TaxTMI 
TaxTMI 
2024 (7) TMI 380
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....nder the provisions of CCR, 2004. 1.1 Officers of DGCEI carried out investigation against some Ingots manufacturers M/s Vishal Engineering & M/s Jalaram IspatPvt Ltd, Vishal Casteels etc. firms of Daman wherein it was alleged that the MS Ingots manufacturers were purchasing CENVAT Invoices (without actual purchase) from ship breakers through brokers or directly and availing CENVAT credit. It was alleged that payments for these transactions were accounted through RTGS/Cheques which were returned back to the manufacturers after deducting certain amount of commission by Ship Breakers. It is also alleged that the manufacturers had purchased local scrap which was used for manufacture the M.S. Ingots from unregistered dealers and account for the inputs covered under the CENVAT invoices. Based on above the appellant was investigated and it was alleged that appellant followed above Modus Operandi from May 2007 to August/September 2008. It was noticed that there were two main issues- a) Receipt of unaccounted inputs without documents for compensating the inputs covered under CENVAT invoices purchased from ship breakers based in Alang and Sosiya. b) Availment of CENVAT C....
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....(324)E.L.T.641(S.C.) Impugned notice has relied upon certain letters purported to have been received from certain transport owners of the vehicles mentioned in the LRs /invoices of the appellant. The veracity of the fact whether author of the so-called letters were the actual owners or otherwise is not ascertainable. The investigation has not gone into the records of the appellant nor have they been able to establish a single case of the goods consigned to the appellant to have been received by a third party. The vehicle numbers mentioned in the invoice were not fictitious. Out of 366 consignments only 44 consignments were subjected to verification by way of recording statements of truck owners. Revenue has not brought any tangible evidence to discharge its burden of proof of clandestine removal of goods. 2.2 The Ship breaking scrap manufacturers have cleared M.S. scrap on appropriate payment of duty which has not been disputed by the department. Further, the Appellants have never stated that they had not received the inputs covered in the invoices. Appellants had made payments through cheques/RTGS which has been confirmed by the ship breaking scrap manufacturers. There is no....
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.... demand of Cenvat credit was confirmed on the ground that under modus operandi the appellant have received the duty paying invoices of ship breaking scrap. However, the goods were not received by appellant but the same were diverted to rerolling mills. In support of the allegation, the adjudicating authority has relied upon the statements of brokers, statements/ letters of the owners of transport vehicles, the statements of ship breakers etc. 4.1 As per the investigation, it reveals that the common investigation was carried out on the identical allegation against the many parties including the appellant and others such as Vishal Engineering, M/s Jalaram Isapt Pvt. Ltd Vishal casteels etc. of Daman were conducted and almost same evidenceswere relied upon. We find that except the statements of various persons, there is no direct documentary evidence available. As regard the statements, some of them were retracted andin some witnesses the adjudicating authority has not allowed the cross examination of the persons whose statements were relied upon. Thus, the adjudicating authority grossly violated the principles of Natural Justice. The provision of Section 9 (D) of Central Excise Ac....
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.... could not adduce any evidence to show that under the guise of inputs covered under the invoice the appellant have received some different material. In this regardnot a single evidence was provided that the appellant have received some other goods other than the goods on which Cenvat Credit has been taken. Similarly, the investigation could not bring any evidence on record that if the goods covered under the Cenvatable invoice not received in the factory of the appellant then where such goods were diverted. In this regard also no evidence was produced by the investigation. It is admitted position that appellant against the purchase of ship breaking scrap made the payment against such purchases through banking channel. Though, investigating agency presumes that against such payment the appellant have returned the money to ship breaking unit but to support this allegation, there is not a single evidence to show that the appellant has returned the money in cash to the supplier as this allegation is not substantiated by the investigation. 4.2 We surprise to note that if the allegation of Revenue is accepted that appellant have not received the inputs covered under the purchase invoi....
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....nvat Credit. 1.2. During the investigation, it appeared that most of the Ship Breaking units of Alang, Dist. Bhavnagar, were engaged in large scale evasion of Central Excise duty by way of clandestine removal of Plates and Scraps to the Rolling Mills and Traders around Bhavnagar and at the same time issued fake Cenvat invoices to Furnace Units without physical supply of corresponding goods to M.S. Ingot manufactures who were availing Cenvat credit merely on the strength of such invoices without actual receipt and consumption of the corresponding goods. Further it appeared that huge amount of money was received in cash by Ingot manufacturers from Ship Breakers through brokers. Further, investigation extended to the transporters and the brokers revealed that many of them were non-existent and bogus as they appeared to have not provided any vehicles and have not transported any consignment of waste & scrap from Bhavnagar/Alang to Daman. Investigation carried out at the end of broker viz. MinazAsgaraliNiyani revealed that he had supplied only the cenvatable invoices from Ship Breakers of Bhavnagar to all the Units manufacturing M.S. Ingot located in Daman. From the investigati....
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....ce. Therefore, it can be inferred that the deposition made by Shri MinazNiyani in his statements dtd. 14.05.2010 and 27.09.2010 was true and factual and the version made by Shri MinazNiyani in his retraction letter dtd. 17.05.2010 and the version in the cross examination made by Shri MinazNiyani is nothing but an after -thought. 2.3 He also submits that the deposition made by the vehicle owners and other transporter that they have never transported the waste & scrap of Iron & Steel from Ship Breakers of Alang/Sosiyo, Bhavnagar to manufacturers of MS Ingot located at Daman and Silvassa also give a circumstantial corroboration that the deposition made by Shri MinazNiyani in his statement dtd. 14.05.2010 and 27.09.2010 and other brokers were true and factual. Further, documents seized and produced by the transporters/ vehicle owner also suggest that the vehicle shown to have used for transportation of the impugned goods under the cenvatable invoices of ship breakers were infact used in the transportation of other goods to places other than Daman and Silvassa or within the Gujarat State. Shri MinazNiyani in his corss-examination dtd. 25.06.2014 has stated that the truck owners....
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....of the file marked A/1 were maintained which recovered from the common office premise of M/s Vishal. Further, the detail written in the said file are maintained in the regular course of business as elaborated by Shri Parvat Mallick and Shri Ankur S, Thakkar in their respective statements. The said private records marked as A/1 are irrefutable and not controvertible documentary evidences suggesting that payment shown to the ship breakers against input invoices were sham and the said amount were flowing back in cash through the broker. Thus it appears that Ship Breakers were issuing only the cenvatable invoices to fraudulently pass on Cenvat credit to MS Ingot manufactures on commission basis without the actual delivery of the goods specified in the said documents. 2.7 He also submits that the adjudicating authority vide said OIO instead on stressing upon the issue of non-receipt of the Cenvatable goods, had concentrated her discussion on other issue like investigation regarding the consumption of electricity, diversion of the goods from the ship breakers and Rule 9 of the Cenvat Credit Rules 2004. The Ld. Commissioner not thoroughly examined the records seized from the comm....
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..... CCE Vs. Garg Industries Pvt. Ltd. and ors -2023(3)TMI 637 CESTAT AHD Sainath Industries Vs. CCE- 2023 (9) TMI -1189-CESTAT-Ahmedabd 3.3 He also submits that there is no evidence in support of the assertion that payments made by the Respondent by Cheque/RTGS to the Ship Breaking Units for the purchase of Ship- Breaking Scarp were returned by the Ship-breaking units in cash through angadias. During the search of the respondent's premises there is no seizure of any cash. There is no statement of any angadia about payment being returned to the Respondent through such angadia. The show cause notice has been relied upon the loose papers contain hand-written figures which are said to be written by Mr. ParvatMallik, Accountant of M/s Vishal Engineering, who in his statement stated that the figures so written represent receipts and payment in cash during the period 10.03.2010 to 27.03.2010 . Based on such loose hand -written rough records pertaining to a period of 17 days the show cause notice has alleged that during the entire period from August 2007 to March 2010, the payment made by cheque/RTGS by the Respondent to the Ship-Breaking units were received back i....
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....uch some invoices. Such a statement that in some of central excise invoices, the scrap was not received is totally vague, lacking in particulars and unsupported by evidence. In absence of any identification by Mr. Parvat Mallik of such " some invoices" no reliance can be placed in such statement, much less can the entire credit be denied on the basis thereof. 3.8 He also submits that Mr. Ankur Thakur, has in his statement dtd. 03.04.2010, confirmed that the respondent was purchasing scrap from different traders of Ship breaking yard, Bhavnagar and that such scrap from Ship -breaking units is purchased through Brokers and he has further given the name of major Ship -breaking units who were supplying the scrap to the Respondent. He has then gone on to say that some of the invoices were received without the goods. He has however, not indicated which according to him, were such some invoices. Such a statement that in some of Central Excise Invoices, the scrap was not received is totally vague, lacking in particulars and unsupported by evidence. In absence of any identification of such " some invoices" no reliance can be placed on such statement, much less can the entire credit....
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.... Merely on the ground that the owners of the transport vehicles have denied the transportation to the Respondent's factory, it cannot be concluded that the scrap was not received in Respondent's factory and the Respondent cannot be denied the cenvat credit. He placed reliance on decision of the Hon'ble Gujarat High Court in the case of Commission Vs. Motabhai Iron and Steel Industries -2015(316)ELT 374 (Guj.). 3.14 He also submits that the said decision of the Hon'ble Gujarat High Court rendered in Tax appeal No. 824 of 2014 has been accepted by the department as para 27 of Part II of CBEC Circular No. 1063/2/2018-CX dtd. 16.02.2018, and as per the said circular, pending cases involving similar issue should be decided in the light of the said decision. 3.15 Without prejudice, he further submits that no statements of the drivers of the said vehicles have been recorded. Further the transportation was arranged by the Brokers and in their cross-examination the Brokers have stated that the reason why the owners of the vehicles denied the transportation to Respondent's factory at Silvassa was that their vehicles having transport permit from RTO only for Gujarat and they....
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....e evidence produced by the department in relation to use of alternate raw materials when the disputed goods are allegedly not received by the respondent , how they procured the alternate goods which have been used in the manufacture of dutiable goods cleared on payment of duty. 4.2 We also find that respondent have also entered the said inputs/ raw material in their Raw material records and have shown the consumption of the same for manufacture of the final product. The said records of the respondent does not stand rebutted by the revenue. If that be so, the allegation as regards diversion cannot be upheld. Once the assessee takes the cenvat credit on the inputs, he is under legal obligation to simultaneously enter the inputs in their stock record and to show the utilisation of the same in the manufacture of the final product. It is not the revenue case that credit was availed without entering the inputs in the records. If the inputs have also been entered and used in the final product, which was cleared, on payment of duty, the denial of credit on the ground of third party statements and documents/ records cannot be made the basis for arriving at a finding against the ass....
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.... circumstantial evidences. In the present case charge of non-receipt of goods was made against the respondent. The respondent claimed that they have received the goods covered under the disputed sale invoices , the entries of such receipts were made in the stock account i.e. Form IV register and also in the accounts, purchase ledger, the payments of the said purchases were made through cheques. These evidences could not be negated by the department. The charge of non-receipt of goods only on the statements is not sustainable. The said statements can only be relied upon if the same is corroborated by independent and cogent evidence, which department failed to adduce. 4.6 We also find that revenue has relied upon the loose papers containing hand written figures which are said to be written by Shri Mallik, who in his statement has stated that the figures so written represent receipts and payment in cash. However, we find that the statement of Shri Mallik, accountant is not corroborated by cogent evidence to establish the allegation against respondent. The payments were made by respondent through cheque/ RTGS to suppliers. During the search of factory premises of the responden....
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.... of the fact that no investigation was conducted at consignor's place, statement of transporter was held not reliable and accordingly, the proposal of disallowance of CENVAT Credit was quashed. 4.9 We also find that the case laws relied upon by the Ld. AR did not find to be relevant as the fact of this case is different from the facts of those relied upon judgments. 4.10 We further find that in the disputed matter transportation of the goods was arranged by the Brokers through whom the scrap was purchased by the Respondent. Merely on the ground that the owners of the transport vehicle have denied the transportation to Respondents factory it cannot be concluded that the scrap was not received in the respondent's factory. We find that the trucks are generally managed by agents and these agents pay fixed amount to the owners. In such cases, the truck owners would not be in position to state whether that particular truck did or did not carry scrap to the respondent. Drivers of all the 994 trips of the vehicles have not been questioned, no statement of driver was recorded by the department. We also noticed that the truck owners did not produce any log book or any recor....