TaxTMI 
TaxTMI 
2026 (9) TMI 1914
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....11 to August, 2014. The Ld. Principal Commissioner further imposed penalty of Rs.2,11,50,354/- under Rule 15(2) of the CCR read with Section 11AC of the Central Excise Act, 1944. Shri. Sunil Bansal, Director of M/s Vaishnavi Ferro Tech Pvt. Ltd. has also been imposed a penalty of Rs. One Crore under Rule 26 read with Rule 15(2) of the said Act. 2. The facts of the case are that appellant M/s. Vaishnavi Ferro Tech Private Limited are engaged in the manufacture of M.S. Ingots (falling under CETSH 72061090) for which major Raw Materials required are Sponge Iron and Steel Scrap like Pooled iron, Pig Iron, C.I. Scrap, M.S. Scrap etc. During the period under dispute, the Appellant purchased Raw Materials from following Central Excise Registered Dealers viz.- (i) M/s Bajrang Steel Coal & Coke Traders (ii) M/s Chakradhari Metal Company (iii) M/s Hari Om Steel (iv) M/s Jai Mata Di Enterprises (v) M/s Bajrang Steel Traders (vi) M/s Shree Balajee Enterprises (vii) M/s Shiv Metalicks (viii) M/s L.S. Construction (ix) M/s Vishwas Metalicks (x) M/s Balaji Enterprises (xi) M/s Sidhi inayak Metals....
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.... The allegations have been made in the impugned order only on the basis of assumptions and presumptions which is legally not sustainable. The Appellant submits that the Show Cause Notice was solely based on the statements recorded from the following persons: (i) Mr. Manish Kumar Naredi, Proprietor of M/s Shiv Metalliks [NOT CONFESSED PAGE 82 OF O-I-O] (ii) Mr. Manoj Kumar Pareek, Partner of M/s Vishwas Metalliks. [NOT CONFESSED PAGE 78/79 OF O-I-O] (iii) Mr. Manoj Kumar Agarwal, Director of M/s Siddhi Vinayak Metal & Salt Co. Pvt. Ltd. [NOT CONFESSED PAGE 81 OF O-I-O] (iv) Mr. Sunil Kumar Agarwal, Proprietor of M/s Vinayak Metal & Chemicals [NOT CONFESSED PAGE 81 OF O-IO] (v) Mr. Ajay Jain, Director of M/s Shri Ram Power & Steel Pvt. Ltd. [NOT CONFESSED PAGE 82 OF O-I-O] (vi) Mr. Nitesh Pandey, Proprietor of Bajrang Steel Coal & Coke Traders and Partner of M/s Chakradhari Metal Company. (vii) Mr. Ajay Kumar Sharma, Proprietor of M/s Jai Mata Di Enterprises and M/s Hari Om Steel. (viii) Mr. Satish Pandey, Proprietor of M/s Bajrang Steel Traders. (ix) Mr. Amit Agarwal, Proprietor of M/s Shree Balajee Ent....
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....case of excess/shortage of raw materials/finished goods is made out; The receipt of impugned goods are duly recorded in Gate Register, and Goods Receipt Note, etc. maintained at the factory; Payment have been made to Suppliers through proper banking channel; There is no evidence of refund of any cash to the Appellant by the dealers; The consumption of the impugned goods in the manufacture of final product (MS Ingot) is not disputed and payment of duty on clearance of such final product is accepted by the department without any demur; There is no evidence of any alternative sourcing of raw material by the Appellant; The vehicles which transported the impugned goods are all Heavy Motor Vehicles; There is no confession of guilt by any of the persons whose statements were relied upon in this case. 3.4. The Appellant submits that they have purchased the impugned goods from the Dealers who are registered with the department. The Purchases were covered under valid Excise Invoices evidencing supply of impugned goods. If some of the Dealers were not found in the addresses mentioned in the Registration, it is the duty of the duty of the department to ascertain the whereabouts of such Deal....
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.... avail the Cenvat credit only on the basis of invoices received by them from the dealers. Accordingly, he supported the demands confirmed in the impugned order. 5. Heard both sides and perused the appeal documents. 6. We find that the Appellant have availed the Cenvat credit on the basis of 230 invoices received from various Dealers. The CENVAT Credit amounting to Rs.2,11,50,354/- availed by the Appellant on Inputs purchased from the Dealers during the period May, 2011 to August, 2014 has been disallowed in the impugned order on the allegation that the Appellant has availed the credit on the basis of Invoices, without receiving those goods in their factory. We find that the Notice was issued mainly on the basis of the following evidences relied upon by the Ld. Adjudicating authority: (i) 15 Statements of 13 suppliers out of which 5 suppliers have denied the charges; (ii) Statements of 2 transporters namely Sri Arvind Dubey and Sri Kamlesh Dubey, (iii) Owner of 4 vehicles, who have transported goods under the cover of 6 invoices (out of 230 invoices) involving CENVAT Credit of Rs.5,81,013.94, out of the total disputed CENVAT Credit of Rs.2,11,50,354/....
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....ity, under clause (b) of Section 9D(1), viz. (i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and (ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. 23. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 9D(1), makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain 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 havin....
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.... that the question of offering the witness to the assessee, for cross-examination, can arise. 28. Clearly, if this procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof. 29. Reliance may also usefully be placed on para 16 of the judgment of the Allahabad High Court in C.C.E. v. Parmarth Iron Pvt. Ltd., 2010 (260) E.L.T. 514 (All.), which, too, unequivocally expound the law thus : "If the Revenue choose (sic chose?) not to examine any witnesses in adjudication, their statements cannot be considered as evidence." 30. That adjudicating authorities are bound by the general principles of evidence, stands affirmed in the judgment of the Supreme Court in C.C. v. Bussa Overseas Properties Ltd., 2007 (216) E.L.T. 659 (S.C.), which upheld the decision of the Tribunal in Bussa Overseas Properties Ltd. v. C.C., 200....
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....finished goods has been made out. The receipt of impugned goods are duly recorded in Gate Register, and Goods Receipt Note, etc. maintained at the factory. Further, payments to Suppliers have been made through proper banking channel. There is no evidence of refund of any cash to the Appellant by the dealers. However, we find that no investigation has been carried out at the factory of the Appellant to ascertain the above said facts. We find that the consumption of the impugned goods in the manufacture of final product (MS Ingot) is not disputed and payment of duty on clearance of such final product has also been accepted by the department. There is no evidence of any alternative sourcing of raw material by the Appellant. Thus, we observe that there is no tangible, cogent, corroborative evidence to prove non-receipt of goods by the Appellant. 6.5. We find that the appellant has produced copies of all invoices received from the Dealers, copies of road permit, vouchers for freight in respect of said consignments and copies of RG 23A Pt-1 and PT-II showing receipt of the impugned goods, before the lower authorities. In our view, these documents are enough to prove that the impugned ....
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....oods were duly received by the Appellant and such receipt is duly recorded in their statutory records RG-23A-Part-I / RG-23A-Part-II, disclosed in ER-1 return and accounted for in their books of accounts. The impugned raw materials were received in their factory and consumed in the manufacture of MS Ingots. Such MS Ingots were cleared on payment of Central Excise duty, which facts are not dispute in the instant case. 6. Search and Seizure operations were conducted by the DGCEI at the registered premises of 6 Central Excise registered dealers and 5 Manufacturers from whom the registered dealers said to have procured the goods, on dated 15.07.2014, 08.07.2014 and 04.07.2014 as follows:- Manufacturers: (i) M/s. Aditya Enterprises, Plot NO.IV-C/4(P), Bokaro Industrial Area, Bokaro (BCBPS6955CEM001) (ii) M/s A. S. InfratelPvt. Ltd. Chiragora, Samson Road, Dhanbad, Hirak Road, Saraidela, Dhanbad (AAJCA4354REM002) (iii) M/s. Ganesh Udyog, Baramundi, Near Asrafi Hospital, B. Politechnic, Dhanbad (AJMPK4448DEM001) on 04.07.2014; (iv) M/s. Shree Ram Engineering & Casting, Jawahar Nagar, Near Red Rose School, Mango, Jamsehdpur (ABXFS8223KE....
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.... Statement of Shri Sunil Bansal, Director of the appellant-company was recorded on 27.07.2015, 10.08.2015 and 13.08.2015 wherein he has inter alia stated to have purchased these goods from another purchaser registered under Central Excise and that the goods were received in their factory. 6.7. From the details extracted above from Globe Steels & Alloys order, it can be seen that the said investigation also was initiated on the same set of facts on the basis of statements recorded from the same suppliers and transporters. In the said order, it has been concluded as under: 19.1. In the instant case, it is undisputed that all the "Central Excise 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 ....
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....involved in the instant case, stated that they have not transported the goods. Further, as the statements of said two transporters are not tested under Section 9D, hence, by operation of Section 9D, said statements have become irrelevant piece of material. 6.8. We find that the findings in the above order are squarely applicable to the facts and circumstances of the present case, as the present case also been dealt with on the basis of the same set of evidences. 6.9. In the instant case, it is undisputed that- (i) All the dealers are registered under Central Excise Rules, 2002 and their registration were valid and active during the material period. (ii) Purchase are covered under valid Excise Invoices evidencing supply of impugned goods to the Appellant; (iii) Quantity of impugned goods received are recorded in RG-23A-Part-I; (iv) Entry Book of Duty Credit is duly recorded in RG-23A-Part-II (v) Claim of CENVAT Credit is regularly disclosed in monthly ER-1 returns; (vi) No investigation is carried out at the factory of the Appellant. No case of excess/shortage of raw materials/finished goods is made out. (vii) Out ....
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....of this view, we rely on the decision in the case of NIRMAL INDUCTOMELTS Vs. CCE reported in 2025-VIL721-CESTAT-DEL-CE. 6.11. We observe that the statutory records (RG-23A-Part-I & RG-23A-Part-II) are authentic documents and are substantive evidence to prove receipt of impugned goods by the Appellant. 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 & RG23A Part-II are authentic and substantive piece of evidence which must be disproved by sufficient corroborative evidence which are totally missing in the instant case. In the case of Kobain Electronic P. Ltd. Vs. CCE reported in (2016) 343 ELT 545 (Tri.-Ahmd.) (Para 4), it is held that RG-23A-PartI & RG-23A-Part-II are statutory records and the only authentic documents to establish receipt of inputs/capital goods. In this regard, we observe that the Appellant has taken all the precaution in terms of Rule 7(4) and Rule 9(5) of CENVAT Credit rules, 2004. An assessee can not be expected to go behind the invoices issued by the supplier and look into the conduct and modus operandi of the r....