TaxTMI 
TaxTMI 
2023 (10) TMI 223
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....t since two appeals against the main noticees are sufficient and all the other co- noticees names are appearing as co-respondents along with the appeal in annexure 'C', there is no need to file additional appeals. These two appeals are sufficient even for other co-noticees. Accordingly, the appeals are taken up for disposal. 3. Brief facts of the case are that during the course of search of the factory premises of M/s Metal Gems (M/s MG) it was noticed that a quantity of 11,840.200 Kgs., of Copper Scrap and a quantity of 4,392/- Kgs. of Copper Cathode were found in excess than the recorded balance in statutory stock accounts. Similarly, comparison of the finished goods revealed that a quantity of 10,759.250 Kgs, of Copper Flats/ Strips were found in excess than the recorded balance in the statutory daily stock account maintained by M/s MG. Since the finished excisable goods viz., Copper Flats Strips weighing 10,759.250 Kg. manufactured by M/s MG found in excess were still lying within the factory premises, in ready to use condition, these goods were handed -over to the authorized representative with a direction to account for the same in their daily stock account before be....
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....n collusion with others have procured required quantities of copper re-melting scrap from the local markets situated at Mumbai/ Bhiwandi and under the cover of the bills /invoices of traders. Such quantity of copper re-melting scrap were used for substitution of the quantities of re-melted copper ingots /wire bars, shown as having been received by respondents from Delhi. Thus it appeared that, in order to substitute the quantities of raw materials in respect of which M/s MG and M/s MI have availed the benefit of Cenvat Credit, they procured quantities of copper re-melting scrap from local markets, the receipts of which were not accounted for in any of the statutory or private records maintained in this regards. Accordingly upon the completion of investigation respondents were issued separate show cause notices both dated 24.04.2006 proposing disallowance of Cenvat Credit and demanding central excise duty. Out of the above said three Show cause notices, in respect of the first Show cause notice it was issued for the limited purpose of confiscation of seized goods and imposition of penalty, the same was decided by the Joint Commissioner, Central Excise & Customs, Daman vi....
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....e examination report obtained from the RTO & Commercial Tax Department of the States of Rajasthan & Gujarat in respect of Check-posts manned by their officers/staff on routes taken by the transporters for movement of goods from Delhi to Daman in respect of the vehicles shown used, vis-à-vis, the quantity shown to have been transported through these vehicles revealed that none of the vehicles had crossed /passed through any of the Check-posts maintained by them. While in some cases, the vehicles were not of the type of vehicles used for transportation of goods as they were either passenger vehicles; and in few others the vehicles were not capable to transport such heavy quantity as their loading capacity is much less then the quantity shown transported by such vehicles. During the investigation, it is revealed that the containers of imported goods cleared from ICD, Tuglagabad, were returned back within one or two days after de- stuffing to their shipyards. This clearly suggests that the consignment from ICD, Tuglagabad had not travelled upto and reached M/s MG and M/s MI. The investigation carried out from the transporter of vehicles used for transportation of local scrap tra....
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....ht-out in the investigation. The documentary evidences seized from the possession of Shri Keshav Singh Tomar during the search of the UP Border Branch office of M/s Time & Space Haulers have clearly emerges that such documents maintained by them on day to day basis for recording business transaction in normal course of M/s. Time & Space Haulers did not carry any records of transportation of imported consignments either to M/s MG or M/s MI at Daman, thereby giving weight behind the theory that only lorry receipts were arranged by the transporter, but no actual transportation was carried out. Had the transporter carried any actual transportation of imported consignments to M/s MG and M/s MI, the relevant details would have been recorded in such daily report register/ documentary evidences seized from the transporter. Thus the abundance of documentary evidences seized from the possession of Shri Keshav Singh Tomar at UP Border Branch office; and also from Delhi main office to M/s. Time & Space Haulers in which he is an employee, clearly proves that Shri Keshav Singh Tomar was under immense influence of the key operators of the scam who are also co-noticees to mis-lead the investigatio....
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....unds of the vehicles mentioned in the relevant Lorry Receipts, upon verification with the RTO authorities were found to be incapable of such transport, relying on the decision of Hon'ble Tribunal in case of Motabhai Iron & Steel Industries / AVM Brothers & Others & M/s Manish Industries etc., the adjudicating authority has erroneously observed that '-incorrect noting of numbers and in this case data has been produced of fake and incorrect numbered vehicle entering Daman.' Accordingly, it has been sought to hold by the adjudicating authority that credit taken on vehicles mentioned in Exhibit Z is to be allowed. All such vehicle numbers were as per the numbers mentioned on the relevant lorry receipts /bilty issued by the transporter accompanying the duty paid documents on which the credit has been taken. 13. He also argued that in terms of the statutory provision contained in Cenvat Credit Rules, 2004, the burden of maintaining proper records of receipt, disposal, consumption, and inventory of inputs and also proving admissibility of Cenvat Credit has been squarely placed on the person taking such credit. While the allegation raised in the subject matter have been made on the basi....
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....hode' in the factory on 12.08.2005, in no way could indicate or substantiate receipts of 'imported re-melted copper ingots' in respect of which the whole case has been made-out. 16. He also submits that the impugned order with regard to allegations that local kabadi Scrap procured from Bhiwandi/Mumbai and transported on the Invoices of M/s Metal Best and M/s Metro Metal by the vehicles of Jogibhai Patel brought to the factories of M/s MG and M/s MI for substitution the same in lieu of imported Copper Cathode, Wire Bars etc., the adjudicating authority has observed that 'there is no invoice relied qua-Metro Metal or other documents of this firms.' In this regard, the adjudicating authority has lost sight of the documentary evidences that have been relied upon for the purposes issuing the show cause notices. In the seized file, few blank invoices of M/s Metro Metal and M/s Metal Best, as well as, few invoices for supply of copper scrap issued by these firms were found available. 17. As regard the observation of the adjudicating authority regarding proposal to confiscate certain goods namely Brass Rods, Copper Tubes etc. seized in the premises of M/s. Mex India of Mumbai on 12.0....
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....rial to demonstrate that the impugned goods were not transported from Delhi to Daman and not received in Daman Factory where Cenvat credit was availed. The documentary evidences seized from the transporters, Statements of transporters, verification reports from public authorities like RTOs, Transport Commissioner and Commercial Tax Department demonstrate and establish that the claimed goods were not transported from Delhi in the given vehicles and the same did not reach the factory of M/s MG and M/s MI situated at Daman. 21. Accordingly, the appellant Revenue prays for allowing its appeals by setting aside the impugned Order-In-Original. 22. Shri Ankur Upadhyay Advocate appearing on behalf of respondents reiterated the finding of the Ld. Commissioner and submits that adjudicating authority in the impugned order has meticulously dealt with all the issues in hand and has given detailed findings in this regards in the impugned order, hence, the appeal filed by the appellant is liable to be set aside. 23. He also submits that department has not disputed the eligibility of duty in BOEs nor its eligibility as 'input' as quest....
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....lear that the data on the movement of vehicles into Rajasthan and out of Rajasthan cannot be established prior to April 2005 in any case and after April 2005 its reliability and authenticity cannot be used in any legal proceedings. Therefore in this case all the vehicles prior to April 2005 from 05.04.2004 to 31.03.3005 and thereafter cannot be disproved to have travelled through Rajasthan on their way to respondents' factory at Daman. 27. He further argued that on perusal of RUD relied upon in the SCN, as statement of Shri Keshav Singh Tomar, Branch Manager of TASH, at UP Border, it would be very clear and evident he has inter-alia disclosed to have prepared the Crossing Pass (Baheti), required under the State Enactments of Rajasthan, Gujarat and Madhya Pradesh as mentioned in the SCN to State and handover the same to the Drivers of the Vehicles loaded under his supervisions with respondents goods from his Godown for transport to Daman. The Drivers of the said vehicles have not been identified. They could have explained as to what route they took to reach Daman and why the LRs of TSH do not bear the Entry and Exit Stamps as alleged in impugned matter. These drivers could ....
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.... on Nasik -Vapi (Gujarat) and Daman High Way. 31. He also argued that the statements of all the Transporters and other person relied in the impugned matter, who have cleared the imported goods at ICD Tughlakabad would indicate that the said inputs owned by Respondent have been transported from ICD to UP Border of TASH and received there by the employee of TASH for further transportation to Daman Factory as admitted by the Branch Manager of TASH at UP Delhi Border. There is no evidence brought in present matter that the said goods were transported to a place other than what Mr. Tomar has stated. It was for the department to establish beyond all reasonable doubts where the diversion took place. It is an assumption made by the revenue in the present case that it is diverted to in and around Delhi. How it diverted to in and around Delhi is not clarified in the present matter. 32. As regard the alleged procurement of Kabadi Scrap being transported by the two vehicles of Shri Jogibhai as investigated and relied by revenue he submits that no statement of the actual drivers of the vehicle identified on records to substantiate the huge quantity of kabadi Scrap said to be transpo....
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....Daman, the same has to be passed through various check posts. Enquiries conducted from the check posts have established that there is no stamp of any check post on the lorry receipts issued by the transporter M/s. Time & Space Haulers, which was required to be affixed on such documents in respect of trucks passing through the check posts. The Revenue has also relied upon the fact that the records/documents maintained by the transporter at Delhi office as well as UP border branch, there is nothing mentioned regarding issuance of lorry receipts, indicating thereby that such lorry receipts issued by the transporter were not in the ordinary course of their business. Further reliance has also been placed upon the records maintained by the respondents in support of the allegation that imported raw material were neither received by them nor consumed inasmuch as during the days when such raw material were received, melting furnaces records indicate that furnaces were shut down/slowed down due to unavailability of raw materials. Further the statements of various persons stand relied upon. We find that contrary to this evidences the fact that the respondents have recorded the receipt of the ....
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....ayment of duty, RT-12 returns were assessed and there was no evidence of use of alternative inputs. Accordingly, Tribunal rejected the appeal filed by the Revenue. The matter was taken up by the Revenue before the Hon'ble High Court of Punjab & Haryana, who vide their judgment as reported in 2008 (229) E.L.T. 661 (P&H) = 2008 (87) RLT 793 (P&H) rejected the same. Similarly in the case of M/s. Steel Tubes of India Limited v. CCE, Indore [2008 (87) RLT 630 (CESTAT-Del.)], it was held that merely because vehicle numbers mentioned in some of the invoices are not of transport vehicles, the same is not sufficient to deny the credit when there is evidence of receipt and utilization of inputs and no evidence of diversion is available. Further in the case of CCE Ludhiana vs. Parmata Singh Jatinder Singh Alloys Pvt. Limited - 2011 (266) ELT 67 the Tribunal held that : - Cenvat/Modvat - Documents for availing credit - Fake number on vehicle on which inputs were transported to assessee - No other evidence on record of diversion of inputs, which were entered in statutory records and their use in manufacture of final products shown - Payment for inputs made through cheque and for the....
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....p; avoid the mandatory ―passing' by RTO authorities. Further third party records cannot be made a basis for alleging contravention by the respondents. In a plethora of cases relied upon by the respondent, it has been held that the statements of transporters /vehicle owners being evidence of third party /co-accused cannot be solely relied upon to confirm serious charges and merely because the said check -post records do not show movement of vehicles from its records. It is common practice that some of the truck drivers in order not to pay local tax or/ toll tax or check post charges or for some other reasons, take their vehicle through alternate routes. In such case, only on the basis of border Check posts report, it cannot be concluded that the vehicles did not transport the goods to respondents' factory. The Check Post report has not given a clear picture of movement of trucks in respect of the consignments. In the facts of the present case, Check Posts report cannot be sole basis for denial of Cenvat credit. The entire transactions were duly recorded in statutory records of the respondents. Hence, we do not find any reason or tangible evi....
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.... this issue the relevant case law in the case of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal v. CCE, Raipur in Appeal Nos. E/52062 & 52066/2018, held as follows. "9. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Reference can be made to Hon'ble Allahabad High Court decision in the cases of Continental Cement Company v. Union of India - 2014 (309) E.L.T. 411 (All.) as also Tribunal's decision in the case of Raipur Forging Pvt. Ltd. v. CCE, Raipur- I - 2016 (335) E.L.T. 297 (Tri. - Del.), CCE & ST, Raipur v. P.D. Industries Pvt. Ltd. - 2016 (340) E.L.T. 249 (Tri. - Del.) and CCE & ST, Ludhiana 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. Parag Pentachem Pvt. Ltd. Reported in 2018 (360) E.L.T. 1025 (Tri. - Del.) the Tribunal o....
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....oice relied qua-metro Metal or other documents of this firm. The alleged quantity of such Kabadi scrap which does not meet the quality requirement of the final end products required by using imported raw materials will be 28,42,570 Kg. in case of M/s MG and 38,91,067 Kg. in case of M/s MI for substitution purpose. As also additional quantities of kabadi scrap would be required to manufacture non-duty paid unaccounted clandestinely removed goods from the factories of MG and MI at Daman and elsewhere. This transporter has one truck and one tempo with one driver only to ferry such huge quantities from Bombay/ Bhiwandi to Daman. The capacity even if overloading is considered assuming use of both the vehicles of Jogibhai Patel, they could not have been made/transported from Bhiwandi /Mumbai to Daman which route take for a single one way trips approximately 10 to 12 hours. The single Driver could not have achieved this herculean transportation. The procurement of Kabadi Scrap to substitute the quantities of imported inputs could not be proved beyond doubt by the investigators. The Ld. Commissioner also found that the Jogibhai's Driver has not been questioned which was otherwise necessari....
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.... who state that he supply kabadi scrap ; no evidence of the cash payment to any kabadi by the respondents in respect of such a huge quantum of purchase of Kabadi Scrap; no statement of any supplier of kabadi indicating the removal of scrap to Respondents, no recovery of any cash amount from the kabadi or cash payments to the input suppliers. It is well settled that the charges of alleged violation are required to be established on the basis of positive and tangible evidence, the same being quasi- criminal in nature. The Revenue has miserably failed to produce corroborative evidence on records so as to substantiate the charges of non- receipts of imported goods and substitution of the same with kabadi scrap and availment of the wrong Cenvat Credit. If the revenue alleged that imported goods are diverted and for manufacturing of final products, Bazar Scrap / kabadi scrap in such large scale clandestinely procured by the respondents, the investigating officers could have easily identified the said Kabadi suppliers and buyers of imported goods. It is beyond one's comprehension that not even a single supplier of the alleged bazaar scrap could be identified or interrogated. Not....
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.... the premises of Mex India of Mumbai on 12.08.05 for the reasons, as recorded in the Panchnama, that they are similar to the goods being manufactured by MG. This reasons to believe itself to seize goods lying in Bombay has to be rejected, as there is no material on record that the officers seizing such goods at Bombay would be aware of what exact similar goods were being manufactured at the factory premises of Daman which was being simultaneously searched on the same day. (c) There is no material in the SCN also, as a result of the investigation also, that the seized goods at Bombay in the premises of M/s Mex India were similar to the goods being manufactured at the factory of MG. (d) In view of the above the conversion of detention into seizure of the goods found in premises of M/s Mex India cannot be accepted. There is nothing in the SCN -1 issued to bring in a liability to seizure and confiscation of the said goods on alleged confessional statements recorded from Shri Nishit Morakhia Proprietor and others, which have been retracted." 44. As regard the central excise duty demand of Rs. 6,05,245/-, we find that officers while searching the factory of M/s MI fo....
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....goods and that the allegation are to be proved with affirmative evidences. CEGAT in case of Emmtex Synthetics Limited v. CCE [2003 (151) E.L.T. 170 (Tri.) has held that the charge of clandestine removal has to be established by the revenue by adducing tangible, convincing and cogent evidences, CESTAT in the case of Esvee Polymers (P) Ltd. v. CCE [2004 (165) E.L.T. 291 (Tri.)] dealt with a case of alleged clandestine production and clandestine removal. The case was based on some private slips. The CESTAT observed that the mere slips or statement are not sufficient for confirmation of demand and allegation of clandestine removal. Evidence in the form of receipt of raw material, shortages thereof excess use of electricity excess/shortage of inputs in stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods etc. is necessary. CESTAT in the case of CCE v. Supreme Fire Works factory [2004 (163) E.L.T. 510 (Tri.) dealt with the allegation of clandestine manufacture and removal and observed that mere suspicion cannot take place of proof. Proof and evidences of purchase of raw materials, sale of final goods clandestinely is necessary. The allega....