AI Drafter 
TaxTMI 
TaxTMI 
2015 (5) TMI 135
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....mbai. The said officers seized several records and documents of the Appellant and also recorded the statements of appellants, the said dealers and transporters. 3. A Show Cause Notice dt.30.09.1999 was issued, proposing demand of MODVAT Credit amounting to Rs. 44,25,049.00 alongwith interest and to impose penalty of equal amount of MODVAT and to appropriate the amount already deposited by the Appellant No.1. It has also proposed to impose penalty on Shri Manohar Naik, Executive Director, the other two dealers and the transporters under Rule 209A of erstwhile Central Excise Rules, 1944. It has been alleged that during the period from April 1996 to November 1998, the Appellant No.1 had wrongly availed MODVAT Credit on the strength of invoices, without physically receiving the raw materials as mentioned in the said invoices. The Adjudicating authority confirmed the demand of MODVAT Credit of Rs. 44,25,049.00 alongwith interest and imposed penalty of equal amount of MODVAT Credit and also appropriated the amount deposited by them. It has also imposed penalty of Rs. 2,50,000.00 on Appellant No.2 amongst others. By the impugned order, the Commissioner (Appeals) rejected the appeals fi....
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....e of specific submission of the Appellant. No finding was recorded by the Adjudicating authority regarding the change in truck number. In de-novo adjudication, the Adjudicating authority again confirmed the demand of MODVAT Credit alongwith interest and imposed penalty of equal amount of MODVAT Credit and appropriated the amount deposited by the Appellant No.1. It has also imposed penalty of Rs. 2.5 lakhs on Shri Manohar Naik, the Executive Director of the Appellant Company amongst others. By the impugned order, the Commissioner (Appeals) upheld the Adjudication order. 7. It is revealed from the records that during the period 1996-97 and 1998-99, the Appellant availed the MODVAT Credit on the basis of invoices issued by the said dealers. The jurisdictional Central Excise officers defaced the invoices as required under the law as it stood during the material period. The departmental officers audited the statutory records. It is also stated that the statement recorded of Appellant No.2 on 30.08.1999 was retracted on 02.09.1999. The said dealers in their statements stated before Central Excise officers that they have supplied the material to the Appellant. It is also recorded that ....
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....of taking delivery of the goods brought by Appellant as detailed in Annexure-II of this statement dt.27.08.1999 was on the broker and the said representative of Appellant of the Mumbai office. Once the delivery of the goods had been taken by the representative of Appellant, of the Mumbai office and by the transporter hired by the broker, the responsibilities of M/s Prakash Steel ceased to exist and the ownership of the goods as detailed in Annexure-II of this statement had been transferred to Appellant. They had supplied the goods as detailed in Annexure-II and received payment through cheques. He further stated that as far as they are concerned they had made the payments to the broker on presentation of freight bills and lorry receipts as required by their accounts department. 9. The Appellants have argued that all the materials received in the factory, were recorded in the Stores Inwards, Inspection Report and also in the Cardex System maintained in the Stores in the factory. Central Excise OfficersAudit party audited this record. The Commissioner (Appeals) observed that the non-receipt of the inputs in the Appellants factory has been confirmed by the statements dt.12.04.1999 ....
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....ed in the act of transfer of MODVAT Credit without transporting the goods for which they were paid a sum of Rs. 400/- per bilty. From the Appellants side, it was the Executive Director Shri Manohar Naik, who played the vital role. So, retraction at a belated stage in such cases cannot negate position stated by them in their original statement under Section 14 of the Central Excise Act, 1944. Moreover, when summons were issued to them by the Department for their cross-examination, they did not turn up, fearing the outcome. Hence, in my opinion, allowing or not allowing of cross-examination of such co-accused will not serve any purpose." 11. I am unable to agree with the findings of the Commissioner (Appeals). It is noted that the Department had not filed any appeal against the earlier order of the Commissioner (Appeals). Hence, the Adjudicating authority should have followed the direction of the Commissioner (Appeals). The main object of cross-examination is to find out the truth and detection of falsehood in human testimony. The adverse party in a proceeding should have right an opportunity to cross examine the witnesses. The Honble Delhi High Court in the case of Basudev Garg V....
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....tant to note that the supplier of input categorically stated that the goods were transported through the agents/broker of the transporter and the vehicle numbers were mentioned in the invoices at their instance. In such situation, MODVAT Credit cannot be denied merely on the basis of report of RTO. 14. The Honble Gujarat High Court in the case of Commissioner Vs M/s Motabhai Iron & Steel Industries 2015 (316) ELT 374 (Guj.) on the identical situation, dismissed the appeal filed by the Revenue. It has been held as under:- 19. From the findings recorded by the Tribunal, it is apparent that payment to M/s Vasmin Corporation in respect of purchases as made through banking channels. Under the circumstances, the Tribunal has lightly held that the demand cannot be confirmed against the assessee. The Tribunal has further found that it is an undisputed fact that all the purchases were duly recorded in the statutory books of the assessee and the goods were also found to be entered in its statutory records. That the Department had not made any investigation at the unit of the assessee, which could have supported the findings of the Adjudicating authority. None of the consignors of the g....