TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 609
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.... the period from June, 2011 to August, 2014 and imposed a penalty of Rs.3,44,11,544/- under Rule 15(2) ibid., besides imposing a penalty of Rs.1,00,00,000/- on Shri Sunil Bansal under Rule 26 of the Central Excise Act, 1944 read with Rule 15(2) of the said rules. 1.1. Excise Appeal No. 75493 of 2019 has been filed by M/s. Globe Steel & Alloys Private Limited against the Order-in-Appeal No. 490/RAN/2018 dated 14.11.2018 wherein the Ld. Commissioner (Appeals) has upheld the disallowance of CENVAT Credit amounting to Rs.18,29,488/- for the period from April, 2014 to March, 2015 as well as the imposition of penalty of Rs.18,29,488/- under Rule 15(2) / 15(3) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. 2. As the issue involved is common in all these appeals, they are taken up together for disposal by way of a common order. 3. The facts of the case are that M/s. Globe Steel & Alloys Private Limited (hereinafter referred to as the appellant/company)is is engaged in the manufacture of M.S. Ingots (Chapter 72), for which raw materials such as Sponge Iron, Pig Iron, C.I. Scrap, M.S. Scrap, Iron and Steel Scrap (like Pooled Iron), etc., are used ....
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....d No.2, 1B, Gopal Marg, Shastrinagar, Kadma, Jamshedpur (CIBPS1382JED002), on 04.07.2014; (iii) M/s.Chakradhari Metal Co., Ward No.7, Khata No. 34, Plot No. 554, Marawaripara Road, Jugsalai, Jamshedpur (AAGFC9964KED001); (iv) M/s. Bajrang Steel Coal & Coke Traders, Plot No. 1183,NH-33 Dimna Road near DVC Power House Mango, Jamshedpur (AQWPP1814FXD001); (v) M/s. Hari Om Steel, H. No.9. Road No.11. Daiguttu, Mango, Jamshedpur (CIBPS1382JED001), on 08-07-2014; (vi) M/s. Shiv Metalicks, a proprietorship firm, Bajpayee Complex, Jugsalai, Jamshedpur (ABOPN9626LED001) which was earlier registered as Partnership Firm (ABOFS5031NXD001), on dated 15-07-2014 7. In the course of investigation, statements of the following persons were recorded under Section 14 of the Act: - (a) Mr. Nitesh Pandey, Proprietor of M/s Bajrang Steel Coal & Coke Traders and Partner of M/s Chakradhari Metal Company, (b) Mr. Ajay Kumar Sharma, Proprietor of M/s Jai Mata Di Enterprises and M/s Hari Om Steel, (c) Mr. Satish Pandey, Proprietor of M/s Bajrang Steel Traders, (d) Mr. Amit Agarwal, Proprietor of M/s Shree Balaji Enterprises, (e) Mr. Manish Kumar Naredi, Proprietor of M/s Shiv Metalliks, (f) M....
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....016, thereby disputing and denying the allegations levelled 10.2. On adjudication, the Ld. Principal Commissioner, C.G.S.T., Central Excise and Service Tax, Ranchi vide the Order-in-Original dated 28.09.2018 has confirmed the disallowance of CENVAT Credit amounting to Rs.3,44,11,544/- (Rupees Three Crore Forty Four Lakh Eleven Thousand Five Hundred and Forty Four only) under Rule 15(2) of the CENVAT Credit Rules, 2004 availed by the appellant-company during the period from June, 2011 to August, 2014, along with interest, and imposed a penalty equivalent to the amount of CENVAT Credit disallowed, under Rule 15(2) ibid. A personal penalty of Rs.1,00,00,000/- was also imposed on Shri Sunil Bansal, amongst others, under Rule 26 of the Central Excise Act, 1944 read with Rule 15(2) of the said rules. 10.3. Aggrieved by the above disallowance of credit, along with interest and penalties thereon, Excise Appeal Nos. 75485 and 75486 of 2019 have been filed by M/s. Globe Steel & Alloys Pvt. Ltd. and Shri Sunil Bansal respectively. Excise Appeal No. 75493 of 2019 11. Subsequently, another Show Cause Notice dated 09.10.2015 was issued alleging wrong availment of CENVAT Credit amounting to R....
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....llant; no investigation was also made with the weighbridge operator of the appellant's factory. 12.3. Furthermore, the appellant has submitted in this regard that the investigation was selectively conducted at the transporter's end. On a test check basis, 21 invoices involving CENVAT Credit of Rs.15,99,466.13 (out of the total disputed credit of Rs.3,44,11,544/-) i.e., 4.6%, were randomly picked up and the vehicle registration numbers appearing on those invoices were verified from online portal; it purportedly emerged that all these 21 vehicle numbers pertain to L.M.V. which could not be used to transport the impugned goods. In respect of rest of the invoices involving CENVAT Credit of Rs.3,28,12,077.87, it is stated that there is no allegation that those were pertaining to cases of L.M.V; resultantly, it has been alleged that the appellant has taken CENVAT Credit on the basis of fake invoices without actual receipt of goods. Thus, the appellant submits that the denial of CENVAT Credit merely on the basis of the findings that some of the vehicles said to have been used for transportation were found to be L.M.V. and could not have been used to transport the impugned goods, ....
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....nce to prove non-receipt of goods by the Appellant. (vi) In the instant case, it is undisputed that- * All "Central Excise dealers" are registered under Central Excise Rules, 2002 and their registration were valid and active during the material period * Purchase are covered under Excise Invoices evidencing supply of impugned goods to the appellant; * Quantity of impugned goods received are recorded in RG-23A-Part-I; * Entry Book of Duty Credit (RG-23A-Part-II) along with ER-1 returns; * Payment made to Suppliers through proper banking channel; * The consumption of the impugned goods in the manufacture of final product (MS Ingot) is not disputed and payment duty on clearance of such final product is accepted by the Department without any demur; * There is no evidence of refund of any cash to the appellants by the dealers. * Statement of Shri Sunil Bansal, Director were recorded on dated 27-07-2015, 10-08-2015 and 13-08-2015. He categorically stated to have purchased these goods from registered dealer and that the goods were received in their factory. * No investigation at the factory of the appellant-company was undertaken. No stock of raw materials or finished g....
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....so been alleged therein against the supplying dealer. (xiv) In the case of Hindustan Engineering & Industries Ltd. Vs. CCE reported in 2025-VIL-702-CESTAT-CE, it has been held by this Tribunal that the registration have been issued by the department at the given address, and the traders/manufacturers did not exist, only fake invoices have been issued. Under the circumstances, the assessee has correctly availed credit on the strength of invoices and denial of CENVAT Credit is not sustainable. (xv) The simple letters by the seven manufacturers stating that they have not sold goods, the Central Excise dealers have been accepted as true and conclusive, while the appellant's detailed books of accounts and statutory records (RG-23A Part-I & II) is treated as untrue, which is contrary to the principles of preponderance of probabilities, particularly, when the Department does not dispute that the impugned goods were used by the Appellant in manufacturing finished goods. It is also not the case of the Department that such finished goods could have been manufactured without the corresponding quantity of the impugned raw materials, nor there is any allegation or evidence of alternative so....
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....(xxii) It is fairly well settled that suspicion however great cannot replace legal proof and tax can be demanded on suspicion or doubt. (xxiii) In the instant case, the burden of proof of non-receipt of the impugned goods by the Appellant is on the department which the department has failed to discharge. It is submitted that RG-23A Part-I & RG-23A Part-II are substantive piece of evidence which must be disproved by sufficient corroborative evidence. (xxiv) It is further submitted that no CENVAT can be disallowed on sample basis without testing the merit of each transactions on its own right. (xxv) In the case of Indian Gum Industries Ltd Vs. Asst. Commissioner reported in [2014] 70 VST 108(Raj), the Hon'ble Rajasthan High Court under Paragraph 18 records that: "On examination .....The methodology, which is pressed into service by the assessing authority for drawing this sort of conclusions solely on the basis of sample transactions and statement of truck owners and drivers, prima facie, fall short of the requisite enquiry for unearthing the truth. This court is quite conscious about the fact that evasion of tax is a menace to the society and the Revenue Authorities acting a....
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.... by the appellant-company on the basis of invoices issued by non-existent dealers. Thus, all the goods said to have been supplied by the said dealers were only paper transactions in the name of those non-existent central excise dealers; statements recorded from 21 transporters categorically revealed that no such transportation of inputs to the factory of the appellant company took place. Accordingly, the Ld. Authorized Representative of the Revenue contends that the CENVAT Credit availed by the appellant-company fraudulently and irregularly, has been rightly disallowed in the impugned orders. Also, it is his submission that penalty has been rightly imposed on the persons for their act of omission and commission in the matter. Accordingly, he prayed for rejection of the instant appeals filed by the appellants. 16. Heard both sides and perused the records of the case. 17. We find that CENVAT Credit amounting to Rs.3,44,11,544/-availed by the appellant has been disallowed on the allegation that the said credit has been availed by the appellant-company on the basis of invoices issued by non-existent dealers. Thus, it has been alleged in the impugned order that all the goods said to h....
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....recorded from 15 persons, without there being any corroborative evidence. Since these oral statements have not been tested in terms of Section 9D of the Central Excise Act, we are of the opinion that these statements cannot be treated as admissible evidence and are, therefore, irrelevant. We also note that the appellants vide their letters dated 01-08-2016 and 31-12-2016 had demanded cross examination of all the witnesses whose statements are relied upon in support of the charge, which was denied by Ld. Principal Commissioner. The statements recorded from different witnesses are thus irrelevant pieces of materials due to non-compliance of Section 9D of the Central Excise Act, 1944 and hence, have to be eschewed from evidence. Thus, we are of the considered view that denial of cross examination vitiates the entire proceedings, which have been built on the basis of such untested statements. 17.5. A similar issue has been examined by the Tribunal, Chennai in the decision rendered in the case of M/s. Geetham Steels Pvt Ltd Vs. Commissioner of GST & Central Excise Salem [2025 (3) TMI 1098 - CESTAT Chennai], wherein it has been observed as follows: - "57. If we notice the provisions o....
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....n the interests of justice, the adjudicating authority can do so as per this Section 9D(1)(b). 59. However, implicit in this procedure stipulated in 9D(1)(b) is the necessary requirement for the adjudicating authority to depose all the deponents who have given statement under Section 14, save as those that are unavailable in the scenarios given in 9D(1)(a), for the purposes of evaluating whether the statements are voluntary, to attest that he had deposed the contents of the statement and then take a considered decision whether the truth of the facts contained in the statement stand proved or disproved in the facts and circumstances of the case. In other words, it is only after such examination in chief, that the adjudicating authority can arrive at a considered decision, whether to declare the witness appearing before it as a hostile witness and then to decide in the facts and circumstances whether to rely on the earlier statement; or if upon finding major inconsistencies between his earlier deposition and in the contradictions brought about in cross-examination, to not rely on the earlier statement; or if it is only minor discrepancies as that which does not majorly disturb the ....
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....D of the Central Excise Act. The show cause notices that had been issued primarily relied upon statements made under section 14 of the Central Excise Act. It was sought to be contended by the Writ Petitioners that the demand had been confirmed in flagrant violation of the mandatory provisions of section 9D of the Central Excise Act. The High Court held that ifnone of the circumstances contemplated by clause (a) of section 9D(1) exist, then clause (b) of section 9D(1) comes into operation and this provides for two steps to be followed. The first is that the person who made the statement has to be examined as a witness before the adjudicating authority. In the second stage, the adjudicating authority has to form an opinion, having regard to the circumstances of the case, whether the statement should be admitted in evidence in the interests of justice. The judgment further holds that in adjudication proceedings, the stage of relevance of a statement recorded before Officers would arise only after the statement is admitted in evidence by the adjudicating authority in accordance with the procedure contemplated in section 9D(1)(b) of the Central Excise Act. The judgment also highlights t....
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....ertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory. 24. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, 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 adjudication authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 25. 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 ....
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....ing a statement recorded under section 108 of the Customs Act as relevant. 25 In Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur [2018 (362) E.LT. 961 (Chhattisgarh)] decided on 04.07.2018, the Chhattisgarh High Court also examined the provisions of section 9D of the Central Excise Act. The allegation against the appellant was regarding clandestine removal of goods without payment of duty and for this purpose reliance was placed on the statement of the Director of the Company who is said to have admitted clandestine removal of goods. The contention of the appellant before the High Court was that the statement of the Director could be admitted in evidence only in accordance with the provisions of section 9D of the Central Excise Act. After examining the provisions of sub-sections (1) and (2) of section 9D of the Central Excise Act, and after placing reliance on the judgment of the Punjab and Haryana High Court in Ambika International, the Chhattisgarh High Court held: 9.3 A conjoint reading of the provisions therefore reveals that statement made and signed by a person before the Investigation Officer during the course of any inquiry or proceedings under the Act ....
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....onsideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Ambica International v. UOI rendered by the High Court of Punjab and Haryana." (emphasis supplied) 26. In Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd. [2021 (375) E.L.T. 545 (Del.)] decided on 01.06.2020, the Delhi High Court examined the provisions of sections 108 and ....
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.... reliance upon the decision of the Punjab and Haryana High Court in Jindal Drugs, observed that if the mandatory provisions of section 9D(1)(b) of the Central Excise Act are not followed, the statements cannot be used as evidence in proceedings under Central Excise Act. The relevant portions of the decision of the Tribunal are reproduced below: 14. Evidently, the statements will be relevant under certain circumstances and these are given in clauses (a) and (b) of subsection (1). There is no assertion by either side that the circumstances indicated, in (a) existed in the case. It leaves us with (b) which requires the court or the adjudicating authority to first examine the person who made the statement and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence. Of course, the party adversely affected by the statement will have to be given an opportunity to cross examine the person who made the statement but that comes only after the statement is, in the first place, after examination by the adjudicating authority, admitted in evidence. This has not been done in respect of any of the 35 statements. Therefore, all the statem....
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.... authority in the impugned order is the statements of the transporters. In this regard, we find that the investigation has selectively taken 21 invoices involving CENVAT Credit of Rs.15,99,466.13 (out of the total disputed credit of Rs.3,44,11,544/-) i.e., 4.6%. We have also taken note of the submission of the appellant that these invoices were randomly picked up and the vehicle registration numbers appearing on those invoices were verified from online portal and that it purportedly emerged that all these 21 vehicle numbers pertain to L.M.V. which could not be used to transport the impugned goods. In respect of rest of the invoices involving CENVAT Credit of Rs.3,28,12,077.87, we observe that there is no allegation that those were pertaining to cases of L.M.V. Resultantly, the allegation has been fastened on the appellant that they have taken CENVAT Credit on the basis of fake invoices without actual receipt of goods. We are of the view that the denial of CENVAT Credit merely on the basis of the findings that some of the vehicles said to have been used for transportation were found to be L.M.V. and could not have been used to transport the impugned goods cannot sustain. In this reg....
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....documents was not in respect of goods transport vehicles. The appellant-company had explained that the goods were duly received in its factory and such receipt cannot be questioned merely because in a few cases the motor vehicle registration number may have been wrongly mentioned in the invoice. Such explanation was ignored by the Ld. Commissioner. Then again, out of more than 1600 consignments, there were 9 cases where the quantity of goods supplied exceeded the official load capacity of the goods transport vehicle used. The appellants had explained that it was the regular practice of transporters to overload their vehicles and that the receipt of goods in the appellant's factory cannot be questioned merely because the vehicle came overloaded. Again, the Ld. Commissioner chose to pay no heed to the said explanation and he ought not to have done so. 22. We find that this Tribunal and various High Courts have had the occasion to deal with similar situations as have emerged in the instant case. 22.1. In the case of Commissioner of Central Excise, East Singhbhum v. Tata Motors Limited [2013 (294) E.L.T. 394 (Jhar.)], the Hon'ble High Court has observed as under: - "7. This argum....
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.... the particulars as mentioned in the invoices issued by the first stage dealer. During the course of the hearing before the Commissioner (Appeals), the assessee submitted, inter alia, Form 31 issued by the Uttar Pradesh Trade Tax Department, the ledger account evidencing payments by cheques made to M/s. MK Steels (P) Ltd., and Form RG 23-A, Part-II. It was held that the assessee has received goods against the invoices of M/s. MK Steels (P) Ltd. for which payment was made by cheque and that the manufactured goods were cleared against the payment of central excise duty. The Commissioner (Appeals) also held that the transaction on the part of the assessee was bona fide and a buyer can take only those steps which are within his control and would not be expected to verify the records of the supplier to check whether in fact he had paid duty on the goods supplied by him. The only reasonable steps which he can take is to ensure that the supplier is trustworthy, the inputs are in fact received and that the documents, prima facie, appear to be genuine. The fact that the assessee made payment by cheque was held to be a proof of his bona fides. The Commissioner (Appeals) also relied on a circ....
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....pect the buyer of such inputs to go and verify the accounts of the supplier or to find out from the department of Central Excise whether actually duty has been paid on the inputs by the supplier. No business can be carried out like this, and the law does not expect the impossible." 8. The judgment of the Division Bench of the Himachal Pradesh High Court in A.B. Tools Limited v. Commissioner of Central Excise - 2010 (256) E.L.T. 382 (H.P.), on which reliance has been placed by the revenue, does not indicate that any contrary view of the law has been taken. 9. Ultimately, the issue in each case is whether, within the meaning of Rule 9(3) of the Rules of 2004, the assessee has taken reasonable steps to ensure that the inputs in respect of which he has taken Cenvat credit were goods on which appropriate duty of excise was paid. Once it is demonstrated that reasonable steps had been taken, which is a question of fact in each case, it would be contrary to the Rules to cast an impossible or impractical burden on the assessee." 22.3. This Tribunal, in the case of Surinder Steel Rolling Mills v. Commissioner of Central Excise, Chandigarh [2016 (343) E.L.T. 935 (Tri. - Chandigarh)], wh....
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....noj Kumar Agarwal, Proprietor of M/s. GRE. In spite of so many persons mentioning Mahendra Kumar Gourisaria and the Department itself regarding him as one of main kingpins and beneficiaries (ref. Q. 14 put to Debesh Ranjan Ghosal on January 13, 2012), the said Mahendra Kumar Gourisaria and his proprietary concern, M/s. Ganga Sales Corporation were not made parties to the proceedings and the Show Cause Notice was not issued to them. This is a major flaw vitiating the entire proceedings. On the other hand, a letter dated September 6, 2011 signed by Mahendra Kumar Gourisaria on the letterhead of M/s. Ganga Sales Corporation to the effect that they had done no business for the last five years and that they had surrendered the Central Excise registration in 2005 was accepted by the Revenue. It is pertinent to mention that the Ld. Commissioner himself in paragraph 4.39 (Page 264 of the impugned order) observed that M/s. Ganga Sales Corporation had surrendered Central Excise registration in 2007 (and not in 2005 as mentioned in the letter dated September 6, 2011). But then a perusal of the alert circular dated July 2, 2009 (of which the appellant came to know only in August, 2011), would ....
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.... dealers" are registered under Central Excise Rules, 2002 and their registration were valid and active during the material period. All purchases are covered under Excise Invoices evidencing supply of impugned goods to the appellant; Quantity of impugned goods received were recorded in RG-23A-Part-I; Entry Book of Duty Credit (RG-23A-Part-II) along with ER-1 returns; payments were made to Suppliers through proper banking channel; the consumption of the impugned goods in the manufacture of final product (MS Ingot) is not disputed and payment duty on clearance of such final product is accepted by the Department without any demur; there is no evidence of refund of any cash to the appellants by the dealers; Statements of Shri Sunil Bansal, Director were recorded on dated 27-07-2015, 10-08-2015 and 13-08-2015, wherein he has categorically stated to have purchased these goods from registered dealer and that the goods were received in their factory. 19.2. It is thus observed that the investigation has obtained simple letters from seven manufacturers stating that they have not sold goods. On the basis of these letters, the investigation has assumed that the Central Excise dealers have not ....
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....as been held as under: - "5.9 The next Issue for consideration is regarding the Cenvat Credit demand of Rs. 4,57,79,503 in respect of Invoices Issued by Supplier M/s Metec Asia Pvt. Ltd., Silvassa. The case of the Revenue is that the Appellant has avalled the Cenvat Credit on Inputs mainly copper/Nickle, supplied by M/s Metec Asla Pvt. Ltd. without actual receipts of the said goods in their factory and without using the sald goods in manufacture of their finished goods. The revenue in support of their allegations rely on the statement of transporters and RTO reports. However, we find that the Revenue falled to establish beyond doubt that the goods received were only on paper and physically there was no receipt of goods by the appellant. The Revenue has not shown anything on record to establish that the goods were not physically received as well as completely ignored the documents and exculpatory statements of the supplier showing that the goods were actually transported. We also find that The Hon'ble Gujarat High Court dealing with the issue in the case of Motabhai Iron Steel Industries (supra) 2015 (316) E.L.T. 374 (Guj)-2014-VIL-314-GUJ-CE agreed with the Tribunal despite t....
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.... We find that Ld. Commissioner while confirming the demand in this matter relied on the statements of transporter and He did not consider the statements of suppliers that they had stated and admitted the supply of goods to the Appellant and receipts of payment of goods through banking channel. Moreover it is on records that in the present case all the transporters had been arranged by the suppliers and therefore in our view when the suppliers had admitted the supply of goods, the denial of cenvat credit on the basis of transporters statements not sustainable. The contention of the Ld. Commissioner Is that Investigation shown that the supplier of the material has not actually supplied the material as the transporter denied the transportation of the material not sustainable in the absence of any corroborative evidences. In this case the appellant's submission is that they had received the material in question from the suppliers, the suppliers in his statement admitted that supply of the material and payments made through banking channel the material was duly entered in the statutory records and Issued for manufacture of finished goods. The payments were made through banking chann....
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....cumentary evidence on record produced by the Appellant. Therefore, the contention of the Adjudicating authority on this Issue cannot be accepted. 5.13 We also noticed that in the present case the reliance of third party i.e transporters documents /statements was placed while confirming demand against present appellant Is also observed to be unjustified and unreasonable. It Is necessary to check the evidentiary value of the third party evidence. The relevant case law In the case of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal v. CCE, Raipur in Appeal Nos. E/52062 & 52066/2018-2018-VIL-1380-CESTAT-DEL-CE supports the appellant, which held as follows. 9. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Reference can be made to Hon'ble Allahabad High Court decision In the cases of Continental Cement Company v. Union of India 2014 (309) E.L.T. 411 (All.)-2014-VIL-431-ALH-CE as also Tribunal's decision in the case of Raipur Forging Pvt. Ltd. v. CCE, Raipur-I-2016 (335) E.L.T. 297 (Tri. Del.) - 2016-VIL-1185-CESTAT-DEL....