TaxTMI 
TaxTMI 
2023 (3) TMI 637
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....r in relation to the manufacture of the aforesaid final products; and had availed the cenvat credit of the CVD paid on such imported inputs under the Cenvat Credit Rules, 2002 upto 09.09.2004 and thereafter, under the Cenvat Credit Rules 2004. An intelligence collected by the officers of DGCEI indicate that M/s. Garg Industries Pvt. Ltd.(hereinafter referred to as M/s GIPL)instead of taking the imported inputs to their factory at Daman for use in or in relation to the manufacture of the final products, had diverted the imported inputs for sale in the market. However, they had taken /availed the benefit of Cenvat Credit of CVD and other duties paid on such inputs on the strength of documents [i.e. on the Bills of Entries] only. The intelligence further indicated that M/s GIPL generally engaged M/s. Pankaj Shipping & Transport Co. ( hereinafter referred to as M/s PSTC) as the customs house agent (CHA) for clearance of the imported goods from Port of import at Mumbai; and also as transporter of the said inputs from the Port of import to their works/ factory at Daman. To cover-up the non- receipts of such inputs in the factory premises at daman, and to facilitate availment of CENVAT cr....
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.... the adjudicating authority has detailed the various RUDs available with the adjudicating authority - but also illogical, in as much as, when it is being emphatically confirmed by the investigating agency vide their repeated communication as has been brought -out in details in impugned order addressed to the adjudicating authority to the effect that, apart from supplying all the requisite documents to the noticees, such documents have already been handed -over to the office of the adjudicating authority. 3.1 He submits that since the investigating agency -i.e. DGCEI admittedly had submitted all the RUDs to the adjudicating authority way-back in the year 2012; hence being available with the Office of the adjudicating authority, it was upon the adjudicating authority to make available requisite RUDs on records with such authority, as directed by the Central Board of Excise & Customs, vide Chapter -III, para 9A on page 15 of Adjudication Manual. Therefore, the adjudicating authority has not only ignored the Board's directions in this regard, but has also grossly erred in holding -on to the fallacious claim of the Respondent that they did not receive the relied upon documents. 3.2 ....
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....ceipts / consignment notes are also mandated and are necessary documents to establish receipt and use of the inputs in the factory of manufacture. If the intent of the government was to allow the benefit of Cenvat Credit merely on the basis of duty paying documents, then there would have been no necessity for incorporating the phrase " ....received by the manufacturer for use in, on in relation to, the manufacture of final products ----" in the Cenvat Credit Rules 2002/2004. Therefore, the adjudicating authority has erred in brushing -aside the evidences and reliance on LRs and Transporter's register and their statements as being third party evidences not to be relied for the purposes of present SCN. In the instate case, the facts and evidence brought -out by the investigations and mentioned in the impugned SCN clearly establish that such imported duty -paid goods covered by the Bills -of -Entry, have neither been received in the factory premises of M/s GIPL nor used in the manufacturing of final products. Therefore, the finding of adjudicating authority in this regard, are clearly out of mis-understood /wrong interpretation of the statutory provisions and hence contrary to the sta....
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....documents have also not been returned to the Respondent. In the circumstances, the dropping of the show cause notice by the Principal Commissioner is Justifiable on this ground itself. He placed reliance on the following judgments: * TRIBHUVANDASBHIMJIZAVERI VS. CCE - 1997(92)ELT 467 (SC) * SHREE VENKATESH METAL CORPORATION VS. CCE- 2012(284)ELT 663. 4.1 He also submits that at the time of search at the Respondent's factory no shortage of inputs was found and the physical stock of inputs and final products tallied with the records. There is no admission of diversion of inputs at Navi Mumbai in any of the statement of the Respondent's Director and employees. None of the transporters have in their respective statement denied transportation of the inputs to the Respondent's factory at Daman. There is no evidence whatsoever of the alleged diversion of the inputs at Navi Mumbai. Not a single buyer of such alleged diversion has been identified nor is there any statement of any person stating that there was such diversion at Navi Mumbai. There is no evidence of any alternate source of procurement of the inputs in lieu of the imported inputs which are alleged to be diverted at Navi M....
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.... destination of Daman was not mentioned in the MLRs. 4.3 Without prejudice he also submits that DLRs and MLRs are in the nature of rough records written by Drivers and on the basis of such third party records, no adverse inference can be drawn against the Respondent. Merely because the Drivers have not accurately maintained the MLRs, no adverse inference can be drawn on against the Respondent on the basis of such third party records. He placed reliance on the following decisions:- * * CCE Vs. Vishnu and Co. 2016 (332) ELT 793 (Del.) * Taksus Steels Pvt. Ltd. Vs. CCE -2015 (329) ELT 859 * Rama Shyama Papers Ltd. Vs. CCE - 2004 (168) ELT 494 * Rutvi Steel and Alloys Vs. CCE - 2009 (243) ELT 154 * Sunhill Ceramics Pvt. Ltd. - 2007(217) ELT 353. 4.4 He also submits that the Notice has placed reliance on statement dated 19.12.2008 of Rajshwar R. Dubey, in which he stated that where higher freight bills had been prepared on instruction of the party to show transport to the factory of importers, after receipt of total amount of cheque, the excess amount had been adjusted towards miscellaneous expenses in cash. Firstly, a perusal of the said statement would show that....
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....ws the vehicles as having gone out (O) of Gujarat without having entered In (I) to Gujarat via Bhilad Check Post. He placed reliance on the decision of M/s Gujarat Victory Forging Pvt. Ltd. Vs. CCE- 2019 (7)TMI -5-CESTAT- AHMEDABAD. 4.6 Further, as regard the cenvat demand as per the Annexure -2 of the show cause notice he submits the cenvat credit in respect of these goods is sought to be denied merely on the ground that the RTO report obtained by the department does not shows entry of these vehicles into Gujarat via Bhilad Check Post. However none of said transporters have in their statement denied transportation of the inputs from Respondent's Godown in Navi Mumbai to Factory at Daman. On the contrary, Daljit Singh, owner of Jasraj Goods Carriers has in his statement dated 14.06.2007 and 26.03.2009 maintained that their trucks were used to transport the goods from Respondent's Godown at Navi Mumbai to Respondent's factory at Daman and they have received freight charges for such transportation. He has further maintained that Register No. 6 which was recovered from his premises contained trip wise daily entries for all trucks and that these entries were true and correct. Signifi....
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....dent had submitted copies of various documents such as Delivery Challans, L/Rs, Transport Bills, etc. A complete set of these documents running into over thousand pages has also been submitted along with Respondent's reply dated 20.01.2014 giving the details of transportation of the goods mentioned in Annexure B1 and B2 to Respondent's Daman Factory. In the circumstances, the Principal Commissioner has rightly dropped the show cause notice and department's appeal is liable to be dismissed. 05. We have heard both sides and perused the records. We find that the case of the department in present matter is that the imported inputs/ raw materials, as detailed in Annexure A1,A2,A3, B1 and B2 of the SCN, in respect of which Respondent availed the Cenvat Credit of CVD during the period January 2003 to March 2007, was transported from Nhava Sheva Ports to the Respondent's Godowns at Navi Mumbai and was sold in cash at Navi Mumbai and was not transported to its factory at Daman. On the basis of this contention, the show cause notice proposed to deny the said Cenvat Credit. In the entire investigation the evidences which were brought on records are transporters' statements and their records....
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....ince the statutory records show production and clearance of finished goods and clearance thereof on payment of duty. There is absolutely no evidence to show the substitution of raw material which in our view would cut the root of the allegation as the statutory records show that goods were manufactured. No shortage of raw material was detected during search of factory. No single buyer of diverted raw material was found by the revenue. In the present case no such inculpatory statement of alleged diverted imported inputs buyer is available, there was no shortage found in the stock if had the respondent availed the credit without receipt of inputs, there must be shortage of inputs which is not the case here. Thus, we find that the Revenue has failed to discharge the onus as regards the source of receipt of raw materials from any other alternative source rather have made a bald allegation on the manufacturers that they have diverted the imported raw materials on payment in cash in market. It is also observed that these facts are not under dispute that the respondent have recorded the receipt of the goods in RG-23 part-I register / stock register and payment of the same was made through....
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....a v. Anand Founders & Engineers - 2016 (331) E.L.T. 340 (P & H). It stand held in all these judgments that the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods. In the matter of Commissioner of C. Ex., Indore v. PragPentachem Pvt. Ltd. Reported in 2018 (360) E.L.T. 1025 (Tri. - Del.) the Tribunal observed as under: Cenvat credit - Bogus transactions - Invoice only received without goods - Evidence - Thirdparty evidence - Revenue, inter alia, relying on written slops/entries of laptop seized from residence of cashier of dealer issuing invoices, alleging that these contain details of cash transaction in respect of goods not of business - The seized records therefore are third party records - Settled law in catena of decisions including that of Apex Court in 1998 AIR SC 1406 that third party records alone cannot be relied upon as admissible piece of evidence - Further, even in these records there is no identification of person to whom said alleged cash transaction belong - Said entries having not been corroborated by any independent evidence, not reliable - ....
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....tor has not been discharged by the investigating agency. This is a gross violation of the principles of natural justice. When the show cause notice is issued proposing to such huge cenvat demand and penalties, the department ought to have taken sufficient care to supply all relied upon documents to the respondent. The entire cenvat demand without supply of entire relied upon documents is against the principles of natural justice and hence the show cause notice stands vitiated. For this reason itself, the cenvat demand and penalty cannot sustain. In Tribhuvandas Bhimji Javeri v. Collector of Central Excise,1997 (92) E.L.T. 467 (S.C.), the Hon'ble Apex Court held that non return of the documents by the authorities may severely prejudice the right of the party to offer the proper explanation and to that extent the principles of natural justice may stand violated. In absence of supply of the copies of the documents a party may be deprived of from leading proper evidence and he may not be able to give proper answer of the case against him by adducing positive evidence in support of his own case together with the right to contradict all other allegations. Deciding a case without furnishi....