TaxTMI 
TaxTMI 
2023 (11) TMI 10
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....mpugned order is as follows: "(a) I disallow the Cenvat credit amounting to Rs. 3,90,48,579/- (including cess) (Rupees Three Crores Ninety Lacs Forty Eight Thousand Five Hundred and Seventy Nine only) and order for its recovery from the Noticee No. 1 under Section 11A (4) of the Central Excise, Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004 and the amount of Rs. 3,20,82,192/- which was already paid/reversed by them is ordered for appropriation from the confirmed demand. (b) I order for recovery of interest from the Noticee No. 1 under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944. (c) I impose penalty of Rs. 3,90,48,579/- (including cess) (Rupees Three Crores Ninety Lacs Forty Eight Thousand Five Hundred and Seventy Nine only) upon the Noticee No. 1 under Rule 15 (2) of the Cenvat Credit Rules, 2004 read with Section 11AC (1) (c) of the Central Excise Act, 1944. (d) I impose a penalty of Rs. 5,00,000/- (Rupees Five Lakhs only) upon Noticee No. 2 under Rule 26 (2) of the erstwhile Central Excise Rules, 2002 (e) I impose a penalty of Rs. 5,00,000/- (Rupees Five Lakhs only) upon Noticee No. 3 u....
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....acturers and all those cases which reached this Tribunal were decided in favour of the assessees and against the department. These are: (a) Ashok Sharma vs CCE Raipur decided by Final Order No. 50426-50430/2019 dated 27.3.2019 passed in Excise Appeal No. 53371-53373 of 2018, 53433/2018 and 53741/2018 (b) Fortune Metaliks Ltd. vs CCE Raipur decided in Final Order No. 51708-51709/2021 dated 6.8.2021 passed in Excise Appeal No. 51044-51045/2019 (c) Trishul Mehta Industries vs CGST in Final Order dated 27.12.2021 in Excise Appeal No. 52313/2019 (iii) There is no evidence in the SCN to support the alleged illegal availment of Cenvat credit. Requests for cross examination of witnesses were made. (iv) The SCN relies heavily on statements recorded by the Central Excise officers which are relevant only if the procedure prescribed in section 9D of the Act is followed and it was not followed in this case by the Adjudicating Authority. Neither was the examination in chief conducted nor was the cross examination followed it. Therefore, bulk of the evidence in the SCN cannot be relied upon and if this is not relied upon, nothing survives in the SCN. (v) There is no substantial eviden....
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....ied on 62 documents in support of the allegations made in it, of which 35 are statements of various persons recorded by the Central Excise officers under section 14 of the Act, 16 are panchnamas drawn at various locations, 2 are summons issued to Mr. Rajiv Drolia, 1 is a letter sent to Mr. Drolia calling for information and 1 is his response. The remaining 6 are letters exchanged between officers. The details are as follows: Statements made by various persons before central excise officers under section 14- Relied upon documents 8,23,24,25,26,27,28,31,32,33,34,35,36,37,38,40,41,42,43, 44,45,46,47,48,49,50,51,52,53,54,55,56,61 and 62 Panchnamas- Relied upon documents 6,9,10,11,12,13, 14,15, 16,17,18,19,20,21,22 and 39 Summons issued to Shri Drolia- Relied upon documents 57 &58 Letter sent to Shri Drolia calling for information- Relied upon document 59 Reply of Shri Drolia- Relied upon document 60 Letter sent to state Commercial tax department- Relied upon document 29 Reply of the commercial tax department- Relied upon document 30 Letters exchanged within the department- Relied upon documents 1,2,3,4 and 5 13. Of the above, the 35 statements of various persons record....
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....that section 9D is a mandatory provision and if the procedure prescribed therein is not followed, statements cannot be used as evidence in the proceedings under Central Excise Act. The relevant extracts are as follows: "13. Once the ambit of Section 9D(1) is thus recognized and understood, one has to turn to the circumstances referred to in the said sub-section, which are contained in clauses (a) and (b) thereof. 14. Clause (a) of Section 9D(1) refers to the following circumstances : (i) when the person who made the statement is dead, (ii) when the person who made the statement cannot be found, (iii) when the person who made the statement is incapable of giving evidence, (iv) when the person who made the statement is kept out of the way by the adverse party, and (v) when the presence of the person who made the statement cannot be obtained without unreasonable delay or expense. 15. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is self-evident inference that the decision flowing from the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, ....
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.... the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudicating authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 19. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all ot....
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....D 59) was issued to him calling for information and he replied (RUD 60). In this reply, he stated that they had placed orders, and procured scrap and availed Cenvat credit and had taken all necessary precautions and no irregularity was noticed and they paid Rs. 3,20,82,192/- when pointed out by the department UNDER PROTEST and that they will examine the remaining Cenvat credit of Rs. 69,66,387/-. Nothing in this statement supports the contention in the SCN that the appellant had received only invoices and had not received the duty paid scrap. 20. A letter was sent (RUD 29) by the department to the Commissioner of Commercial Taxes, Raipur, Chattisgarh, who, in reply (RUD 30) confirmed that none of the several firms indicated in his letter including M/s. Jetking Trading and M/s RMS Steel (the two first stage dealers in this case) had shown any purchase of any goods from Dhanbad, Jharkhand. This supports the contention of the Revenue that the three manufacturers of Dhanbad from whom the first stage dealers claim to have purchased the scrap had not purchased duty paid scrap at all. If they had not purchased duty paid scrap, by logical extension, they could not have sold it to the seco....
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.... not even exist. Further, if the allegedly non-existent registrants were also filing returns which were also being accepted and scrutinized by the officers as claimed by the learned counsel for the appellants, there does not appear to be any investigation as to how the Returns of the 'non-existent' Registrants were being accepted by the officers. 24. Once the registration is issued by the department, the buyer of goods can procure goods from such a registered trader and take credit on the strength of such invoices. The case of the Revenue is that the traders and the manufacturers never existed but they issued Cenvatable invoices only on paper and had not supplied duty paid scrap at all and they could have supplied bazar scrap (post consumer scrap) against such invoices. 25. What is more interesting is that after investigating and concluding that the manufacturers and traders did not exist at all and cancelling their registration, the Show Cause Notice was issued not only to the three appellants herein but also to those very manufacturers and traders who were supposed to not exist at all and at the addresses where they were found to not exist as per the investigation proposing imp....
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....both existed and did not exist. Their existence was presumed when they were registered and their existence was denied when their registrations were cancelled. In the SCN and the impugned order, their existence was presumed when the SCN and the notices for personal hearing was sent but in the same SCN and the impugned order their existence is denied to deny the Cenvat credit to the assessee. 28. The case of the appellant is that it had placed orders on the registered traders, received the goods, accounted for them in its records and availed Cenvat credit on the invoices. Balancing the two sides, we find that the issue tilts in favour of the appellant. When the department registered the so called 'non-existent manufacturers/dealers' and it cancelled registrations much later, after this investigation, the irresistible conclusion is that the officers had either fraudulently issued the registrations or they issued registrations believing that the manufacturers/traders existed and only much later came to know that they did not exist at all. There is no evidence or allegation of fraud by the officers, hence, it is reasonable to presume that they believed that the manufacturers/traders ex....