TaxTMI 
TaxTMI 
2023 (12) TMI 434
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.... basis that the Appellant melts its inputs and produces SS Billets/Wires/rods/bars etc. and there is no proof that the Appellant uses SS Patta/Patti, SS Circle, SS Flat, SS Sheet (assuming it to be virgin material) whereas the claim of the Appellant all along before lower authority was that what they had received was off cuts pieces/defective/seconds/waste SS articles, and very much used by them in manufacturing process. The impugned order confirmed the demand on the basis that Cenvat Credit was availed without receipt of SS articles as such and also imposed personal penalty on the Managing Director Shri. Ashok Malhotra as well as on M/s. Jankilal & Nandlal Metal Pvt Ltd as also M/s. Keyur Impex, who were the registered dealers who had supplied the goods to the Appellant. In addition, penalties are imposed on M/s. Manohar Manak Alloys P. Ltd. as also other suppliers of SS Patta/Patti, SS Circle, SS Flat, SS sheet etc. as well. Personal penalties are also imposed on the various suppliers of SS articles to the Appellant, who had purportedly raised invoices to show supply being made to the Appellant Company. 1.1 A somewhat similar dispute is involved in the second lot of appeal Nos....
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....ements were obtained during the course of investigation however, since the revenue department tacitly denied cross-examination of witnesses, such statements loose the evidentiary value and cannot be used against the Appellants, as held in the following cases: • Synergy Steels Ltd. Vs CCEx, Always [2020 (372) ELT 129] • Andaman Timber Industries Vs. CCE, Kolkata, 2015(324) ELT 641(SC) • Gujarat Victory Forgings P. Ltd. 2019 (7) TMI 5 - CESTAT AHMEDABAD (Para 13) • Gobinda Das 2023 (7) Centax 201(Tri- Cal) • Motabhai Iron and Steel Industries 2015(316) ELT 374 (Guj.) • Jindal Drugs Pvt. Ltd 2016(340) ELT 67 (P & H) • Prakash Raghunath Autade 2022(380)ELT 264 (Bom) 2.3 It is his submission that the documentary evidences anyway supersede oral evidences. In the present case, there is ample evidence in form of receipt of goods and its usage in factory premises. The Appellant had always stated that the goods received were seconds/off cut pieces/defective material and never prime grade material anyway, whereas the revenue has assumed it to be so, suo motu, which cannot be the basis to allege non r....
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.... 2.8 That as held by the Tribunal in the case of Indian Polypipes and others versus Commissioner, Central Excise, Kolkata-1, 2003 (157) E.L.T. 652 (Tri. - Kolkata) and similar view was taken in the case of Rishi Polymach Pvt. Ltd. 2010 (261) E.L.T. 349 (Tri. - Bang.), to the effect that when there is no evidence that the inputs were either sold in the market as such or the assessee had purchased some other inputs which were allegedly used in the assessee's company, then only on assumption and conjectures, credit could not be denied. 2.10 In any case, the records or statement of the transporters could not be proof of any alleged contravention of law by the consignee or the consignor. Reference is made to the Tribunal decision in the case of Raj Petroleum Products Versus Commissioner of Central Excise, Mumbai-I 2005 (192) ELT 806 (Tri. - Mumbai). The transporters merely stated that they did not transport SS prime grade items, whereas the truck owners are not competent to understand the difference between second grade/off cuts/rejects of SS Patta/Patti etc. compared to prime grade goods anyway and nothing turns on their statements as such. Anyway, the drivers were the ones to h....
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....dences on record. 2.16 He made various submissions as regards the second lot of the appeals, in addition to the above submissions most of which are common, wherein it was contended that for the records, the one consignment of 10585 Kg found in the factory premises on date of visit, pertained to non-industrial scrap, and the confiscation proceedings in this regard proves that the Appellant had not even availed any Cenvat Credit in this regard, and hence, they were exonerated from the proceedings, vide OIO No.03/Jankilal/AC/D-III/Vad-I/17-18 dt.31.5.17 as well. The said consignment pertained to duty paid by the manufacturer one M/s. Apar, for which no credit stands availed since the goods were found to be domestic waste anyway, by the Appellant. In that sense of the matter, since it is proven that in case of receipt of non-industrial MS scrap, the Appellant does not avail any credit anyway, the present proceedings must be dropped/vacated in limine against them. 2.17 Be that as it may, the impugned order has generalized all the past procurements by assuming that since for one instance, the domestic scrap was received in factory of the Appellant (no credit availed by the Appellan....
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....estion, to any third party in cash as well. The factum of duty paid goods being cleared by manufacturers and receipt of proper invoice by the Appellant are not in dispute as well. Even the valuation of goods (industrial v/s. non-industrial scrap material) is not questioned, meaning thereby that the entire theory of goods being non-industrial grade whereas the Appellant requires only scrap material, is baseless. 2.24 The 9078 MT of MS scrap was procured by the dealers and as involved in the present case, if domestic scrap was procured locally to substitute this, not a single supplier for domestic scrap (which presumably was sent to the Appellant) is identified by revenue. Such huge quantity of MS scrap if was sold to other buyers by the Dealers, again it is not shown to whom it was sold as well. There is no proof of receipt or payment for domestic scrap by any person to any other person as well. 2.25 That even the yield obtained from scrap cannot be high from domestically sourced scrap, whereas the Appellant, for its own production purposes, would require heavy MS scrap, which is not possible from domestic scrap anyway. 2.26 Para 6.2, 6.5, 6.6, 6.7, 10.2 of the SCN clearly ....
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....ing goods and the demand was rightly confirmed by the lower authority. 6. We have carefully considered the submissions made by both the sides and perused the records. We find that in the present case, the issue to be addressed by us is whether the Appellant Company has in fact received duty paid MS and SS scrap material and correctly availed Cenvat Credit thereon or otherwise. 6.1 At the outset, it is seen that while the Appellant Company had specifically sought to cross-examine various witnesses, the lower authority has rejected such request and still relied upon the various statements recorded during the course of the investigation. While in light of the various decisions rightly relied upon by the Appellant to the effect that refusal to grant cross-examination renders the statements as inadmissible evidence, especially in light of the judgment by the jurisdictional High Court of Gujarat in the case of Motabhai Iron and Steel Industry (supra), we otherwise find that the documentary evidence otherwise available on record in fact would show that the invoices under which the SS scrap was supplied by the manufacturer / suppliers through the dealers to the Appellant, otherwise s....
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....t of the above, in the facts and circumstances of the present case, it must be held that the Appellant had in fact received SS waste and scrap supplied to them through dealers, on documents, which otherwise show that it was seconds/defective etc. and had correctly availed Cenvat Credit thereon, in absence of any cogent evidence regarding either diversion of such goods by suppliers or replacement thereof by the Appellant from any other local source. 6.5 Also, when it comes to the issue of availing Cenvat Credit on MS scrap, the allegation is that the domestic scrap was received by the Appellant Company on which no Central Excise duty would have been paid, whereas the credit was availed on basis of invoices raised by the dealers. There revenue department has doubted the factum of dealers themselves receiving duty paid MS scrap. 6.6 The stray instance where the domestic scrap of 10585 Kg was found in the premises of the Appellant, it is generalized in the present proceedings that the Appellant invariably receives only domestic (non-duty paid) MS scrap from the dealers. Demand of Cenvat Credit on almost 9000 MT of MS scrap is confirmed on this presumptive basis, assuming that on ....
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.... concurrent orders: 6.11 It was held in the case of Sri Rangathar Industries P. Ltd. 2018 (3) TMI 179 - CESTAT CHENNAI that: "7. The assessees have been at pains to contend that the raw material received by them was very much in the nature of scrap. Though it was mentioned as HR Coils, Sheets etc., in the Cenvat invoices, these are cuttings of HR Coils, Sheets etc., procured from the registered dealers. Such goods were loosely known as scrap in trade. The main allegation is that in the Cenvat invoices the description of goods (raw material) is HR Coils, HR Sheets, MS Rounds, MS Wire Coil etc., whereas in commercial invoices and other documents the goods (raw materials) are described differently as MS scrap. The department thus alleges that assessee has not received any goods in nature of HR coils, MS rounds, Sheets etc., and therefore has availed credit fraudulently. 8. Cenvat credit scheme allows to availcredit on invoices of duty paid on inputs/raw materials supplied by the manufacturers and registered dealers. Only first stage and second stage dealers are permitted to transfer the credit of duty involved in the inputs as the Cenvat credit Rules 2002/2004. In....
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....een retracted in cross examination, the department s reliance on those statements in support of their allegation will naturally get demolished. 9. Another contention of the appellant is that they received only goods of SS coils, sheets etc. which in commercial parlance is known as scrap which is the reason why in the commercial invoices description is given as scrap . However, as to supplier s invoices only cut to size HR Coils/SS sheets/ plates etc., as purchased from manufacturers like M/s. JSWSteel or Salem Steel Plant were mentioned. The dealers/suppliers prepared the Central Excise invoices on the basis of goods received by them from the said steel plant s. Appellant has consistently asserted that this is the precise reason of calling the goods as scrap and that the test reports have also indicated the same. We find merit in these contentions. Interestingly, the previous case booked against the appellants which resulted in the earlier CESTAT Order No.946-947/05 dt. 06.07.05,alleging that the dealers had purchased HR steel, coil sheets /plates etc. from various manufactures and supplying cuttings to SRIPL. While there was no dispute over this factum, the department in ....
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....connection with the regular availment of credit by SRIL." 11. We thus find that the main planks of the department s case against the assessee do not stand to scrutiny. There is also no other cogent or compelling evidence which can prop up department s allegation. Further, even the allegation made by the department that assessees have manufactured their final products by procuring locally manufactured scrap , is also not backed up by any corroborative evidence and can at best be termed as an assumption. If the department alleges that appellant has not received any goods as per the Cenvat invoices and has only received scrap which is locally procured then, the department has to establish from where and how appellants have procured such local scrap. There is no evidence of suppliers of local scrap, transporters, payment to such suppliers etc. The case of the department therefore does not sustain on merits. 12. We also find merit in the plea of limitation raised by the appellants. The SCN has been issued on 05.09.2007 against SRIPL Unit I (Impugned order for Appeal No.E/390/2009) for the period August 2002 to October 2006 invoking extended period under proviso to Sect....
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....hs gets extended to five years where such non-levy, short levy, etc., is by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules with intent to evade payment of duty......" 6. Now so far as fraud and collusion are concerned,? it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word wilful preceding the words mis-statement or suppression of facts which means with intent to evade duty. The next set of words contravention of any of the provisions of this Act or Rules are again qualified by the immediately following words with intent to evade payment of duty . It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be wilful. 14. In the impugned Order-in-Appeal No. 06/2010 to 10/2010-CE dt.29.01.2010 (Impugned order for Appeal No.E/219/2010, E/18....
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....ot be alleged that they had issued only the invoices. 5.4 As per para-2 of the SCN, officers attached to the Headquarters Preventive Unit, Coimbatore visited the appellant's manufacturing unit on 25.09.2008, based on the intelligence gathered, that appellants are availing irregular cenvat credit on the non-duty paid inputs received fraudulently in the guise of CR, HR, CR sheets, rejected CR etc. When the visit to the factory of the appellant was made with such specific intelligence, the minimal action that even a rookie officer would be expected to do is firstly to conduct a stock taking, at least of the raw material inputs lying in the factory and secondly, take samples of such types of inputs being used by the appellant. In fact, we are at a loss to understand how and why such basic protocols were given the go-by. Drawal of the samples of the inputs received by the appellants and their testing etc. may have revealed their actual nature and composition which would definitely have helped vindicate, or as the case may be, dispel the suspicion that was created as per the "intelligence". That was not done. 5.5 On the other hand, the investigative action appears to ha....
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.... Baskaran vide a letter dt. 16.03.2011 conveyed his disinclination to appear for a cross examination on the grounds that they had already filed their reply to the SCN and that they were also a co-noticee in the SCN. The reply alluded to by Shri Baskaran is the letter dt.16.08.2010, reference to which is found in para-13 of the OIO. In the said reply, the allegations made in the SCN have been denied and it has been contended that the depositions made were not corroborated with any tangible or material evidence; that they received payments from the appellant for the supplies and it could not be alleged that they had issued only their invoices. In the circumstances, we find that even the slender thread of "supporting evidence" namely the statement of Shri G. Baskaran, Proprietor of Amman Steels, also stands neutralized. This being so, any allegation based on that sole statement will surely lose their bite. 5.10 Further, in the cross examination held by the adjudicating authority on 22.03.2011, Shri N. Gopinath, Manager (Accounts) of the appellants from whom statement dt. 25.02.2009 had been recorded during investigation, clarified that the officers had noticed only commercial....
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....that allegations made out against the appellants have not been convincingly proved. This being so, the impugned order cannot sustain and will require to be set aside, which we hereby do. In consequence, the appeal is allowed with consequential benefits, if any, as per law." 6.13 In light of the above facts and circumstances, the revenue has not been able to substantiate its case, except raising allegations based on mere conjectures and surmises, that the Appellant had not received MS and SS scrap through the dealers. There is no other corroborative evidence to substantiate such serious charges and the demand on this count as such must be quashed and set aside. 7. Accordingly the impugned orders are set aside and all the appeals are allowed, with consequential relief, if any. (Pronounced in the open court on 08.12.2023) ============= Document 1 Ice Under 11 of the Contral Excise flutes, 2012 Removal of Excisable goods from a factory Name & Address of Factory (Seller): ABHINAY STEEL Plot No. 615, Phase-IV, G.I.D.C., Vatva, AHMEDABAD. GST VAT No. 24075701598 DL 06/03/07 CST TIN: CST VAT No. 24575701588 DR. 08/03/07 VAT TIN: Nam and Address o....