2016 (5) TMI 894 - AT - Central Excise

Denied cenvat credit on the evidence as no entry of vehicle no. at ICC the statement of transporter/suppliers and the expert opinion of NISST - Availed cenvat credit on Bura scrap and furnace oil without actual receipt in their factory premises - Held that - merely the vehicles in question were not entered at ICC does not dis-entitle to the appellant to avail cenvat credit on the inputs in question. As the appellant has produced the certificate issued by Excise & Taxation Officer of Punjab certifying that these goods have been received in their factory therefore the cenvat credit cannot be denied. The revenue has also relied on the various statements of supplier/transporters and also relied on the statement of Parveen Kumar Garg of M/s LOT initially made on 25.02.2005. This same was retracted by him on from next date 26.02.2005 which was despatched on 28.02.2005 thereafter various summons have been issued to Sh. Praveen Kumar Garg but Sh. Praveen Kumar Garg never appeared nor the cross examination of Sh. Praveen Kumar Garg was granted in that circumstances statement of Sh. Praveen Kumar Garg have no evidentially value in the light of the decision in the case of CCE Delhi-I Vs. M/s Vishnu & Co. Pvt. Ltd. 2015 (12) TMI 593 - DELHI HIGH COURT . Some kachaa ledger was also recovered from Sh. Praveen Kumar Garg the same cannot be relied upon as evidence in the matter as these records have been recovered from third party whose cross examination has not granted to prove the truth therefore these Kucha Ledger is not admissible as evidence. It is found that revenue has relied on the opinion obtained from the NISST to the extent that furnace oil is not required for the appellant for operation of their furnace or induction furnace. In fact the person gave the opinion have never visited the factory premises to the appellant and made a general statement. On the other hand the appellant has produced the certificate issued by the chartered Engineer who has physically visited the factory and stated that furnace oil is required for the running of induction furnace of the appellant. The said chartered engineer was not cross examined by the revenue on the contrary he affirmed the contents of the certificate issued by him therefore the said certificate is having evidential value. In the absence of any contrary evidence produced by the revenue the certificate issued by the chartered engineer who has visited the factory is admissible. Further I find that during the course of investigation the furnace oil was found in stock of the appellant. The allegation of the revenue that the furnace oil is not required for manufacturing by the appellant but the same was available in the factory premises of the appellant in that circumstances the revenue is failed to prove their case by cogent evidence to show that the furnace oil has not required by the appellant. - Decided against the revenue

Issues Involved: Denial of Cenvat Credit on Bura Scrap and Furnace Oil, Duty on Shortage of M.S. Ingots, Admissibility of Statements and Evidence, Penalty Imposition.

Issue-wise Detailed Analysis:

1. Denial of Cenvat Credit on Bura Scrap:
The appellant, Adhunik Alloys Ltd. (AAL), had availed Cenvat credit on Bura scrap. During the investigation, it was found that AAL received only invoices and not the actual Bura scrap. This was admitted by the authorized signatory, and the credit was voluntarily reversed. Consequently, the Cenvat credit on Bura scrap was denied, and the appellant was held liable to pay duty along with interest. The tribunal confirmed that since the credit was already reversed, the appellant must pay interest for the intervening period within 30 days.

2. Duty on Shortage of M.S. Ingots:
During the factory visit, a shortage of 6.205 MT of M.S. Ingots was found. The appellant had already paid the duty on this shortage. Given the meager quantity found short, the tribunal confirmed the duty demand on the M.S. Ingots.

3. Denial of Cenvat Credit on Furnace Oil:
The revenue's case was based on the non-entry of vehicle numbers at ICC, statements of suppliers/transporters, and an expert opinion from NISST. The appellant argued that the goods were received and used in manufacturing, supported by certificates from the Excise and Taxation Officer and VAT/Sales Tax returns. The tribunal noted that the purpose of ICC entries is to ensure VAT/CST/Sales Tax compliance, which was certified by the concerned officer. Therefore, the absence of vehicle entries at ICC does not disqualify the appellant from availing Cenvat credit. The tribunal also referenced similar cases where such information from the Sales Tax Department was deemed unreliable.

4. Admissibility of Statements and Evidence:
The tribunal scrutinized the statements of suppliers/transporters, particularly the retracted statement of Praveen Kumar Garg of M/s LOT. Given that the statement was retracted the next day and the cross-examination was not granted, the tribunal found it lacked evidentiary value, citing the Delhi High Court's decision in Vishnu & Co. Pvt. Ltd. Further, the kachcha ledger recovered from Praveen Kumar Garg was deemed inadmissible as evidence due to the lack of cross-examination. Additionally, the tribunal found that the cross-examination of M/s Ritco Kirti Associate (P) Ltd. was not relevant as the person who made the initial statement was not produced.

5. Expert Opinion on Furnace Oil Usage:
The revenue relied on an expert opinion from NISST, which stated that furnace oil is not required for the appellant's operations. However, the tribunal found this opinion to be a general statement as the expert did not visit the appellant's factory. In contrast, the appellant produced a certificate from a Chartered Engineer who physically visited the factory and confirmed the necessity of furnace oil for operations. This certificate was not contested by the revenue and was thus considered valid evidence. The tribunal also noted that furnace oil was found in stock during the investigation, further supporting the appellant's claim.

6. Penalty Imposition:
Given the findings, the tribunal concluded that no penalties were imposable on the appellants.

Order:
1. Cenvat credit on Bura Scrap denied; duty along with interest is payable.
2. Duty on shortage of M.S. Ingot confirmed.
3. Cenvat credit on furnace oil allowed.
4. No penalties imposed on the appellants.

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