TaxTMI 
TaxTMI 
2014 (7) TMI 532
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....ted 25.03.13, is M/s New Kishan Cement Pvt Ltd [hereinafter referred to as 'New Kishan Cement'] and the main appellant in appeals preferred against Order-in-Original dated 31.3.13, is M/s Major Cement Pvt Ltd [hereinafter referred to as 'Major Cement']. 2. Since the issue involved in all the appeals is common, we propose to dispose of all the appeals by a common order. For the sake of convenience, we would be referring to the facts of New Kishan Cement and Major Cement separately. 3. The relevant facts relating to appeal preferred by New Kishan Cement and other connected appeals, preferred against Order-in-Original dated 25.3.13 in brief are as under. 4. New Kishan Cement is engaged in the manufacture of Cement and Clinker and are duly registered with the Central Excise department. According to New Kishan Cement, the major raw material required for manufacture of cement and clinker are silica, lime stone, pet coke, clay, coke dust/coke breeze, fly ash, gypsum etc. The process of manufacture involved is that raw materials i.e limestone, clay, silica sand, pet coke are mixed proportionately and fed into Raw Mills. The same materials are grinded in the Raw Mill and resultant ....
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....prise, Jamnagar), Rajan Vadaliya (one of the Directors of M/s New Kishan Cement), Bipin Bhagwanjibhai Patel (Weighbridge In-charge and Supervisor of New Kishan Cement), Manoj Kanji Virani, (Proprietor of M/s Parthm Transprt, Jamnagar), Dhiraj Rangani (Partner of M/s Kailash Cement Industries), Arvind Gangdas Sakhiya (Partner of M/s Tapee Cement), Khodidas D Sojitra (Director of Nilkant Concrete Pvt Ltd), Satish K Parikh (Godown In-charge of M/s Jayshree Vyapar Ltd), Sashikant Koticha, (Director of Jayshree Vyapar Ltd), Ashok Dhirubhai Vasani (Partner of M/s Samrat Cement & Chemicals Ind.), Chandrakant J Patel (Partner of M/s Karan Chemicals), Gautam J Patel (Partner of M/s Karan Marketing) 7. On 3.5.08, the officers once again visited the factory premises of New Kishan Cement and drew representative samples once again and Panchnama was also drawn in this regard. The representatives samples drawn on 3.5.08 were sent for chemical test at National Small Industries Corporation Ltd (NSIC), Rajkot vide letter dated 5.5.08. The Manager (Testing) vide Test Report dated 7.5.08 forwarded the Test Report bearing No 10858 dated 7.5.08 confirming the contents of the samples drawn on 3.5.08. ....
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....ed for cross-examination of various persons whose statements have been extensively relied upon while issuing the Show Cause Notice. On 5.9.12 the Commissioner fixed the Show Cause Notice dated 29.3.11 for hearing and on the said date the Counsel representing New Kishan Cement once again requested for providing Test Report of the samples drawn on 26.4.08. It was also requested that if the said samples were not tested, the same may be sent for testing and a copy of the report may be furnished to them. The Revenue responded to the request for providing the Test Report of the samples drawn on 26.4.08, by issuing a Corrigendum dated 14.02.13 which is annexed with the Appeal Paper Book of New Kishan Cement at page No 352. The Corrigendum issued to New Kishan Cement reads thus: In the aforesaid Show Cause Notice at para No 3 the following words be deleted. The representative samples were, therefore, drawn for testing and ascertaining its actual description and composition. 12. Further, on 15.02.13, the Superintendent, Central Excise Headquarters, Rajkot issued a letter to New Kishan Cement informing that on verification of Panchnama dated 26.4.08, drawn at the factory premises....
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....cient for deciding the type of coal. Since NSICs report is merely based on the composition of Ash, Volatile Matter and Fixed Carbon, it cannot be relied upon. 14. The Show Cause Notice was also responded to by following notices: i) M/s New Kishan Cement Pvt Ltd, ii) Shri Navneet Vadaliya, Director of M/s New Kishan Cement, iii) M/s Hindustan Exports, iv) M/s Kathiawad Industries, v) Shri Kuldipsinh Basiya, Partner of Hindustan Exports & Kathiawadi Industries, vi) Shri Rajan Vadaliya, Director of M/s New Kishan Cement, vii) M/s Radhey Vyapar Ltd, viii) M/s Jayshree Vyapar Ltd, ix) M/s Karan Chemicals, x) M/s Karan Marketing, xi) M/s Maruti Enterprise, xii) M/s Samrat Cement, xiii) Shri Ashok Vasani, Partner of M/s Samrat Cement, xiv) Shri Bhavin Pabari, Proprietor of M/s RadheyVyapar Ltd, xv) M/s Pyramid Portland Cement, xvi) M/s Om Sai Ram Transport, xvii) Shri Pravin Bhandari, Managing Director of M/s Pyramid Portland Cement, xviii) M/s Pratham Transport, xix) M/s Nilkanth Cement, xx) M/s Kailash Cement Industries, xxi) M/s Tapee Cement, xxii) Shri Khodidas Sojitra, Director of M/s Nikant Cement, xxiii) Shri A....
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....ee Cement (xix) Shri Dhiraj Rangani, Partner of M/s Kailash Cement (xx) Shri Shashikant Koticha, Director of M/s Jayshree Vyapar, (xxi) Shri Gautam Patel, Partner of M/s Karan Marketing, (xxii) Shri Chandrakant J Patel, Partner of M/s Karan Chemicals. 19. As regards, the Show Cause Notice dated 29.10.08 issued for confiscation of 11.750 MT of Ordinary Portland Cement valued at Rs. 55,225/-, the Commissioner has imposed fine of Rs. 6,000/- upon New Kishan Cement and penalty of Rs. 6,000/- each upon two Directors of New Kishan Cement. 20. The facts and evidence referred to hereinabove referring to the case of New Kishan Cement and other connected appeals are more or less identical in the appeals preferred by Major Cement and other connected appeals preferred against Order-in-Original dated 31.3.13. However, some relevant facts, which would be necessary to be referred to while deciding the present appeal also are stated in brief thus: 21. Major Cement is also engaged in the manufacture of Cement and Clinker and are duly registered with the Central Excise Department. Acting on an intelligence that Major Cement is availing Cenvat Credit on the invoices of pet coke w....
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....as also imposed penalty on following parties: i) Shri Kalpesh Maradia, Director of M/s Major Cement Pvt Ltd ii) M/s Kathiawad Industries, Bharoodi iii) Shri Kuldipsinh Basiya, iv) Shri Mansukhbhai Patel, MD of M/s Major Cement Pvt Ltd, v) M/s Radhey Vyapar, vi) M/s Maruti Enterprises, vii) M/s Samrat Cement, viii) Shri Ashok Vasani, ix) Shri Bhavin Pabari, x) M/s Pyramid Portland Cement, xi) M/s Om Sai Ram Transport, xii) Shri Pravin Bhandari, xiii) M/s Pratham Transport, xiv) M/s Nilkanth Cement, xv) M/s Kailash Cement, xvi) M/s Tapee Cement, xvii) Shri Khodidas Sojitra, xviii) Shri Arvid Gangdas, xix) Shri Dhiraj Rangani, xx) Shri Sashkiikant Koticha, xxi) Shri Gautam Patel, xxii) Shri Chandrakant J Patel 24. New Kishan Cement and Major Cement are in appeal before us. Besides New Kishan and Major Cement, co-noticees against whom penalty has been imposed by the Commissioner are also in appeal before use. 25. On behalf of New Kishan Cement and Major Cement, arguments were addressed by ld. Counsel Mr. C. Hari Shankar along with Devashis K. Trivedi, Advocate. Connected appeals, were represented by Shri P.D. Racch....
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....ission of the ld. Counsel that the Commissioner has dealt with the issue of drawing of samples and test report in a perverse manner. Our attention, in this regard, was drawn to Para 10.3 of the impugned order, which reads thus: M/s New Kishan have contended that the Department ought to have tested the sample drawn on 26.4.08 and should have provided them with a copy of the test report in this regard. However, on going through the Panchanama drawn at the premises of M/s New Kishan on 26.4.08, it is observed that the same did not contain any narration regarding drawal of samples of pet coke. There is a mention of 3 packets of samples of pet coke and 3 packets of samples of cement at Sl No 23 & 24 respectively of the annexure to the said panchanama but in the absence of any narration in the panchanama that samples were being drawn and separately packed in 2 packets, it cannot be said that any samples were drawn on 26.4.08. The only inference that can be drawn from the entries at Sl No 23 & 24 of the annexure is that 3 packets of pet coke and 3 packets of cement were taken into custody from their premises by the officers. Further, the statement dated 14.10.2008 of Shri Rajan Vadali....
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.... the manner of sampling, whereas the question and the response to the said question was something different. English translation of the said statement has been placed on record before us which reads thus: Q 10: You have shown a panchnama dated 2.5.08, regarding the drawal of a representative samples of pet cock from your factory. You are agreed with it? Ans: Yes, I have read this panchnama and give my dated signature on it. Q.11: Sample of pet coke drawn from your factory on 2.5.08 was tested at NSIC Technical Service, Rajkot, a Govt. of India Enterprise. You have shown test result dated 7.05.08 of such sample. What you are say about these? Ans: I am not agree with these report. 31. The learned Counsel appearing on behalf of New Kishan Cement and Major Cement, further submitted that, even otherwise, the test report dated 7.5.08 was unreliable as there are two test reports on the Coke taken from the premises of Major Cement and the results are different in both the cases. Therefore, it is the submission of the learned Counsel that the Test Report would totally dependent on the method adopted for sampling. Had it been done as per BIS standards, the test report would, u....
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.... filed by the ld. Counsel, reliance has also been placed, in this regard, on the judgement of the Hon'ble Supreme Court in CBI v V C Shukla & others, 1998 (75) ECR 484. 34. As regards the oral evidence and third party documentary evidence, which has been relied upon by the Revenue for denying the Cenvat credit, it is the submission of the ld. Counsel appearing for New Kishan Cement and Major Cement that no case could be made against them even on the basis of said evidence. The ld. Counsel, in his written and oral submission has drawn our attention to evidence gathered by the Revenue, in respect of each supplier of Pet coke. With regard to Harshiddhi Fertilizers and Chemicals, it is the submission of the learned counsel that there is no documentary or tangible evidence regarding non-receipt of pet coke in the factory of New Kishan Cement and Major Cement. As regards Radhe Vyapar Ltd, it is the submission of the learned Counsel that the credit of duty has been denied to New Kishan Cement and Major Cement on the basis of the statement of Shri Bhavin M Pabari, Proprietor of M/s Radhe Vyapar Ltd and a red colour diary seized from the premises of M/s Radhe Vyapar Ltd. It has been poin....
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....fect that there was a possibility of diversion. Therefore, it cannot be presumed, without tangible evidence that the Pet coke consigned to New Kishan Cement and Major Cement by Karan Marketing and Karan Chemicals have been diverted. 36. As regards Hindustan Exports and Kathiawad Industries, it is the submission of the learned Counsel appearing on behalf of New Kishan Cement and Major Cement that the demand is primarily based on the evidence supposedly contained in the hard disk of the computer found in the premises of Kathiawad Industries. It is the submission of the learned Counsel that the said evidence could not be relied upon for the following reasons: (i) Electronic evidence recovered from computers can be relied upon only if the pre-requisites of Section 36B(2) of the Act are strictly complied with. In the present case, there was nothing to indicate that the strict requirements of Section 36B(2) of the Act were complied in respect of the HDD printouts relied upon by the Commissioner. Reliance in this context was placed on the judgements of the Honble Tribunal in Jindal Nickel and Alloys Ltd v C.C.E, Delhi, 2012 (279) ELT 134 (Del) and Sri Chakra Cements Ltd v C.C....
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.... Major Cement. The Commissioner has not adverted to this submission made before him in the adjudication proceedings. 38. On behalf of other appellants who are before us in connected appeals, the learned Counsels appearing on behalf of the said appellants, have adopted the submissions made by the learned Counsel, Shri C Hari Shankar appearing on behalf of New Kishan Cement and Major Cement. However, in addition, it was also there submission that imposition of penalty under Rule 26 of the Central Excise Rules, 2002 was not justifiable in the facts of the present case. They have also submitted that since the period in dispute is prior 1.2.2007, no penalty could be imposed under Rule 26. They have relied upon the decision in Ispat Industries v CCE & Cus, Aurangabad, 2008 (226) ELT 218. 39. The learned Counsel appearing on behalf of Hindustan Exports, Kathiawad Industries, Karan Chemicals and Karan Marketing have also submitted that revocation of Central Excise Registration was totally unjustifiable without establishing the fact that they have committed any offence under the Central Excise Act. Even otherwise, there are other provisions in the Act which duly takes care of a situat....
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....f regarding admissibility of Cenvat Credit was on the manufacturer. New Kishan Cement and Major Cement have failed to submit any documentary evidence to show that they have received pet coke accompanied by a test certificate from an accredited laboratory. He also submitted that documentary evidence in the form of data contained in the hard disk of Hindustan Exports and Kathiawad Industries reveals that they were supplying non-cenvatable items to New Kishan Cement and Major Cement. 41. We have considered the submission made at length by both sides and perused the records. 42. On perusal of the records, we find that the case of the Revenue is mainly based on two evidences i.e. the Test Report of NSIC and the statements of suppliers of Pet coke and of the out-station buyers of Pet coke who were allegedly interested in only getting Pet coke without any Cenvatable invoice. It could be found from the submissions referred to hereinabove that New Kishan Cement and Major Cement have strongly contended that representative samples of Pet coke were drawn for testing on 26.4.08 and the Revenue has deliberately failed to disclose the report to them for reasons best known to them. Though no....
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....as not in favour of the Revenue. We are constrained to take such a view because Corrigendum to Show Cause Notice (as referred hereinabove) was issued almost after a period of two years. Moreover, the Corrigendum was issued for deleting the para on which New Kishan Cement and Major Cement was strongly relying upon. It appears as though the corrigendum was issued to defeat the stand taken by New Kishan Cement and Major Cement. Issuance of Corrigendum at a belated stage also fortifies the stand of New Kishan Cement and Major Cement that the test report of the samples drawn on 26.4.08 was apparently in their favour. 43. Now, proceeding further on this aspect we find that test report of samples drawn on 3.5.08, cannot be given much credence. We are unable to understand in the present case that why the samples drawn on 3.5.08 has been sent for testing to NSIC when there are reputed government laboratories for the undertaking the concerned test. The learned AR has also not been able to give any reasonable explanation in this regard. We find that New Kishan Cement and Major Cement have also disputed the methodology adopted for testing and drawing of samples. Our attention was drawn by t....
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....is of the statements and third party documentary evidence predominantly in the form of data recovered from the Hard Disk of the computer found in the premises of Kathiawad Industries and Hindustan Exports. 45. Dealing with the evidence in the form of statements, we find from the record that New Kishan Cement and Major Cement has made repeated request for cross-examination of the persons whose statements have been relied upon. The Commissioner, in the present case, after keeping the request pending for two years, summarily rejected the request by letter dated 15.2.13. No reason has been stated in the said letter except to state that the Adjudicating Authority has not acceded to the request for cross-examination of person named in letter dated 11.9.09. In the impugned order, the Commissioner while addressing the issue of cross-examination has merely stated that the request for cross-examination was rejected considering the facts of case. The manner in which the adjudicating authority has dealt with the request of cross-examination is clearly incorrect. After having kept the request pending for almost two years, the Commissioner has rejected the request for cross-examination withou....
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....cessity. It provides for relevancy of statements recorded under Section 14 of the Act dispensing with or without the opportunity for testing the truth of such evidence by cross-examination. For, when a person is dead or incapable of giving evidence or cannot be found, no better evidence can be had in the circumstances than the statement tendered by witnesses before a quasi-judicial authority. The safeguards which are enumerated in the provision under Section 32 of the Evidence Act are essential as the provision provides for an exception to the rule of exclusion of hearsay evidence, while proving for relevancy of even direct oral evidence of the fact under enquiry, which otherwise is not admissible, to ensure that there is no miscarriage of justice. Similarly, provisions under Section 9D provide for relevancy of statements recorded under Section 14 of the Act, under certain circumstances, in criminal as well as quasi judicial proceedings, to meet the ends of justice. 27. We, thus, are intent to agree with the submission of the learned Addl. Solicitor General that if an Act of Parliament uses the same language which was used in a former Act of Parliament referring to the same s....
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....pply to other grounds. If the quasi judicial authority opines that a person is incapable of giving evidence, formation of such an opinion has also to be predicataed on proper material on record, which could be in the form of mental or physical disability of such a person. 29. Thus, when we examine the provision as to whether this provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, it is obvious that there has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for forming the opinion. Only then, it would be possible for the affected party to ch....
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....ced by the Revenue to deny the credit as regards the supplies made by Harshiddi Fertilizers & Chemicals. We find that Revenue has disputed the supplies made by RadheyVyapar, solely on the basis of the statement of Bhavin Mahendrabhai Pabari, recorded on 13.5.08 and 21.05.08 and a Red color diary seized from their premises. While going through the statement of Bhavin Mahendrabhai Pabari, we find that in his statement he has categorically asserted that the practice of diversion is being adopted for 15 trucks only. He has not made any categorical assertion regarding diversion of any other trucks. Therefore, there is force in the submission made by ld. Counsel that out of total purchases of 4633.058 Mts of pet coke, the allegation of non-receipt can be disputed only in respect of 144.470 Mts of pet coke. However, we find from the records that Revenue has failed to bring anything on record to clarify which specific invoices were given to New Kishan Cement and Major Cement without supply of 'pet coke'. We, therefore, hold that the allegation of non-receipt of pet coke from Radhey Vyapar Ltd, is totally presumptuous. The inference drawn in the impugned order regarding non-receipt of pet c....
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....t. We find that in the said document a caption has been inserted on the top of the page, in an added row, which reads 'supply of coke dust source-hard disc M/s Hindustan Exports, Month January-2008'. We agree with the submission made by the ld. Counsel that these words could not have figured in the original data as contained in the Hard Disc, and have been inserted. It is obvious that once the original data retrieved from the Hard Disc is tampered, the entire data becomes inadmissible in evidence. It loses the credibility in its entirety. Apart from this, we also find that these evidences have been retrieved from Hard Disc, which is neither maintained by New Kishan Cement and Major Cement. New Kishan Cement and Major Cement have absolutely no control over the said Hard Disc. It is not even the case of the Revenue that the data has been entered in the Computer as per the instructions of New Kishan Cement and Major Cement. We also find that there is nothing to indicate that the Computer Print outs taken from the Hard Disc of the said computer was in regular use by Hindustan Exports and Kathiawad Industries. In such an eventuality, we are constrained to hold that computer print outs t....