TaxTMI 
TaxTMI 
2016 (2) TMI 534
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....tervailing Value Duties (CVD) of Customs paid on the imported goods under the Cenvat Credit Rules 2004. The Central Excise officers of Directorate General of Central Excise Intelligence (DGCEI), gathered information that the assessee engaged M/s Pankaj Shipping & Transport Company (in short M/s PSTC) a Customs House Agent (CHA), for clearance of imported goods from the ports, and who was also acted as transporter for transport of the goods from the port to assesses factory at Silvasa. It has received information that certain containers were unloaded in midway at Bhiwandi and from there the same were sold to different customers in cash. The assessee availed cenvat credit on the imported material diverted in mid-way. On 27.11.2006 he Central Excise Officers conducted search of various premises of M/s PSTC. The Central Excise officers collected Daily Loading Register (DLR) of M/s PSTC and also recorded the statements the employees of PSTC. As a follow up action, on 1.12.2006, a search was conducted at the factory premises of the assessee and seized various documents and recorded the statements of the various persons of the assessee. 3. A show cause notice dtd 6th Sept. 2009 was issue....
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....tained on the basis of the statements and documents of third party. He further submits that in the same investigation, another proceeding was initiated against their sister concern. The Tribunal in the case of the sister concern M/s Sunlands Alloys, Pravin Kumar A Ranka, Shivraj Singhal Vs CCE&ST, Vapi by Order No 11137-11139/2015 dtd 23.7.2015 allowed the appeals of the appellants with consequential relief. The Ld Advocate filed compilation of case laws. 5. On the other hand, the Ld Authorised Representative on behalf of the Revenue reiterates the findings of the Adjudicating Authority. He submits that the assessee failed to produce any transport documents in support of receipt of the inputs in their factory. He submits that the investigating authority collected the evidence from the transporters and the statements of the employee of M/s PSTC, transporter and CHA, engaged by the assessee, had stated the diversion of the inputs. He drew the attention of the Bench the relevant portion of the Adjudication order. 6. After hearing both the sides and on perusal of the records, we find that the officers of DGCEI gathered information from M/s PSTC, who was engaged by the assessee for th....
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.... (ii) Statement of our Manager, Shri Ashokendu Kumar Gupta was also recorded wherein he has categorically stated that the firm took credit of CVD only after receipt of the impugned goods in the factory premises. The records maintained by us also show that the impugned imported goods were received in our factory premises and final products were manufactured from these inputs. (iii) The show cause notice has not identified a single party to whom the impugned goods were allegedly diverted and sold. The show cause notice has not produced any direct evidence in support of the allegation that the goods were sold to local parties and credit of duty was taken without receipt of goods in the factory. This corroborative evidence was absolutely necessary to prove that the impugned goods were diverted and In this respect the case law pertaining to C.M. Re-rollers & Fabricators [2004 (168) ELT 506(Tri-Del) referred to in para B) below is mutandis equally applicable. Also, in the case of Hiren Aluminium Ltd. Reported in 2009 (245) ELT 386 (Tri-Ahmd.) the Hon'ble CESTAT has observed that the (Adjudicating authority) has further observed that an inference can be drawn in view of the documentary....
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....us indicate the manner in which the impugned goods were utilized in the manufacture of the end products in our factory. There is no charge that the quantity of end products does not correspond to the inputs used in their manufacture. Therefore we submit that the allegation that we diverted the impugned imported goods into the local market and took credit of C.V.D. without actually receiving them in our factory is not correct and is not proved. 7. It has been alleged in the show cause notice that the imported inputs so diverted to local markets appears to have been sold in cash to the persons, who did not need Central Excise invoices and no record has been kept by the assessee regarding such transactions. The buyers of such unaccounted raw materials appear to have used it for unaccounted production and clearance of articles of non-ferrous metal. And the input shown have been receipt in the factory at Silvasa by the assessee appears to have been substituted by bazaar (local) non-duty paid scraps. We find that the said allegation is totally on the basis of assumption and presumption. There is no iota evidence on record of the selling of imported material and purchase of bazaar scrap ....
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....lty on the partner of the assessee cannot be sustained. 9. The other aspect of this matter is that on the basis of the same investigation another proceeding was initiated by the officers of the DGCEI against M/s Sunland Alloys and others (sister concern of the present assessee). In that case, the entire case was made out based on the DLRs, MLRs and statement of the Shri Rajeshwar Prasasd R Dubey, Proprietor of M/s PSTC. We find that the facts and circumstance of the present case are similar to the case of M/s Sunland Alloys. The Tribunal in the case of M/s Sunland Alloys (supra) after detailed discussions allowed the appeal of the assessee. It has also discussed the various case laws on this issue. For the proper appreciation of the case, we reproduce below the findings of the Tribunal in the case of M/s Sunland Alloys (supra), as under: Heard both sides to these appeals and perused the case records. The case is made against the main appellant M/s Sunland Alloys for clandestinely taking Cenvat Credit on imported scrap of copper without receipt of inputs in appellants factory. It is the case of the Revenue that copper scrap imported under the bills of entry have been diverted at ....
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....stances of each case. Delhi High Court in the case of Basudev Garg Vs. CC [2013 (194) E.L.T. 353 (Tri-Delhi)], by relying upon the judgement in the case of J & K Cigarettes Ltd. Vs. [2009 (242) E.L.T. 189 (Tri.-Del)], held that statement against the assessee connot be used without giving them an opportunity of Cross Examination. Hon'ble Delhi High Court made following observations in para-10 and 14: 10. Insofar as the general propositions are concerned, there can be no denying that when any statement is used against the assessee, an opportunity of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd.(supra) and Laxman Exports Limited (supra). Apart from this, the decision of this court in J&K Cigarettes Ltd.(supra) clinches the issue in favour of the appellant. In that case, the validity of Section 9D of the Central Excise Act, 1944 reads as under:- 9D. Relevancy of statement under certain circumstances.- (1) A statement made and signed by a person before any Central Excise Officer of a gazette rank during the course of any inquiry or proceedings under this Act shall be re....
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....evant only when the specified ground is, it is obvious that there has to be objective for4mat5ion 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 such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject ot judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted. 5. The same view was taken by us in the case of Sakeen Alloys Pvt Ltd. Vs. CCE Ahd,[2013 (296) E.L.T. 392(Tri-Ahmd.)]. Revenue did not accept this order and filed appeal in the jurisdictional High Court Hon'ble Gujarat High Court in this case held that confessional statements solely, i....
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.... Vasmin Corporation in respect of purchases was made through banking channels. Under the circumstances, the Tribunal has lightly held that 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 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 of the unit of the assessee, which could have supported the findings of the adjudicating authority. None of the consignors of the goods have denied the clearance of goods to the assessee. There was no evidence on records to show that the records maintained by the assessee were not correct. The Tribunal, was according of the view that on the basis of statements of some transporters which were not corroborated by any material on record, a huge credit could not be disallowed is under these circumstances that the Tribunal has set aside the demands and the penalties imposed upon the assessee and the co-noticees. 6. Similarly in the case of Commissioner of Central Excise, Ludhiana Vs. P.J. International Ltd. [2010/ (255) E.L.T. 418 (Tri-Del....
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....8 that the documents recovered under the panchnama on 1-9-1998 were pertaining to production and clearance of tin containers by their factory. He stated that these documents consisted of daily production reports written in note-books, delivery challans, stock record of tins etc. The documents recovered pertained to production and clearance of tin containers. He also stated that amongst other supervisors, even Awadesh Kumar Saxena, Electronics Engineer looked after the production and clearance of the goods of the factory. The authorized signatory of the appellant Girijesh Kumar Rai, confirmed in his statement recorded on 28-9-1998 that the records shown to him were withdrawn from the factory of the appellant in his presence and that he had put his signatures on the said documents at the time of withdrawal on 1-9-1998. The Electronics Engineer, Shri Awadesh Kumar Saxena in his statement dated 28-9-1998 admitted that the portion of daily production reports note-book pertaining to the appellants was prepared by him and that challans and daily production reports which bear his signatures, were prepared by him and they were of the appellant firm. According to him, the daily production re....
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.... appellants who manufactured the tin containers and that these contained information regarding production and clearance. He also stated in reply to question No. 19 that all challans were prepared by Shri Rajeev Agarwal and others whose signatures he recognized. The authenticity of the recovered documents was admitted by the partner Yogesh Garg [noticee No. (2)] and noticee No. (6) (Girijesh Rai) who also admitted that the record pertained to unaccounted for production and clearance of the tin containers by the appellant. Any subsequent retraction by Shri Awadesh Kumar Saxena has been rightly held to be an afterthought to protect the noticees. This is not a case where any defence was taken up about less consumption of electricity that would have impelled the Revenue Officers to examine consumption of electricity. When production and removal of excisable goods in a clandestine manner is established by such positive documentary evidence and the oral evidence of the managing partner and the supervisor, it cannot be said that the Commissioner committed any error in holding that the appellant had manufactured and cleared tin containers in a clandestine manner. The quantum of liability wh....