx xx" 10. Besides, the case of Pahar Chand & Sons v. The State of Punjab, (1972) 30 STC 211, decided by the Division Bench of the Punjab & Haryana High Court (cited by the appellants in the memo of appeals) also applies on all fours to the present case. In that case also, the Sales Tax Assessing Authorities under the Sales Tax Act were treating the sales recorded in the books of accounts as fictitious and the assessing authorities relied upon the testimony of the witnesses without giving opportunity of cross-examination to the assessee therein. Setting aside the assessment, the Court observed (1) that "if the assessing authority was relying on the testimony of a witnesses, the assessee should have been afforded an opportunity to cross-examine. It was not open to the assessing authority to get over this hurdle on the plea that the witness had not been produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have duly recorded the receipt of the goods in their Raw materials account, the purchase transactions of the raw material under in question were booked in books of account. The Appellant has also shown the use of disputed inputs in their factory premises for manufacture of finished goods, even the payment of transportation was also made for transportation. The Revenue could not bring any evidence that the goods covered under the said raw material invoices were diverted to any other place. It is also not the case of the department that the Appellant have procured some unaccounted inputs/raw materials to cover up the quantity of input shown in their books of accounts. Moreover, in the present matter revenue could not find out any single buyer of the alleged diverted inputs. 4.8 We also find that in the present matter receipts of the goods in factory clearly established by the Appellant with documentary evidences. Further, the investigation is silent as to how the Appellant-manufacturer, manufactured finished material without receiving the inputs. The law is settled that as long as duty payment is accepted on outputs, the benefit of credit available on input cannot be denied. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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