TaxTMI 
TaxTMI 
2014 (2) TMI 1012
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....stigation, the Revenue Officers on scrutiny of the records carne to a conclusion that the respondent had removed their finished goods clandestinely without payment of duty and they have availed ineligible Cenvat credit of the petrochemical products the quantity of which was short received in their factory premises. The Revenue authorities also recorded statements of various purchasers of the finished goods of the respondent. Show cause notice was issued proposing to recover Cenvat credit of an amount of Rs. 2,58,277/- and Rs. 13,470/- along with interest, recovery of Central Excise duty of Rs. 4,93,313/- along with interest and imposition of penalties on the main assessee as well as the two individuals. After due process of law, the adjudicating authority confirmed the demands raised in the show cause notice, interest thereof, imposed equivalent amount of penalty on the main assessee and also imposed penalties on the individuals. Aggrieved by such an order, all the three respondents herein filed an appeal before the first appellate authority. The first appellate authority after considering the submissions made by the respondents before him and perusal of the records, set aside the ....
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....s statements of the factory Manager and Manager Accounts. It is his submission that the statements of laboratory technicians, relating chemise of the unit and quality control chemist of the units also indicate clandestine removal of the said goods. It is his submission that most of the alleged misaccounting, non-accounting of the amounts, goods book placed before 21-7-2006 and the audit report which was relied upon by the first appellate authority, for such observation no proof has been adduced by the assesse to explain such change based on audit observation. It is his submission that in the instant case, the private records are based on nothing but an authorised record of accounts of the unit duly corroborated by statements of different employees having exercised and competent to such entries. It is his further submission that as regards setting aside the demand of duty in respect of raw material received short the Cenvat credit has been availed on the full quantity, there is no specific provision in law which would permit credit of duty on regularly short or not received goods even if they are less than 1% whether issue is operationally settled or any other reason. It is his subm....
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....he clandestine removal is not proved in any way, inasmuch as the purchasers of the. respondent's final products have clearly deposed that they have not received any goods which were clandestinely removed. It is also his submission that statements of Shri Anil Mohanlal Desai, Manager of M/s. United Phosphorous Ltd., Shri Manish Bhagwanbhai Lakhani, authorized signatory of M/s. Jay Enterprise, statement of Shri George Peter K., Assistant Manager of M/s. Bilag Industries Pvt. Ltd. and statement of Shri Pankajbhai Ashok Kumar Thaker, Accountant-cum-authorised signatory of M/s. Sagar Chemicals, Mehsana clearly indicate that they have not received any goods from the respondents without payment of duty or without invoices. It is his submission that the reliance placed by the department in the appeal on the statements of Shri Subhash Solanki and others is incorrect as during the cross-examination of these persons by other assessee, i.e. M/s. United Phosphorous Ltd. and M/s. Bilag Industries Pvt. Ltd., the said Shri Subhash Solanki has clearly stated that none of the goods are removed without payment of duty. It is his submission that the cross-examination of Shri Subhash Solanki is recorde....
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....the Revenue's appeal to the extent it challenges the appeal of the first appellate authority on this point of denial of Cenvat credit for short receipt of the inputs is liable to be rejected and I do so. 9. As regards the confirmation of the demand of the duty on the charge of clandestine removal, from the respondent-assessee, interest thereof and penalties on all the three respondents, I find that at this issue, the reliance placed is by the Revenue on the statement recorded of Shri Subhash Solanki and Shri J.S. Patel. First and foremost, it is to be noted that while setting aside the demands confirmed, the first appellate authority after going through the entire records has recorded the following findings. "11. Regarding the duly demanded on the goods alleged to have been removed on the entries of overwriting, on a careful consideration of the matter. I find that the submissions made by the appellants have got force. The finished goods analysis register was being maintained by the quality control department, which has nothing to do with removal/sale of goods. I find that, the only evidence on the basis of which duly has been demanded and penalty has been imposed in th....
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....the statements of the customers, which were recorded under Section 14, specifically states that they had not received any goods from the respondent without payment of duty. On the contrary there is an assertive and confirmative statement that they have received all the goods from the respondent on payment of duty under proper documents. This crucial piece of evidence is in the favour of the assessee, which is not controverted in the grounds of appeal. Further, I find that the reliance is placed by the Revenue in their grounds of appeal on a statement of Shri Subhash Solanki and others. I find Shri Subhash Solanki was offered for cross-examination by the adjudicating authority on a request made by M/s. United Phosphorous Ltd. and M/s. Bilag Industries Pvt. Ltd. on the question of imposition of penalties on them. I find that during the cross-examination, the said Shri Subhash Solanki has clearly stated that goods were never removed without payment of duty. Since he has retracted from his original statement, adjudicating authority again examined him for which also he had stated that the statements which were recorded by showing various statements were under duress as he was in the Exc....