TaxTMI 
TaxTMI 
2026 (10) TMI 114
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....34 002, whereby the appeals preferred against Order-in-Original No. 03/2018/C.Ex/Joint Commissioner/DNB(H) dated 28.03.2018 came to be rejected and the demand of Rs.87,52,175/-, being the CENVAT Credit irregularly availed and utilized by the appellants during from October, 2012 to June, 2014, along with interest and various penalties, came to be upheld. The dispute in the present case pertains to the alleged irregular availment and utilisation of CENVAT Credit by the appellant-company during the period, purportedly on the strength of invoices issued by certain Central Excise registered dealers, which invoices were alleged to have been based upon invoices purportedly issued by certain non-existent as well as existing manufacturers without actual receipt of the corresponding goods. 2. The facts of the case are that the appellant-company is, inter alia, engaged in the manufacture of M.S. Ingots, TMT Bars and Flats (hereinafter referred to as "the said goods"), falling under Chapter 72 of the Central Excise Tariff Act, 1985. During the material period from October, 2012 to June, 2014 (hereinafter referred to as "the said period"), the appellant-company had been clearing the said goo....
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....cern, situated at Bajpayee Complex, Jugsalai, Jamshedpur, Jharkhand, bearing Registration No. ABOPN9626LED001, which had earlier been registered as a partnership firm under Registration No. ABOFS5031NXD001, on 15.07.2014. 4.1. A significant development in the investigation followed the search conducted at the premises described as the secret office of M/s. Shiv Metalicks. During the course of the said search, various documents were allegedly recovered and seized, together with a Hard Disk stated to contain details of RG-23 registers pertaining to a number of other Central Excise registered dealers. On scrutiny of the data and documents retrieved from the said Hard Disk, the investigating authorities identified five further first-stage dealers who were alleged to have been engaged in passing on irregular CENVAT Credit on the basis of fake or forged invoices, namely: - (i) M/s. Shree Balajee Enterprises, Jamshedpur, Jharkhand, (ii) M/s. Vishwas Metalics, Jamshedpur, Jharkhand, (iii) M/s. Satguru Metalicks, Jharkhand, (iv) M/s. Hari Om Udyog, Purulia, West Bengal, and (v) M/s. Bajrang Steel Traders, Jamshedpur, Jharkhand. 4.2. The inv....
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....s, namely, M/s. Bajrang Steel Coal & Coke Traders, M/s. Chakradhari Metal Company, M/s. Jai Mata Di Enterprises, M/s. Hari Om Steel and M/s. Satguru Metalicks, which invoices were, in turn, alleged to have been linked to invoices purportedly issued by four non-existent manufacturers, namely, M/s. Aditya Enterprises, M/s. A. S. Infratel Pvt. Ltd., M/s. Ganesh Udyog and M/s. Shree Ram Engineering & Casting, and by one existing manufacturer, namely, M/s. Maa Tara Ispat Industries Pvt. Ltd. The alleged invoice trail insofar as the present appellant-company is concerned may be summarised as follows: Sl. No. Alleged manufacturer Central Excise registered dealer Receiver of goods 1. M/s. A. S. Infratel Pvt. Ltd. M/s. Hari Om Steel / M/s. Jai Mata Di Enterprises / M/s. Satguru Metalicks M/s. Vikromatic Steels Pvt. Ltd. 2. M/s. Aditya Enterprises M/s. Jai Mata Di Enterprises M/s. Vikromatic Steels Pvt. Ltd. 3. M/s. Ganesh Udyog M/s. Hari Om Steel / M/s. Jai Mata Di Enterprises M/s. Vikromatic Steels Pvt. Ltd. 4. M/s. Maa Tara Ispat Industries Pvt. Ltd. M/s. Chakradhari Metal Company M/s. Vikromatic Steels Pvt. Ltd. 5. M/s. Sh....
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.... that only Nil ER-1 returns had been filed. * In relation to M/s. A. S. Infratel Pvt. Ltd., Shri Dharamvir Kumar, Director, in his statement dated 19.09.2014 recorded under Section 14 of the Act, was stated to have admitted that the entity had been created at the instance of Shri Nitesh Pandey without any manufacturing activity, purchases, sales or issuance of invoices. * In the case of M/s. Ganesh Udyog, its proprietor Shri Pradip Kumar could not be traced and the summons issued to him were returned unserved. * As regards M/s. Shree Ram Engineering & Casting, a search conducted on 20.03.2015 allegedly revealed, in place of a manufacturing premises, a residential apartment construction site. The partner, Shri Nitesh Pandey, in his statement dated 27.04.2015 recorded under Section 14 of the Act, was stated to have admitted that no goods were manufactured by the entity and that fake invoices relating to Pig Iron, M.S. Scrap, etc., had been issued for passing on CENVAT Credit to dealers and manufacturers, including the appellant-company. 9. The position concerning the only existing manufacturer relevant to the present appeals, namely, M/s. Maa Tara Ispat ....
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....and that CENVAT Credit had consequently been availed and utilised without actual receipt of goods. 11. On the basis of the material collected during the investigation, it was alleged that the appellant-company / appellant no. 1 had availed and utilised irregular CENVAT Credit on Pig Iron, M.S. Scrap and related inputs, without actual receipt of the said goods, purportedly passed on by the aforesaid five registered dealers on the strength of invoices ultimately traceable to the four alleged non-existent manufacturers and one existing manufacturer referred to above, during the period from October, 2012 to June, 2014. Further, it was also alleged that Shir Jai Prakash Choudhary, Director of the appellant-company (appellant no. 2), being the head of the management, was actively involved in the irregular availment and utilization of CENVAT Credit by procurement of fake and forged invoices by colluding with the above mentioned registered central excise dealers, to defraud the government exchequer. 12. The investigation culminated in issuance of Show Cause Notice bearing F. No. 39/DGCEI/JRU/VSPL/Gr.-B/2015/1615 dated 27.09.2017, proposing denial and recovery of CENVAT Credit amounti....
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.... Central Excise, Ranchi. The said appellate proceedings culminated in Order-in-Appeal No. 11-12/RAN/2019 dated 08.01.2019 (hereinafter referred to as the "impugned order"), whereby the said appeals came to be rejected and the Order-inOriginal dated 28.03.2018 came to be affirmed in its entirety. 12.3. Aggrieved by the said rejection of their appeals and the confirmation of the demand, interest and penal consequences, the appellants have preferred the present appeals. 13. During the course of hearing, the Ld. Counsel appearing on behalf of the appellants, made detailed submissions, both oral and in writing, which can, inter alia, be summarised as under: - I. NON-COMPLIANCE WITH SECTION 9D OF THE CENTRAL EXCISE ACT, 1944 (i) The Department has placed substantial reliance upon statements recorded under Section 14 of the Central Excise Act, 1944 (hereinafter referred to as "the Act"), particularly those of Nitesh Pandey, Ajay Kumar Sharma and Harpal Singh Bhatia, in support of its allegation that the five registered dealers issued invoices without supplying the corresponding goods. These statements constitute the principal foundation upon which the genuineness o....
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....s considered therein are directly relevant to the present appeals. (v) In the present case, the OIO does not disclose that the adjudicating authority examined the concerned persons as witnesses, determined the admissibility of their earlier statements in accordance with Section 9D(1)(b) of the Act or established the existence of any statutory exception under Section 9D(1)(a) thereof. The appellant submits that the said statements could not, therefore, have been treated as substantive evidence establishing the truth of their contents against it. The Commissioner (Appeals), instead of addressing the said statutory infirmity, proceeded to affirm the findings founded upon those statements, notwithstanding the mandatory requirements laid down in G-Tech Industries (supra), Hi-Tech Abrasives (supra) and the aforesaid decisions of this Hon'ble Tribunal. (vi) Furthermore, the appellant submits that the statutory obligation imposed upon the adjudicating authority under Section 9D of the Act cannot be defeated merely because the original adjudication reply does not contain a separately identifiable written application requesting cross-examination. The primary objection c....
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....ati Enterprises (supra), wherein the Kolkata Bench of this Hon'ble Tribunal examined the corresponding provisions of Section 138C of the Customs Act, 1962, concerning electronic evidence. The Tribunal recognised the relevance of compliance with the statutory requirements governing computer-generated records, distinguishing their admissibility from the separate requirements governing investigative statements. The statutory provisions considered therein are pari materia with Section 36B of the Act. (v) In the present case, the Department must establish which particular electronic records recovered from the premises associated with Shiv Metalicks are relied upon against the appellant, whether the statutory conditions prescribed under Section 36B of the Act have been satisfied and how such records establish the allegations concerning the disputed invoices. The mere recovery of a hard disk containing information associated with several registered dealers does not establish either the authenticity of every entry contained therein or the appellant's participation in the alleged fictitious transactions. In the absence of compliance with the applicable statutory requirement....
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....ne removal, its consideration of the admissibility and reliability of the material relied upon is relevant to the present proceedings. The appellant does not suggest that the evidentiary requirements applicable to allegations of clandestine removal automatically govern every dispute concerning CENVAT credit. Rather, the Department's evidence in the present case must independently establish the particular factual allegations upon which denial of credit is founded. (v) In particular, the Department alleges that the dealers received consideration against fictitious invoices and subsequently returned such consideration to the purchasers after deducting commission. The appellant submits that the alleged return of consideration to it must be established through evidence connecting the purported financial arrangement with its transactions. The statements of the dealers cannot, without examination of the corresponding evidence, establish that payments made by the appellant were subsequently returned to it. The absence of such evidence assumes particular significance where the appellant relies upon contemporaneous banking records supporting its purchases. (vi) Equally,....
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.... made by third parties, must be distinguished from an admission based upon personal knowledge that the corresponding goods were never received. (iii) In this regard, the appellant submits that an admission must be construed according to its actual terms and surrounding circumstances. The Department cannot isolate selected responses concerning the alleged incorrect availment of credit and thereafter treat them as conclusive acknowledgment of every factual ingredient of the allegations, including nonreceipt of goods, knowledge of the alleged fictitious arrangements and conscious participation therein. Such findings must be supported by the contents of the statement itself and the other admissible evidence available on record. (iv) The appellant further submits that the statement of its director cannot validate the statements of the dealers or dispense with the statutory requirements prescribed under Section 9D of the Act. The admissibility of the third-party statements must be established independently. In Vikromatic Steels Pvt. Ltd. and Shri Jai Prakash Choudhary (supra), this Hon'ble Tribunal examined the necessity of complying with the statutory requirements ....
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....cturers, without examining their relevance to the appellant's particular transactions. Where the Department alleges that the appellant received no goods whatsoever, notwithstanding the documents and records maintained by it, the evidence relied upon must be capable of establishing that allegation. The requirements imposed upon the appellant under Rule 9(5) of the Rules do not dispense with the separate statutory requirements governing admissibility of the Department's evidence under Sections 9D and 36B of the Act. (iv) The appellant further submits that evidence concerning the subsequent condition of a dealer's registered premises, the conduct of persons associated with that dealer or the alleged irregularity of an upstream manufacturer's invoices must be examined alongside the contemporary circumstances of the appellant's purchases. The existence of valid registration particulars, the disputed invoices, the corresponding accounting entries and evidence concerning the actual receipt and consumption of inputs are relevant to that examination. The Department's evidence must be assessed against those materials rather than treating the statements of the....
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....uted transactions, contains general allegations concerning the issuance of fictitious invoices by BSCCT and other concerns. Its admissibility and reliability must be established in accordance with the principles laid down in GTech Industries (supra), Andaman Timber Industries (supra) and Sampad Narayan Mukherjee (supra). In the absence of compliance with the prescribed statutory procedure, the Department cannot rely upon the statement for establishing the truth of the allegations against the appellant. (iv) The Department further relies upon the search conducted at the registered premises of SREC on March 20, 2015, during which no manufacturing unit was reportedly found. However, the disputed invoices were issued during October 2012, approximately two years and five months before the search. The appellant submits that the condition of the premises in March 2015 must be distinguished from their condition during October 2012. The subsequent absence of manufacturing activity does not, without further evidence concerning the relevant period, independently establish the position obtaining when the disputed invoices were issued. (v) The SCN also relies upon the bank sta....
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....edit amounting to Rs. 5,10,537/- against six invoices issued by M/s Chakradhari Metal Company (hereinafter referred to as "CMC"), namely, invoice Nos. 49 and 50 dated June 20, 2013, invoice Nos. 157 and 158 dated October 6, 2013, and invoice Nos. 170 and 171 dated October 30, 2013. Unlike the allegations concerning BSCCT, the disputed transactions involving CMC identify an existing manufacturer, namely, M/s Maa Tara Ispat Industries Private Limited (hereinafter referred to as "Maa Tara"), as the purported upstream supplier. (ii) The Department's allegation is that CMC passed on CENVAT credit by referring to certain invoices purportedly issued by Maa Tara, although those invoices had not actually been issued to CMC. In support thereof, the SCN relies upon the statement dated April 27, 2015, of Nitesh Pandey, a partner of CMC, the statement dated November 12, 2014, of Munna Singh, director of Maa Tara, and copies of certain invoices obtained from Maa Tara. The appellant submits that this allegation differs materially from an allegation concerning a wholly non-existent manufacturer and requires independent examination of the documents and statements relied upon. ....
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....nation of the original upstream invoices, the statutory records maintained by CMC and the appellant, the corresponding financial transactions and the evidence concerning receipt of goods. The statement of Nitesh Pandey cannot be relied upon without compliance with Section 9D of the Act, while Munna Singh's expression of ignorance concerning CMC's subsequent activities cannot independently establish the allegation of nonreceipt by the appellant. III. M/S JAI MATA DI ENTERPRISES (i) The appellant availed CENVAT credit amounting to Rs. 27,66,263/- against 26 invoices issued by M/s Jai Mata Di Enterprises (hereinafter referred to as "JMDE"). The disputed credit comprises Rs. 15,22,505/- relating to fourteen invoices identifying M/s Aditya Enterprises as the purported manufacturer Rs. 6,20,843/- relating to six invoices identifying M/s A.S. Infratel Private Limited as the purported manufacturer, and Rs. 6,22,915/- relating to six invoices identifying M/s Ganesh Udyog as the purported manufacturer. (ii) The Department principally relies upon the panchnama dated July 4, 2014, concerning JMDE's registered premises, the statements dated July 7 and July....
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....ng its Central Excise registration. In respect of Ganesh Udyog, the Department relies upon unsuccessful attempts to secure the proprietor's attendance, bank records and an order subsequently revoking its registration. These materials must be assessed individually, having regard to their dates, contents and connection with the transactions under dispute. (vi) In particular, the subsequent cancellation of a purported manufacturer's Central Excise registration and the absence of identified payments in its bank records must be distinguished from the separate allegation that the appellant did not physically receive goods from JMDE. The appellant submits that the Department must establish the evidentiary connection between the defects alleged in the upstream transactions and the actual supplies purportedly made to the appellant. The appellant's contemporaneous records concerning receipt and utilisation of inputs must be considered in that examination. (vii) The transportation allegations concerning JMDE require separate consideration. Paragraph 8 of the SCN identifies three invoices, namely, invoice Nos. 63, 65 and 126, in which the registration particulars ....
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....consequently depend upon the admissibility and reliability of Ajay Kumar Sharma's statements, the actual evidentiary significance of the panchnama, the distinct materials concerning the three purported manufacturers and the limited transportation evidence identified in the SCN. These materials must be evaluated individually and cumulatively against the appellant's records before any finding concerning the twenty-six disputed invoices can be sustained. IV. M/S HARI OM STEEL (i) The appellant availed CENVAT credit amounting to Rs. 24,89,861/- against twenty-four invoices issued by M/s Hari Om Steel (hereinafter referred to as "HOS"). The disputed credit comprises Rs. 15,59,677/- concerning fifteen invoices identifying A.S. Infratel Private Limited as the purported manufacturer and Rs. 9,30,184/- concerning nine invoices identifying Ganesh Udyog as the purported manufacturer. (ii) The Department relies principally upon the panchnama concerning HOS's registered premises, the statements dated July 7 and July 15, 2014, of its proprietor, Ajay Kumar Sharma, and the investigative materials concerning A.S. Infratel Private Limited and Ganesh Udyog. The....
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....ords, rather than upon a general allegation concerning the purported activities of HOS and the upstream manufacturers. V. M/S SATGURU METALLICKS (i) The appellant availed CENVAT credit amounting to Rs. 18,61,945/- against eighteen invoices issued by M/s Satguru Metallicks (hereinafter referred to as "SGM") during June 2014. The disputed invoices bear Nos. 111 to 128 and identify A.S. Infratel Private Limited as the purported manufacturer. The Department alleges that SGM issued invoices without receiving or supplying the corresponding goods and thereby facilitated irregular availment of CENVAT credit by the appellant. (ii) The principal testimonial evidence relied upon against SGM comprises the statements dated August 26, 2014, and February 12, 2015, of Harpal Singh Bhatia, its proprietor. The SCN records that he attributed management of the business to Nitesh Pandey and subsequently stated that CENVAT credit had been passed on through fictitious invoices without transportation of the corresponding goods. The Department further relies upon his statement concerning the alleged falsity of invoices attributed to A.S. Infratel Private Limited. (iii) T....
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....gally admissible evidence establishing the particular transactions under dispute. The investigative statements, allegations concerning A.S. Infratel Private Limited and the vehicle-registration discrepancy identified against one invoice must each be evaluated according to their actual evidentiary scope. The allegation that all eighteen invoices were fictitious cannot be sustained merely by extending the findings concerning one transaction or the alleged general activities of the dealer to every transaction undertaken with the appellant. 13.1. In view of the submissions made hereinabove as well as the judicial precedents relied upon, it is contended by the Ld. Counsel for the appellants that the demand, along with interest and penal consequences against the appellants herein cannot be sustained since the same are based merely upon a generalised finding concerning the alleged activities of the dealers without establishing the factual basis for denying credit against the particular transactions forming the subject matter of the present appeal. Accordingly, he prayed for setting aside the impugned order in its entirety and for allowing the instant appeals, granting consequential rel....
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.... a fact that the appellant-company admittedly procured the subject inputs from Central Excise registered dealers who, during the relevant period, possessed valid departmental registrations. The appellants have contended that the invoice price, including the duty/CENVAT component, was duly remitted by them to the concerned dealers. The Department, however, has proceeded on the allegation that the dealers were engaged in issuing fictitious invoices for consideration and, after retaining their commission, returned the corresponding consideration in cash to the purchasers. Such an allegation, when specifically applied to the present appellant, necessarily requires some evidentiary linkage between the payments made by the appellant to the dealers and the alleged subsequent return of those very funds to the appellant or to its Director, Shri Jai Prakash Choudhary. 18.1. On examination of the material placed before us, we do not find any cogent banking, financial or other documentary trail demonstrating such alleged flowback of funds from the dealers to the appellant-company or its Director, apart from statements of certain other persons/co-noticees. The statements of the concerned dea....
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.... the raw materials covered by the impugned invoices never reached the appellant's manufacturing premises, some material would ordinarily be expected to emerge demonstrating how the appellant procured the substantial physical quantity of inputs necessary for manufacture of the finished goods cleared by it during the corresponding period. The investigation, however, has not, as placed before us, identified any alternate source of procurement from which the requisite raw materials were actually obtained, nor has it brought on record any parallel purchase trail, clandestine procurement evidence or other material establishing the source from which the appellant obtained the inputs allegedly absent from the impugned consignments. 19.1. Equally significant is the absence of any demonstrated stock deficit or input-output mismatch at the appellant's factory. There is no material placed before us indicating that, during the investigation, the Department detected any discrepancy in the appellant's stock records or established that the quantities of inputs/raw materials reflected in the statutory records were irreconcilable with the production and clearance of the finished goods....
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.... of the way by the adverse party, or cannot be produced without unreasonable delay or expense, the statement has to pass through the procedure contemplated under Section 9D(1)(b). In the adjudicatory setting, this entails examination of the maker as a witness before the adjudicating authority, followed by the authority's determination regarding its admissibility in the interests of justice. 20.2. A plain reading of the record before us does not disclose that the adjudicating authority undertook such an exercise in respect of the statements of Shri Nitesh Pandey, Shri Ajay Kumar Sharma and Shri Harpal Singh Bhatia. Nor is there any finding that the case fell within any of the exceptional circumstances enumerated in Section 9D(1)(a) so as to dispense with the procedure contemplated therein. instead relied upon directly, as though their mere existence in the investigation record were sufficient to establish the truth of the allegations contained therein. 20.3. Such a course cannot be countenanced where the statements in question constitute material evidence for establishing the very foundation of the demand. The Hon'ble Punjab and Haryana High Court in the case of M/s. Ambik....
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....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 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 Sectio....
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....ce on the statements, recorded during investigation under Section 14 of the Act. He has not invoked clause (a) of sub-section (1) of Section 9D of the Act, by holding that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. That being so, it was not open to respondent No. 2 to rely on the said statements, without following the mandatory procedure contemplated by clause (b) of the said sub-section. The Orders-in-Original dated 19-52016 and 1-6-2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in-Original stand vitiated thereby." 20.4. In the case of Sampad Narayan Mukherjee v. Union of India [2019 (366) E.L.T. 280 (Cal.)], the Hon'ble Calcutta High Court highlighted the importance of Section 138B of the Customs Act which is in pari materia with Section 9D of the Central Excise Act, in the following manner: - "12. Although the Evidence Act, 1872 is not applicable to a proceeding under the Act of 1962 in the strict sense, the principles thereof are attracted. The adjudicating authority, the appellate author....
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.... under the Act of 1962, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court. In other words, the exceptions carved out under Section 138B(1) of the Act of 1962 from the general law of evidence, apply to a proceeding of adjudication under the Act of 1962, as it would apply in a proceeding before a Court for the prosecution of any offence under the Act of 1962. 15. When an adjudicating authority is faced with a proceedings in which, the prosecution introduces evidence of witnesses, then the prosecution is obliged to offer such witness for cross-examination to the noticee. Likewise, if the noticee introduces any witness in its defence, the noticee is obliged to offer its witness for cross-examination to the prosecution. Only upon such offers are made, then the evidence of such witness becomes relevant and admissible as evidence. However, the evidence of such witnesses would also become relevant and admissible, if any of the grounds stipulated in Section 138B(1) of the Act of 1962 is attracted, in a fact scenario. In a given case, a person making a statement under Section 108 of the Act of 1962 dies prior to the conclusion of the ad....
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....e it is desired to give a statement in evidence by virtue of this section, a certificate identifying the electronic record, describing the manner in which it was produced, and giving particulars of the device involved, signed by a person occupying a responsible official position in relation to the operation of the relevant device, must be produced along with the computer output. 21.3. The record reflects that at the time of seizure, extraction, and subsequent reliance upon the data contained in the Hard Disk from M/s Shiv Metalicks, the Revenue failed to obtain, prepare, or annex the mandatory Certificate prescribed under Section 36B of the Act. 21.4. The Tribunal at Mumbai in the case of Agarvanshi Aluminium Ltd. vs. Commissioner of Customs (I), Nhava Sheva [2014 (299) E.L.T. 83 (Tri. - Mum.)],analysed the issue in respect to section 36B of the Central Excise Act as herein, and observed that: "12. ...... it is clear that for admissibility of computer printout there are certain conditions have been imposed in the said section. Admittedly condition 4C of the said section has not been complied with and in the case of Premier Instruments & Controls (supra) this Tribunal....
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.... evidence in terms of Section 36B (2) & (4) of the Central Excise Act in the case at hand." 21.6. In Ambica Organics v. Commissioner of C.Ex., Surat-I [2016 (334) E.L.T. 97 (Tri. - Ahmd.)], it was held that data retrieved from computer hard drives or pen drives without issuing a certificate under Section 36B cannot form the basis of a sustainable tax or penalty demand. 21.7. The mandatory nature of Section 36B has thus been consistently enforced by Tribunal Benches across various jurisdictions. In the present case, the infirmity is further compounded by the fact that the electronic hardware in question was neither recovered from the factory premises of VSPL nor seized from the custody or control of any of its Directors or authorized personnel. It was seized from the premises of an independent third-party entity (M/s Shiv Metalicks). The mere recovery of a hard disk containing raw data, files, or entries associated with various registered dealers does not, by itself, establish either the authenticity, integrity, or correctness of every entry contained therein, nor does it establish the appellant's active participation in the alleged fictitious paper transactions. In the absenc....
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....ly audit, investigate, or verify the RTO registration credentials of third-party transport vehicles deployed by its suppliers or sub-contracted transporters. Once the goods enter the factory gate and are duly accounted for in the daily stock registers, the recipient cannot be penalized for latent errors or clerical discrepancies committed by upstream suppliers in recording vehicle numbers on consignment notes. 22.2. Further, as pointed out by the appellant, the Department conducted online checks on the VAHAN portal for only a small, selected sample of vehicle numbers. It is a fact that such cases where there arose discrepancies as regards the nature of the vehicle and the quantity transported, was not in respect of all such vehicles. The Department was required to establish non-transportation with respect to each specific invoice for which CENVAT credit recovery was proposed. 22.3. Even otherwise, data extracted from public databases such as the VAHAN portal is susceptible to typographical errors, outdated historical entries, or clerical mismatches during data entry. While the data from the vahan portal helps the Revenue corroborate their claims, such automated digital querie....
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....mises of M/s Shree Ram Engineering & Casting on March 20, 2015, where no manufacturing infrastructure was found. It has been pointed out that the disputed invoices issued by M/s. Bajrang Steel Coal & Coke Traders to the appellant pertain to October 2012-a gap of two years and five months prior to the search. The condition of a third-party manufacturer's premises in March 2015 cannot be back-dated or extrapolated to establish its operational status in October 2012 without contemporaneous proof relating to the exact period of manufacture. 23.2. Further, the allegations concerning this dealer rest almost entirely on the generalized, untested statement of Shri Nitesh Pandey and selective VAHAN checks on three vehicle numbers. The Department failed to examine the records of M/s. Bajrang Steel Coal & Coke Traders i.e., contemporaneous RG-23D registers, bank statements confirming invoice consideration, or the appellant's actual receipt and consumption registers. The finding that all transactions in respect of M/s. Bajrang Steel Coal & Coke Traders were fictitious cannot be sustained merely on the basis of a delayed search at the upstream manufacturer's premises. ▪....
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....efects to the specific consignments delivered at the Appellant's factory gate. ▪ M/s. Hari Om Steel (HOS) [Purported Manufacturers: M/s A.S. Infratel Private Limited and M/s Ganesh Udyog] 23.8. The Department alleged that M/s. Hari Om Steel was managed by Shri Manish Kumar Naredi, who allegedly prepared fictitious documents. However, general managerial allegations against the operator of a dealership do not, per se, prove that the 24 specific transactions entered into with the appellant were paper-only transactions. Further, although the above dealer is named among the dealers collectively listed in Shri Anwar Khan's general statement, the Show Cause Notice fails to pinpoint or prove any specific, invoice-by-invoice transportation discrepancy for the said invoices issued by M/s. Hari Om Steel to the appellant-company. It is seen that there was no transaction-specific evidentiary audit of the appellant's purchase registers, banking payments, and raw material utilization. ▪ M/s. Satguru Metallicks (SGM) [Purported Manufacturer: M/s A.S. Infratel Private Limited] 23.9. As with M/s. Hari Om Steel, while M/s. Satguru Metallic....
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....arious personal liability cannot be automatically fastened upon a Director or corporate officer merely by virtue of their executive designation or corporate position. To invoke the penal provisions of Rule 26, the Department carries a strict legal burden to prove mens rea, active personal participation, and specific overt acts showing that the individual knowingly dealt with duty-evaded goods or consciously arranged fraudulent, non-existent transactions. 25.1. Rule 26 requires positive, transaction-specific proof that the person concerned had actual knowledge or reasonable belief that the goods in question were liable to confiscation under the Central Excise Act or the Rules made thereunder. In the present case, a critical examination of the Show Cause Notice and the impugned order reveals that the Revenue has failed to adduce any admissible evidence on this count. 25.2. In any case, in view of the fact that the main demand against the appellant-company stands completely set aside, and given the total absence of any specific finding establishing personal mens rea or physical dealing with goods liable to confiscation, the imposition of a personal penalty on Shri Jai Prakash Ch....