AI Drafter 
TaxTMI 
TaxTMI 
2018 (2) TMI 282
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....the manufacture of PVC Compound and Master Batches, classifiable under Chapter 39 of the Schedule to the Central Excise Tariff Act, 1985 at its factory situated at Village : Rithala, Delhi. The main appellant avails Cenvat Credit of Central Excise duty paid on the Inputs and Capital Goods and Service Tax on the Input Services under the provisions of the Cenvat Credit Rules, 2004. The Central Excise officers gathered an intelligence that one M/s. Chemplast Sanmar Limited (for short, M/s. Chemplast) a Chennai based company, having its depot at Delhi manufactures different grade of PVC Resins, one of which is Battery Separator grade resin. It is also gathered information that certain PVC Compound manufacturers are buying Battery Separator Grade Resin just to avail more Cenvat Credit as the said resin is costlier than the ordinary grade at least by 60%. The PVC Compound manufacturers are showing the use of the resin in the manufacture of PVC Compound and then showing the supply of the compound so manufactured out of the said resin to the wire and cable industries and it is a mere paper transaction. On the basis of the said information, on 26.05.2006 the Central Excise Officers visited ....
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....e enquiry was conducted only from 22 petty parties, from whom only 10% of raw materials were purchased. (f) Even during the course of investigation, out of 12 parties, 8 parties admitted in their statement that they have supplied the raw materials under the cover of invoices. (g) The Adjudicating authority erroneously observed that CP 172 SG Grade Resin is costlier than K 6701 Resin which was not used in the final products and was purchased from M/s. Chemplast for availing higher amount of Cenvat Credit. The Learned Counsel elaborated the manufacturing process to establish that the said grade was used in the manufacture of final products. (h) The Test Results nowhere indicate that CP 172 SG Resin cannot be used for manufacture of PVC Compound. (i) As per Panchnama dated 14/15.02.2006, the representative samples of PVC Compound/ Master Batches were drawn and did not send the same for test to ascertain whether CP 172 SG Resin was contained and/or used therein or not. (j) The scrap generated during the process of manufacture of finished products was available in the factory as evident from the Panchnama dated 30.07.2004 and 14.02.2006, whic....
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....uct namely Wires and Cables supplied to the Government Sectors and Public Sector Undertakings are invariably inspected for their quality. Thus, the appellants purchased the quality material from the main appellant. Further, with regard to sale of finished goods to the main appellant, it was submitted by the Learned Counsel that the goods in question were actually supplied by them on issuance of proper invoices. The Learned Counsel submitted Written Submissions along with case laws. 5. The Learned A.R. on behalf of the Revenue reiterates the findings of the Adjudicating authority. He has filed a Written Submission along with Case Laws. The Learned A.R. mainly submitted that the Director and the other employees of the main appellant in their statement had admitted that they have not manufactured the goods and issued invoices through the buyers to facilitate availment of inadmissible Cenvat Credit. It is further submitted that the main appellant used to purchase the resin costlier from M/s. Chemplast to avail more Cenvat Credit, after which the same was diverted to Battery Separator manufacturers working under SSI exemption. It is submitted that statements of the various transporte....
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.... and sample was drawn. In the Show Cause Notice dated 27.01.2005, there was no allegation that the appellant was not manufacturing PVC Compound / Master Batches out of C.P. 172 SG Resin as supplied by M/s. Chemplast. Hence, it may be construed that Cenvat Credit of Rs. 6,89,05,552/- involved in the goods admitted to be manufactured during the period July 2002 to July 2004. The Adjudicating authority confirmed the demand of Cenvat Credit of Rs. 9,73,52,981/- after adjustment of 1,07,11,757/- against total demand of Rs. 10,79,64,737/- taken by the main appellant. It is seen from the records that the amount of Rs. 2,60,54,730/- was recovered from the buyers in Delhi-I Commissionerate and the same amount cannot be recovered from the main appellant. 9. The Adjudicating authority observed that the main appellant had issued Cenvatable invoices without delivery of the goods to facilitate the Cenvat Credit benefit to the buyers. The buyers had issued the cheques to the main appellant, who returned money in cash after deducting 1 -3% against the cheque received from the customers. These facts are based on the statement of the various persons recorded by the Central Excise Officers. On the....
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....e evidences, in so far as Invoices/G.R are affixed with stamp of Sales Tax Check Post at Haryana - Rajasthan border. Hence, the statement of M/s Gupta Transport Company cannot be relied upon. It is clearly evident that the main appellants delivered the materials through the Transporter. Shri Rajiv Gupta in his statement stated that he had not transported the goods from the main appellant to Bhiwadi, but the Invoices as well as G.R. are affixed with the stamp of Rajasthan Government Check Post. It appears that the goods were delivered under the cover of Invoice, Consignment Note and Sales Tax declaration. The Check Post authorities put the stamp on the documents on some cases. In other cases, the goods were weighed on Dharmkanta before entering into the Inward Register of the factory. In such situation, the statement of the transporter cannot be relied upon, by ignoring the evidences available on record. 13. The Adjudicating authority observed that CP 172 SG grade Resin is costlier than the other resin which cannot be used in the manufacture of the final products as purchased from M/s. Chemplast. It is presumed that the main appellant purchased the said resin for claiming more Ce....
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....d in their statement that they have supplied the materials under the cover of Invoices and received the payment by Cheques. The parties at Serial No. 9,10 11 and 12 of the Annexures to the Show Cause Notice stated that in some cases they have supplied Invoice but the said parties had not clarified the details of transaction to substantiate the veracity of their statement. In any event, the said parties had received the payment by cheque and during investigation did not deny the transaction with any material evidence. 15. The Adjudicating authority observed that the total production of PVC Compound / Master Batches and scrap as shown in the records and monthly returns cannot be possible on the basis of power consumption; thus, the main appellant diverted the inputs in the local market. It is noticed that on 30.07.2004 and on 14/15.02.2006, when the officers conducted the stock verification, there was no shortage in the stock of finished goods. The investigating officer did not find out any raw materials from the premises of the supplier or from the market. The Learned Counsel submitted that the gross purchase of the main appellant during the material period was 14,415.572 M.T and....
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....dit to the manufacturer of final products, it is necessary to show that the cenvatable inputs were never received by the manufacturer and the credits have been taken simply on the basis of paper invoices without actual goods. In the present case, we note that the appellants produced chart with vehicle nos. for the receipt of the inputs from KPIPL. They have maintained statutory records regarding receipt of inputs, credit availed thereon, manufacture of final products and duty paid clearance of final products. None of these records have been put to question with any evidence. Further, we also note that the payments towards purchase of raw materials have been made by crossed cheques by the main appellant. They have also produced ledger accounts to this effect. There is no evidence regarding any flow back of cash from KPIPL to the main appellant or any arrangement to that effect. We note that while examining the lack of evidence regarding flow back of money, the Original Authority records that the event happened more than 3-4 years and hence, no evidence could be left behind. However, while examining the admissibility of certain statements of truck drivers recovered 3-4 years back, it....
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....munication Ltd., located outside Delhi-I jurisdiction, where the main appellant issued the invoices. In that case, the Tribunal vide Final Order No.58053/2017 dated 23.11.2017 has taken a consistent view that Cenvat Credit cannot be denied merely on the basis of statements, which are un-corroborative in nature. The learned A.R. for the Revenue in his written submission filed before this Tribunal had quoted the statements of various persons to substantiate that the main appellant had issued the fake invoices. We find that the case of the Revenue is that the buyers made payment of the cheques and the main appellant returned cash after deducting 2-3% commission. The Investigating officer had not made any attempt to examine the Bank Account. No cash was recovered at any place, as the matter involved huge amount of cash. The Tribunal in the case of Aum Aluminium Private Limited Vs. Commissioner of Central Excise, Vadodara - 2014 (311) ELT 354 (Tri.- Ahmd.) observed that un-accounted sales proceeds in substantial cash from factory or office premises or anywhere else in direct control of the assessee are not recovered and therefore, the charge of clandestine removal of goods cannot be sus....
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....ome cases, the buyers had settled their case before the Settlement Commission, which may be taken as admission of the offence. The identical dispute was raised before the Larger Bench of the Tribunal in the case of Bosch Chesis Systems India Private Limited Vs. C.C. Gurgaon - 2008 (232) 622 (Tri- LB). The issue involved in that case was that whether filing of application under Section 32E of the Central Excise Act, 1944 before the Settlement Commission, would amount to admission of fraud, willful misstatement, suppression of facts etc., on the part of the assessee. The Larger Bench of the Tribunal, by following the decision of the Hon'ble Supreme Court in the case of Sir Sodhi Lal Sagar & General Mills Vs. C.I.T [ 1997 (31) ELT 325 (SC)] held that non-payment of duty could be bonafide and there may be reason for the assessee to opt for settlement and not contest the Show Cause Notice. The Larger Bench of the Tribunal held that mere filing of application before the Settlement Commission under Section 32E of the Act for waiver of interest and penalty and immune from prosecution may not necessarily be construed as admission of the allegation. The relevant portion of the said decision ....