TaxTMI 
TaxTMI 
2024 (7) TMI 380
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....cers 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 Credit without actual receipt of inputs. The investigation ....
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....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 evidence on record that the appellants had received back the amounts on account of the fact....
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....ceived 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 Act, provides that for admission of any statement the examination in chief and thereafter, cross examina....
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....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 invoices with such a huge quantity i.e. 4980 MTsof inputs involved in the present case then how the appellant have arranged the goods in substitut....
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.... 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 investigation it appears that Cenvat Credit amounting to Rs. 3,40,80,748/- was wrongly availed and utilized by the respondent for the period April 2006 to March 2010. After co....
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....yani 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 who possess the RTO permit specifically meant for specific state, will not accept this fact that the truck has moved to another province. The said statement is not acceptable as no documentar....
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....hri 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 common office of the respondent and the records seized from transporters and held that these records are not authenticated and does not have any evidential value. The impugned order is not correct and legal. 3. Shri J.C. P....
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....nt 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 in cash by the respondent through angadias. 3.5 He argued that if as alleged, huge amount of cash had been received in the span of 17 days during the 10.03.2010 to 27.03.2010, such cash would have been found and seized during the search operations conducted on 30.03.2....
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....tement, 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 be denied on the basis thereof. 3.9 He further submits that in his statement dated 14.05.2010, Minaz AsgaraliNayani, Broker, has first confirmed that he arranged supply of Iron Scrap to the Respondent from Ship-Breakers, whose names he has given. He has later given contradictory version statin....
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....on 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 had used their vehicle in breach of the RTO permit for transport to Silvassa. In the circumstances no reliance can be placed on the statements of the vehicle owners. 3.16 He also submits that the order dtd. 28.03.2017 of the Commissioner dropping the demand is legal and proper and it is accordingly prayed that the department's appeal be dismissed. 4. He....
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....al 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 assessee. Department has not disputed the correctness of quantity manufactured by the respondent recorded in their daily stock account. 4.3 We find that the Ld. Commissioner has given weightage to all these deficiency in the investigation and held that there is no sufficient evidences to establish fraudulent availment of credit. We also noticed that in case of M/s. Lloyds Metal Engg. Co....
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....nces 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 respondent no cash was found by the department. Further we observed that such loose pieces of paper which does not contain authenticated information, cannot be made a basis for upholding the charge of wrong availment of Cenvat credit. The entries in the said loose sheet papers cannot be considered to be account books maintained in regular course of business. They cannot be constitute evidence, as there is no corroboration....
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....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 record based on which they state with certainty that they did not supply the goods to the respondent. The Tribunal in Utility Alloys v. CCE - 2005 (184) E.L.T. 80 (T) held that demand cannot be confirmed against the appellants based on statements of truck drivers without any corresponding log sheet or trip sheet to corroborate the statement. This judgment was affirmed by Kerala High Court at 2009 (236) E.L.T. A19 (Ker.). Further, the above findings fin....