TaxTMI 
TaxTMI 
2019 (8) TMI 757
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....y are using Polyethylene Granules as basic raw materials which is procured by them from M/s GAIL, Pata and are also availing credit of the duty paid on said raw material. Based upon the investigation, they were issued show cause notice dated 25.11.06 alleging that they have availed cenvat credit of Rs. 1,26,99,671/- during the period August, 2002 to March, 2003 and of Rs. 47,94,058/- during the period Jan,2004 to October, 2004 without receipt of Polyethylene granules in their factory and instead used reprocessed granules in manufacture of their finished goods. The show cause notice relied upon the File No. A/29 seized from factory which showed receipt of accounted as well as unaccounted Reprocessed Granules by the Appellant Unit. Record No. A/9 maintained by Shri Rohit Kumar Asopa, Accountant was also seized from Delhi office which allegedly contains details of accounts between the Appellant Unit and transporter M/s Golden (India) towards transportation of Reprocessed granules. Record named as A/24 written by Shri Rohit Kumar Asopa and alleged to be containing the quantity of Raw material purchased from M/s GAIL during the month of March,2004, the actual receipt of raw material as ....
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....d January '04 to Oct. '04 was made against M/s Resham by relying upon the report of the Commercial Tax Officer, Pithol Check Post, Jhabua (M.P) who vide his letter dated 15.09.2006 intimated that only 22 consignments had crossed the Pithol Check Post out of 157 consignments shown to have been received by M/s Resham. Accordingly, demand of cenvat credit of Rs. 1,26,99,671/- was proposed against M/s Resham. A further demand of cenvat credit of Rs. 78,495/- was made on the ground that during the physical stock verification of finished goods and raw materials, a shortage of 8250 kg of polyethylene granules involving duty of Rs. 7,84,95/- was found and Shri Gopalji Lal Karn, Manager and Authorised Signatory admitted that the said quantity has been sold in the open market. 1.2 The demands were confirmed by the adjudicating authority vide order dt. 28.02.2008. On an appeal filed by the Appellant before the Tribunal, the case was remanded back vide Order No. A/1831-34/WZB/AHD/2009 dt. 12.08.2009 for De-Novo consideration. The demands were again confirmed vide the impugned order by relying upon the statements and relied upon records. Hence the present appeals by all the Appellants. 2.....
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....e and if the vehicle has not passed through the check post, it means that the goods were not transported to factory of M/s Resham and therefore credit on such goods is not admissible to the appellant. The Revenue has relied upon the seized record Sr. No. A/29, which was seized from the Appellant's Delhi office and which contained details of transportation of goods by M/s Bombay Golden (India) from GAIL. It is alleged that there has been payment of transportation charges to M/s Bombay Golden for period August'02 to March'03 to the tune of Rs. 41,31,793/- and further entry of receipt of Rs. 30,66,235/- as cash from the said transporter. A reference of certain other pages of the said file was given regarding receipt of cash from transporter and transportation of goods from Pata to Delhi and not to Silvassa. Reliance was also placed on the statement of Shri Harish Arora, partner of M/s Bombay Golden (India) wherein he stated that they had issued bills for freight charges from GAIL, Pata upto Silvassa and received entire amount through cheques and returned the differential amount in cash when the goods were un-loaded in Delhi and such amounts were reflecting in the said file. 2.2 He ....
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....e figures as per the dictation of Shri Pradeep Lohia, director of the appellant company. Shri Asopa could not disclose the actual source on the basis of which he had written the figures in a loose paper. In his statement he did not specify for which the concerned figures in the rough sheet pertained. The statement of Shri Asopa has got no evidentiary value. Further his statement stands retracted and it is a settled law that the retracted statement cannot be made basis for making demand against the Appellant. 2.3 Even the transporter Shri Harish Arora's statement is in general. The goods which were not used by the Appellant in their factory and were sold, the credit on such goods was already reversed. As regard reprocessed granules purchased by them, he submits that they were also doing trading of such granules and no evidence of such granules having been used instead of virgin granules has been brought on record. He submits that only for the reason that if the goods did not pass through the Pithol Check Post which allegedly is the shortest route from GAIL, Pata to Silvassa where the Appellant factory is located, it cannot be concluded that the goods did not reach the Appellant's....
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.... Officer of Pithole check-post is only assumption as the same has been relied upon without considering the fact that there are other alternate routes available to transport the goods from Pata to Silvassa. The Ld. Counsel takes us through list of 57 invoices and copies thereof showing other check-post stamps evidencing that the goods have been transported through alternate check-posts. Pointing out such instances, he draws our attention to Invoice No. 30304054150 dated 29.6.2004 evidencing LR No. 376244 showing the stamp of Jamli Sendhva Check post to Silvassa annexed to the bill. Similarly he relies upon Invoice No. 30304056249 dated 27.7.2004, which showed transportation of goods from UP to Silvassa via Mandar. In case of Invoice No. 30303067462 dated 31.3.2004 bearing LR No. 332918 showing stamp of Uncha Nagla check-post. He submits that it is thus absolutely clear that the Pithol check post route is not the only route through which the goods were received by them. Despite several submissions, the adjudicating authority did not grant cross examination of the officer of VAT check post at Pithol, which would have easily shown that there are alternate routes for entering into the s....
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.... pipe Industries 2013 (293) ELT 739 (TRI), Adhunik Alloys Ltd. 2016 (334) ELT 426 (TRI), G.S Alloys Castings Ltd. 2016 (331) ELT 310 (TRI), Sadashiv Structural P. Ltd. 2017 (357) ELT 834 (TRI), Good Earth Steel Pvt. Ltd. 2018 (9) GSTL 177 (TRI), PeeJay International Ltd. 2010 (255) ELT 418 (TRI) and Mittal Appliances Ltd. 2018 (12) GSTL 297 (MP). He also submits that the shortages of granules in their factory cannot be a ground to allege diversion of the same as there is no evidence of removal. The demand cannot be made on the basis of bald statement of employee. 2.7 Lastly he submits that as per the previous order of the Tribunal, the Tribunal had given its findings on alternate route for the transporters to carry the goods other than Pithol check-post. The Tribunal in reference to existence of 14 invoices with the stamping of the Commercial Check-post other than that of Pithol check-post had instructed verification of same. The adjudicating authority has contended that the stamping is there on 4 invoices, but the same is not legible. He submits that the adjudicating authority at the time of hearing never spelt out that the stamping is not legible on 4 invoices produced by the ....
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....upon the statement of partner of M/s Bombay Golden (India) wherein he stated that the bills were issued for the freight charges from GAIL, Pata to Silvassa and the entire amount was paid in cheque and in case of diversion of goods in Delhi, the cash on account of excess freight was returned back to the Appellant. The bills of the transporter, wherein the notings were made 'D' and 'S', which according to him, stand for delivery or Delhi or delivery at Silvassa and the bills which had noting 'D' pertained to the raw material, which was not allegedly received in the factory of the Appellant.. The show cause notice has relied upon the report of check post Incharge and in case of demand for the period January to October' 2004 the main ground for making demand is such report. 5. We find that the Appellant M/s Resham Petrochem are manufacturing Sheathing Compound for the Telecom companies who in turn are manufacturing Cables to be supplied to BSNL, MTNL etc. For supply of such Sheathing compound, the vendor should be approved by Compound Approval Centre for Telecommunications (CACT). We have seen the approval certificate issued by the Dy. General Manager, CACT, Bangalore to the Appella....
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....ppliers is also appearing. In such case it was easily ascertainable the extent of use of reprocessed granules. No such exercise has been undertaken by the revenue. 7. We find that though the allegation is of diversion of granules, but no investigation has been made from the transporter, truck driver as to where the said goods were diverted. Even Shri Asopa who had written/ maintained the records on the basis of which the allegation of non receipt/ diversion of granules was made was not questioned about the recipient of such goods. Further it is nowhere appearing in the show cause notice as to how the consideration of such alleged diverted goods were received. The statement of Shri Asopa stands retracted by him during his cross examination and hence cannot be relied upon. Moreover the records maintained by him are in isolation and hence not reliable. 8. The allegation of the show cause notice of non receipt of granules for the impugned order is also based upon the report of check post authority. Mainly for the period Jan.'04 to Oct.'04 the sole basis of allegation is communication / report of the Commercial Tax Officer located at Pithol check post, which falls at M.P. - Gujara....
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....f the check-post in- charge. The Appellant had sought cross examination of the check post in-charge to show that there are other alternate routes from GAIL, Pata to Silvassa through which the goods are also transported to Silvassa. However, the adjudicating authority denied the request of the appellant without assigning any reason. We are of the view that when the show cause notice has relied upon the report of check post officer, in that case the Appellant should have been granted cross examination of said person. Our views are based upon the judgments of Apex Court, High Court and Tribunal in case of LAKSHMAN EXPORTS LIMITED 2002 (143) ELT 21 (SC), ARYA ABHUSHAN BHANDAR 2002 (143) E.L.T. 25 (S.C.), SWADESHI POLYTEX LTD. 2000 (122) E.L.T. 641 (S.C.), RAJENDRA BAJAJ 2010 (253) E.L.T. 165 (Bom.), JHA SHIPPING AGENCY 2011 (264) E.L.T. 321 (Cal.). Thus in such case when no cross examination of person whose report is being relied upon has been provided, it cannot be held that the Appellant did not receive the said goods. Thus merely on the basis of the report of the check-post authorities, it cannot be concluded that the goods were not transported to the appellant factory at Silvassa. ....
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....the revenue is that the appellant have not received inputs namely Bura scrap and furnace oil in their factory premises at all. For denial Cenvat credit on Bura scrap, I find that the appellant has already reversed the Cenvat credit during the course of investigation and have not contested on merits. In that circumstances, the Cenvat credit on Bura scrap is denied. Consequently, the appellant is liable to pay duty thereon alognwith interest. As appellant has already reversed the Cenvat credit therefore, appellant is required to pay interest for the intervening period within 30 days from today. 8. I also find that there was some shortage of the finished goods found during the course of investigation. Considering the fact that the appellant has already paid duty thereon and the quantity found short is a meagre one therefore the same is confirmed. 9. For denial of Cenvat credit on furnace oil, the case of revenue has relied on the following evidences. A. no entry of vehicle no. at ICC. B. The statement of transporter/suppliers and C. the expert opinion of NISST 10. The case of the revenue is that the furnace oil never crossed the bo....
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....es necessary for the department to produce other evidence which is of an independent nature which corroborates the retracted statements. 12. I also find that some kachaa ledger was also recovered from Sh. Praveen Kumar Garg, the same cannot be relied upon as evidence in the matter as these records have been recovered from third party whose cross-examination has not granted to prove the truth, therefore these Kachaa Ledger is not admissible as evidence. During the course of argument, the Ld. AR submits that M/s. Ritco Kirti Associate (P) Ltd. has produced for cross-examination. In fact the initially statement of Sh. Sanjeev Kumar of M/s. Ritco Kirti Associate (P) Ltd. was recorded but for cross-examination, Sh. Mukesh was produced. As the person who made the statement was not produced, the cross-examination of the third person is not relevant to reveal the truth. In that circumstances, as the revenue fails the produce Sh. Sanjeev Kumar for cross-examination the statement of M/s. Ritco Kirti Associate (P) Ltd. is not admissible at all. 13. Further, I find that the revenue has relied on the opinion obtained from the NISST to the extent that furnace oil is not require....
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....independent source though such statements can be of some value but cannot be solely relied upon for the purpose of holding against the assessee. I also note that the Revenue has not bothered to make any investigation from the transporters even though their names were available in the respective invoices. They have not found out whether the vehicles number mentioned in the invoice, have been actually used for the transportation of the goods or not. The appellants in the statement recorded during the investigation had clarified their stands that they have actually received the materials in question and any documents recovered from the premises of third party cannot be adopted to hold against them. Even otherwise, the Revenue is silent on the issue that if the appellant has not received the materials in question, how have they manufactured the corresponding final products. It is not the Revenue's case that they have procured the raw material from any other alternative source. It is not only inpractical but impossible to manufacture the final product without raw material in question. The appellants having reflected the raw material in their Cenvat credit account and h....
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....tive evidence on record that waste and scrap has been cleared by the respondent No. 1 on payment of duty. In these circumstances, the ld. Commissioner (Appeals) has rightly set aside the adjudication order. 8. During the course of argument the ld. AR relied on various jurisdictional pronouncements Gulabchand Silk Mills Pvt. Ltd. (supra). The facts of the said case are not relevant to the case in hand as in that case the vehicle carrying finished goods was intercepted and it was found that vehicles carried excess goods on which duty burden was not discharged. Further, in the case of Sita Cement Ltd. (supra) it was a case wherein during the course of road patrolling, Commissionerate intercepted three trucks and the driver of the said trucks produced duplicate copies of three challans and invoices showed the PLA debit entry no. giving the impression that the duty has been paid by the manufacturer through PLA but during the cross-examination it was found that no duty was paid by the assessee. Further, relying in the case of N.P. Agro (supra), I find that it is a case of seized goods during the course of investigation and on seized goods no explanation was given by the assessee....
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....other date was fixed on 13-5-2008, for the above said persons to appear. On the said date two persons namely; Shri H.A. Khan, Superintendent (Preventive) & Shri N.K. Das, Superintendent, appeared for cross-examination. Shri Amit Awasthi, Counsel for the party/respondents had put questions to the said witnesses and thus cross examined them. It is explained by the ld. Counsel for the respondent that these are the formal witnesses who prima facie supported the relied upon documents, the fact of recording of statement etc. in the search/investigation proceedings. The Counsel for the respondents reiterated the request for cross-examination of Shri Lalit Kumar Sharma, Shri Vijay Sahni & Shri G.K. Bansal. Another date of hearing in the matter was fixed on 25-6-2008 and in this regard, summons were issued to them and none of the persons came to attend the cross-examination on the scheduled date. On further request by the counsel for the respondent, date of hearing be fixed on 20-7-2008 to cross-examine also one, Shri Shashi Shekhar, SIO, DGCEI, Kanpur, the main Investigating Officer in the proceedings. The next date fixed on 29-8-2008 on which date the aforementioned three persons were als....
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.... of PeeJay International Ltd. 2010 (255) ELT 418 (TRI) the Tribunal held as under: "14. Merely because the numbers and dates of LRs and GRs in the statement of the representatives of the manufacturer of the inputs and the representative of the dealers as well as of the transporters from the manufacturer of inputs to the dealers tally, that by itself, will not be a conclusive and satisfactory evidence about diversion of the inputs by the respondent in the open market, in the facts and circumstances of the case. It is not in dispute that the dealers as well as the respondents both are having their establishment in the District of Ludhiana. It is not in dispute that the statutory records maintained by the respondents do not disclose absence of receipt of such inputs by the respondent in their factory. It is not in dispute that the records maintained by the respondents were never doubted by the department. On the contrary, the same were verified and confirmed. In these circumstances, in the absence of cogent evidence about the clandestine disposal of the inputs without utilization thereof in the manufacture of the final product by the respondent, we fail to understand as to ho....
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....ry premises of M/s. Inter Metal and M/s. Indo Micro Nutrients in respect of the stock of finished goods/inputs. c. Nothing has been brought on record to show the place to which the goods were sent on payment of duty after removal from the factory of the supplier. d. Further, the case records are silent on the points that when the trucks in question were not used for transportation then what were the vehicles in which the said goods were transported and to what destination. e. No discrepancy in the stock of raw material or finished goods was noticed in the factory of M/s. MAL, Nothing has been brought on record to show as to how M/s. MAL produced their final products in the event of not having received the inputs in their factory. f. It is noticed that M/s. MAL have paid the amount for the purchase of inputs to M/s. Indo Micro Nutrients and M/s. Inter Metal by crossed cheques/DDs. In the event of not having received any inputs, nothing has been brought on record to show as to what happened to the amount so paid by M/s. MAL. g. M/s. Sujoy Transport Company which later became M/s. Saral Logistics Pvt. Ltd. had four offices. But the investig....