2014 (10) TMI 723 - HC - Central Excise

Cenvat credit - allegation of non receipt of material - Held that - no investigation had been taken by the Department at the end of the suppliers to ascertain the facts regarding delivery of goods. Moreover, the statutory records of the assessee concerned, shows receipt and consumption of goods. There was no statement of the supplier that the goods were not supplied to the assessee and were supplied to a third party. In light of the aforesaid facts, it cannot be said that the findings recorded by the Tribunal are in any manner erroneous. demands were based upon the statements of transporters or drivers of the trucks which were not corroborated by any evidence. Under the circumstances, the Tribunal was justified in holding that only on the basis of third party statements, such demand cannot be made. Moreover, as rightly pointed out by the Tribunal, no investigation has been conducted at consignors place or at the place where the said goods are alleged to have been supplied. Under the circumstances, it cannot be said the Tribunal has committed any error in deleting the aforesaid demands. All the goods supplied by M/s. Motabhai Iron & Steel were accompanied by documents evidencing payment of duty. The representative of M/s. Motabhai Iron & Steel had nowhere admitted that the assessee was issued only invoices and that there was no delivery of goods to the assessee. Besides, all the payments that were made to M/s. Motabhai Iron & Steel were made through bank drafts. The Tribunal has also noted that, in all, demand was made in respect of 44 consignments. However, it was only in respect of two transporters, who had transported merely three consignments that the alleged discrepancy had been pointed out, whereas, in case of other transporters, no discrepancy has been found. In the light of the aforesaid findings recorded by the Tribunal, it cannot be said that there is any error in the conclusion arrived at by the Tribunal while deleting the demand - Decided against Revenue.

Issues Involved:
1. Ignoring provisions of Section 36A of the Central Excise Act, 1944.
2. Ignoring material evidence contrary to documentary evidence.
3. Right of cross-examination in quasi-judicial proceedings.
4. Burden of proof regarding admissibility of CENVAT credit.
5. Setting aside various penalties imposed against the assessee.

Detailed Analysis:

Issue 1: Ignoring Provisions of Section 36A of the Central Excise Act, 1944
The appellant argued that the Tribunal ignored statutory documents seized from the assessee and others. The Tribunal found that the sole basis of the demand was the statement of Shri Arjandas, who did not appear for cross-examination. The statement lost its efficacy and could not be used against the assessee. The Tribunal also noted that M/s. Star Associates had a history of regular supply without any prior issues of fraudulent invoicing. Therefore, the Tribunal found no reason to disallow the credit of Rs. 14,42,177.

Issue 2: Ignoring Material Evidence Contrary to Documentary Evidence
The appellant contended that the Tribunal ignored significant evidence, including statements from transporters and octroi receipts. The Tribunal found that no investigation was conducted at the suppliers' end to verify the delivery of goods. The statutory records of the assessee showed receipt and consumption of goods, and there was no statement from the supplier denying the supply to the assessee. As such, the Tribunal found no reason to disallow the credit of Rs. 5,42,938.

Issue 3: Right of Cross-Examination in Quasi-Judicial Proceedings
The Tribunal noted that the statements of various transporters and other parties were not corroborated by any evidence. The Tribunal held that demands based solely on third-party statements without corroboration could not be sustained. Additionally, the Tribunal found that the non-appearance of witnesses for cross-examination weakened the case against the assessee. Therefore, the demands of Rs. 2,57,347 and Rs. 5,83,537 were not sustainable.

Issue 4: Burden of Proof Regarding Admissibility of CENVAT Credit
The Tribunal found that the goods were duly recorded in the assessee's factory and consumed in production. Payments were made through banking channels, and no investigation was conducted at the consignors' end. The Tribunal relied on the judgment in M/s. Monarch Metals P. Limited, which held that credit is available when ample evidence of actual receipt and payment is provided. Thus, the Tribunal found no reason to disallow the credit of Rs. 3,26,188.

Issue 5: Setting Aside Various Penalties Imposed Against the Assessee
The Tribunal found that all goods supplied by M/s. Motabhai Iron & Steel were accompanied by duty-paying documents, and payments were made through bank drafts. The Tribunal noted that discrepancies were found only in a few consignments, and there was no evidence to support the allegations for the majority of consignments. Therefore, the Tribunal found no reason to disallow the credit of Rs. 13,62,301.

In the case of the demand of Rs. 2,94,274, the Tribunal noted that the statement of the proprietor of M/s. Vasmin Corporation was retracted the next day, losing its evidentiary value. Payments were made through banking channels, and there was no evidence that the records maintained by the assessee were incorrect. Thus, the Tribunal set aside the demand and penalties.

Conclusion
The Tribunal's findings were based on a detailed appreciation of the evidence on record. The appellant failed to point out any material to dislodge the Tribunal's findings. The Tribunal's conclusions were not perverse to the record of the case, and the appeals did not give rise to any substantial question of law. Consequently, the appeals were dismissed.

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