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2021 (12) TMI 1148 - AT - Central ExciseRecovery of CENVAT Credit - fraudulent availment of CENVAT Credit on the strength of Cenvatable invoices - reliance placed on statements recorded by the third parties upon the documents recovered from the third party premises - Rule 11 of Central Excise Rules, 2002 - penalty on on Shri Pradeep Kumar Aggarwal whose statement has mainly been relied upon - HELD THAT - There is no evidence to prove that the appellant have not received material from M/s. Sypher Impex Alloys Pvt. Ltd through the invoices No. 67, 69 and 90 dated 8.6.2012, 10.6.2012 and 2.7.2012 respectively. Irrespective Shri Yogesh Singh Director would have been involved in the practice of issuing fake invoices for permitting the purchasers of raw material to have fraudulent CENVAT Credit but there is no iota of any positive evidence for involvement of the present appellant in the said fraudulent availment. The Department has failed to falsify the statement of Shri O P Sharma and to falsify the documents produced by them for proving the transactions of impugned invoices as genuine. Resultantly it stands clear that the confirmation of demand against the appellant has been confirmed based on the third party evidence. Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence - It is well settled law that there has to be some concrete evidence which would show clandestine manufacture of goods, as was reiterated by Tribunal, Delhi in the case of C.C.E. S.T. -RAIPUR VERSUS P.D. INDUSTRIES PVT. LTD. 2015 (11) TMI 455 - CESTAT NEW DELHI . The document recovered from the appellant premises shows that the appellant had maintained a record about the invoices being received from various companies whereupon the appellant has availed the Cenvat Credit. Merely because the company issuing invoice was found non-existent, the appellant could not be denied the availment of Cenvat Credit thereupon unless and until his involvement in terms of his knowledge about such non-existence and about the invoice to be bogus is not proved on record. Otherwise also there is no denial that the appellant has cleared his final product on payment of duty. In such circumstances and that the invoices were containing all the particulars as are required under Rule 9 of Cenvat Credit Rules and that the appellant was also making the record of all those details. The allegations based on the statements given by other manufacturers, first or second stage dealers or even by the transporters cannot be read against the appellant - Once assessee is found to have acted with all reasonable diligence in its dealings within the meaning of Rule 9 (3) of Cenvat Credit Rules, 2004 will amount to casting an impossible or impractical burden on the assessee and same would be contrary to the rules. Levy of penalty on Shri Pradeep Kumar Aggarwal - HELD THAT - The companies involved herein i.e. High Tides Infra Project Pvt. Ltd., RMS Steel Tech Pvt. Ltd., Jetking Trading and Agencies, Singh Materials Infratech etc. were the companies in the said decision wherein it has been held that when sufficient document is produced by the appellant to prove the physical entry of inputs in the assessee s premises along with the ledger account and RG-23 A Register maintained by the assessee along with the invoices. the burden is upon the Revenue to prove that it was merely a paper transaction and goods were not received by assessee appellant. It was held by this Tribunal in the said Final Order that Revenue has failed to produce such a record. Per contra, there is apparent compliance of Rule 9, CCR 2004 on part of the appellant. The allegations based on the fact that manufacturers as that of M/s.High Tides Infra Project Pvt. Ltd are found non-existent have been set aside. The entire case of the Department is on the basis of statements of witnesses who were never allowed to be cross examined by the present appellants. There is no other material with the Revenue to justify its findings against the appellants. Withholding the opportunity to cross examination to the appellants definitely amounts to violation of principles of natural justice and the statutory mandate of section 9D of Central Excise Act, 1944 which becomes another reason for nullifying the impugned order. Hon ble Apex Court has also in the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II 2015 (10) TMI 442 - SUPREME COURT has held that non compliance of the provisions of section 9D and section 33 of Central Excise Act, 1944 nullify the order confirmed in demand. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Alleged fraudulent availment of CENVAT Credit. 2. Evidence supporting the allegations. 3. Reliance on third-party statements and documents. 4. Compliance with procedural requirements, including cross-examination rights. 5. Imposition of penalties. Issue-wise Detailed Analysis: 1. Alleged Fraudulent Availment of CENVAT Credit: The Department alleged that the appellants engaged in fraudulent availment of CENVAT Credit based on invoices issued by M/s. Sypher Impex Alloys Pvt. Ltd. without actual receipt of goods. The investigation revealed that M/s. Sypher Impex Alloys Pvt. Ltd. had conducted paper transactions to generate CENVAT Credit, passing it to various firms, including the appellants, without manufacturing or clearing any finished goods. 2. Evidence Supporting the Allegations: The Department's investigation involved several statements from individuals linked to M/s. Sypher Impex Alloys Pvt. Ltd., including admissions from its Director, Shri Yogesh Singh, and other employees, that no actual goods were received or supplied. However, there was no specific evidence indicating that the appellants were aware of or involved in these fraudulent activities. The appellants maintained records of the invoices and claimed to have received the goods, presenting documents such as purchase registers and CENVAT Credit registers to support their claim. 3. Reliance on Third-Party Statements and Documents: The Tribunal noted that the Department's case heavily relied on third-party statements and documents without direct evidence implicating the appellants. The Tribunal referenced several legal precedents, including the case of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal vs. CCE, Raipur, which established that findings of clandestine removal cannot be upheld solely based on third-party documents without corroborative evidence. 4. Compliance with Procedural Requirements, Including Cross-Examination Rights: The Tribunal highlighted that the appellants were not given the opportunity to cross-examine the witnesses whose statements were used against them, violating principles of natural justice and the statutory mandate of Section 9D of the Central Excise Act, 1944. The Tribunal cited the Hon'ble Delhi High Court's decision in J K Cigarettes Ltd. vs. CCE and the Hon'ble Apex Court's ruling in Andaman Timber Industries vs. Commissioner of C. Ex., Kolkata-II, emphasizing the necessity of following procedural requirements. 5. Imposition of Penalties: The Tribunal observed that penalties imposed on individuals like Shri Pradeep Kumar Aggarwal, who did not challenge the imposition, could not justify the disallowance of CENVAT Credit to the appellants. The Tribunal referenced the case of Ashok Sharma vs. CCE, Raipur, where it was held that the burden was on the Revenue to prove that transactions were merely paper-based and that goods were not received by the assessee. Conclusion: The Tribunal concluded that there was no concrete evidence proving that the appellants did not receive the goods from M/s. Sypher Impex Alloys Pvt. Ltd. through the disputed invoices. The reliance on third-party statements without allowing cross-examination and the lack of corroborative evidence led to the setting aside of the order under challenge. The appeals were allowed, and the demand against the appellants was nullified.
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