TaxTMI 
TaxTMI 
2024 (2) TMI 74
X X X X Extracts X X X X
X X X X Extracts X X X X
....dicated that since the duty paid raw-materials as shown in the duty paying documents were not physically received in their factory for being used by them in or in relation to manufacture of finished goods, the Cenvat credit in such cases was not admissible to them. Accordingly, the factory premises of the appellant was searched by the officers and statements of various persons were recorded. The investigations revealed that 10 imported consignments of Brass Scrap/Shredded Brass Scrap/ Re-melted copper Ingots and 2 consignments of copper ingots procured from the Unit of Jammu were not physically received in the factory premises of Appellant or in the premises of their job workers. Therefore, such consignments of Brass Scrap/ Shredded Brass Scrap/ Re-melted Copper Ingots/ Copper Ingots intended as an input for the manufacture of finished goods were never used in the manufacture of finished products. After the detail investigation a show cause notice dated 07-05-2009 was issued to Appellant for disallowance and recovery of Cenvat Credit along with interest and penalty and also imposition of penalty on Shri Rakesh Jain, Director of Appellant. In Adjudication, Learned Commissioner vide ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nly basis for making the allegation of divergence of inputs to Bhiwandi or Surat. Hence the statement of the transporter cannot be relied upon in the interest of the justice as the said statement has not been cross-examined. Further statement of the transporter is not corroborated with any other evidences thus demand cannot be confirmed on the basis of third party statements only. He placed reliance on the following decisions:- Motabhai Iron & Steel Industries Vs. CCE, Ahmedabad -II- 2014(302)ELT 69 (Tri. Ahm.) Commissioner Vs. Motabhai Iron & Steel Industries -2015(316)ELT 374 (Guj.) AVM Brothers & Others Vs. CCE. Bhopal - Final Order No. A/58354-58358/2017 dtd. 13.12.2017 2.3 He also argued that no investigation was made from the driver of the vehicles who transported the goods as statement of the driver of the transporter who had loaded the goods from the port and the actual place of delivery if any other then the factory premises of the appellant could have been determined. Thus inquiry made by the department is incomplete and the inputs has been genuinely received by the appellant in their factory premises. 2.4 As regarding the denial of Cenvat credit in respect of 2 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that Cenvat credit has been unjustifiably denied to them by the adjudicating authority merely on the basis of the statements of transporters and other persons whose cross-examination have not been allowed. No other evidence is available on record but the statements which too have not been allowed to be examined. 4.1 On perusal of letter dated 13.07.20211 of the Assistant Commissioner, Central Excise & Customs, Vapi, we find that the request for cross-examination of the persons whose statements have been relied upon has been turned down on the ground that in the facts and circumstances of the case there is no need to give an opportunity to cross-examine the persons and what have been stated by the transporters and panch witnesses are their voluntary statements which have never been retracted by them. In this regard, we find that the reasons assigned by the authorities below to reject cross-examination is clearly unsustainable in legal parlance for the obvious reason that no adverse inference can be drawn against assessee where statements are to be relied by the Revenue without ascertaining the veracity in the absence of cross-examination. Therefore the said statements cannot be re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll be pertinent at this stage to refer to Section 138 of the Evidence Act which provides : "138. Order of examinations. - Witnesses shall be first examined-in-chief then (if the adverse party so desires) cross-examined, then (if the party calling him so desires) re-examined. The examination and cross-examination must relate to relevant facts but the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief. Direction for re-examination. - The re-examination shall be directed to the explanation of matters referred to in cross-examination; and if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter." 9. It would, thus be seen that Section 138 (supra) envisages that a witness would first be examined-in-chief and then subjected to cross-examination and for seeking any clarification, the witness may be re-examined by prosecution. There is, in our opinion, no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross-examination, as a matter of fact, amounts to giving up of the witness by prosecution as it does not ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ice shall be allowed to take credit (hereinafter referred to as Cenvat credit) of the duties specified therein paid on any inputs or capital goods and received by the manufacturer for use in or in relation to the manufacture of final products. Rule 4 of the said Rule stipulates that Cenvat credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service. Rule 9 of Cenvat Credit Rules, 2004 deals with the documents and accounts on the basis of which the Cenvat credit can be taken. From the above provisions of law, it becomes evident that to avail Cenvat credit, the inputs should have suffered the stipulated duty by the producer/manufacturer of such goods and the goods should be received by the manufacturer availing credit in his factory and the inputs so received should be utilised in or in relation to the manufacture of final products. In the present matter the case of the department is that Appellant as availed the Cenvat credit without receipts of the goods mentioned in Bills of Entry and supplier invoices. We find that the conditions for allowing the Cenvat credit on the inputs u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f records of transporter and their statements not sustainable. We find that the basis for denial of such substantial amount of Cenvat credit on raw materials is totally unsustainable and beyond reason. Here, again it is not clear, if such quantities of raw materials were diverted without receipts of the factory and use of the same in manufacturing of finished goods, how then can there be production of given quantity of final product. Department in the present matter nowhere produced any corroborative evidences related to the diversion of imported raw materials and raw material supplied by the M/s. Bhagwati Metals Works, Kathua, Jammu. We also find that the Hon'ble Gujarat High Court dealing with the identical issue in the case of Motabhai Iron Steel Industries (supra) 2015 (316) E.L.T. 374 (Guj) agreed with the Tribunal despite the fact available in that case that as per RTO reports the vehicle were not capable of carrying the goods but on the basis of other facts, such as the goods were found duly recorded in the appellants factory and consumed in the production, the payment were made through banking channels, no evidence of non-supply of the goods by the consignor etc. considerin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he fact of non-transportation of the goods and the addresses of truck owners were found to be fake. Similarly, in the case of M/s. Malerkotla Steels & Alloys Pvt. Ltd. v. CCE, Ludhiana, 2008 (229) E.L.T. 607 (Tri.-Delhi), it was held that a manufacturer cannot be denied the credit on the ground that registered dealer had not received the inputs. 4.10 We also noticed that in the case of Motabhai Iron & Ispat Indus. v. Commissioner of Central Excise - 2014 (302) E.L.T. 69 (affirmed by Hon'ble Gujarat High court) where in respect of CENVAT Credit availed the Revenue had alleged that the invoices are bogus and there has been no actual delivery of goods. It has been held that credit cannot be disallowed on basis of statements not corroborated by other evidence or goods not received by the assessee. Invoices issued by registered dealer duly recorded in statutory record books and payment made through Banking channel and there is no evidence that the said amount was received back by the assessee and that records maintained were not correct. Further, form-40 (Sales Tax paid by supplier) was produced in support of contention that the goods were actually transported. In view of the fact that....