2024 (1) TMI 633 - AT - Central Excise

Clandestine removal - demand based on the statement of Shri Amit Gupta and on the basis of documents recovered during the searches conducted in the various premises pertaining to said Amit Gupta - HELD THAT - It is observed from the record of both these appeals that except the documents recovered from the various premises of Shri Amit Gupta, there is no other evidence. Most of those documents have been retrieved from the electronic gadget. No such certificate as is required under section 36B of Central Excise Act is placed on record to prove the authenticity and admissibility of those documents into evidence. In view of the said provision, the documents are not admissible. Shri Amit Gupta in his cross examination has even denied having any share holding in the business activity of any of the registered dealer companies as tabulated in the impugned show cause notice with the allegation that those registered dealer companies. Apparently, there is no search and recovery from the premises of the present appellants except that the statement of Shri Anil Goel, the appellant, was recorded. On perusal of the statement of said Shri Anil Goel, it is clear that he has outrightly denied receiving any cenvatable invoice without getting physical delivery of the goods. It is also observed that RG-23 Part I register has been placed on record by the appellants wherein all purchases of metal scrap/rods from M/s.Unanti Alloys were specifically recorded by the appellants. The department has failed to produce any document to falsify the contents of the said register. The register being documentary evidence should have precedence over the statement relied upon by the department. There has been no such recovery of document from premises of the appellant, it will not be out of place to hold that the department has proceeded based on the third party evidence to confirm the demand against the appellants. There has been catena of decisions wherein it has been held that third party evidence has no evidentiary value and that the same is not at all admissible in law. Thus, there is no evidence to prove that the appellants have availed cenvat credit on fake invoices without getting physical delivery of the goods - there are no reason for confirming the recovery of the said cenvat credit availed by the appellant - there is no question for imposition of penalty upon the appellant. Appeal allowed.

Summary

Issues Involved:

1. Admissibility of Cenvat Credit based on invoices without physical delivery of goods.
2. Validity of evidence obtained from third-party premises.
3. Retraction of statements by key witnesses.
4. Admissibility of electronic evidence without proper certification.
5. Timeliness of the demand raised by the department.

Summary:

Admissibility of Cenvat Credit:
The case revolves around M/s. KMG Rolling Pvt. Ltd. and its proprietor, who were accused of availing inadmissible Cenvat credit based on invoices from M/s. Unanti Alloys Pvt. Ltd. without actual delivery of goods. The investigation was initiated based on the statement of Shri Amit Gupta and documents recovered during searches at various premises. The department issued a show cause notice proposing recovery of Cenvat credit amounting to Rs. 83,54,316/- along with interest and penalties.

Validity of Evidence:
The appellants argued that no searches were conducted at their premises or at M/s. Unanti Alloys Pvt. Ltd., and that the statements of Shri Amit Gupta and Shri Sanjeev Magoo were retracted during cross-examination. They emphasized that all transactions were recorded in their RG-23A Part I Register and payments were made through legitimate channels.

Retraction of Statements:
Shri Amit Gupta and Shri Sanjeev Magoo retracted their earlier statements, claiming they were made under coercion. The Tribunal noted that once a statement is retracted, the burden shifts to the department to prove the allegations with corroborative evidence, which was not done in this case.

Admissibility of Electronic Evidence:
The Tribunal observed that the documents recovered from electronic devices lacked the necessary certification under Section 36B of the Central Excise Act, making them inadmissible as evidence.

Timeliness of Demand:
The appellants contended that the demand was time-barred as they were regularly audited and filed returns. The Tribunal did not find sufficient evidence to support the department's claim of fraudulent availing of Cenvat credit.

Conclusion:
The Tribunal held that there was no evidence to prove that the appellants availed Cenvat credit on fake invoices without receiving the goods. The order confirming the recovery of Cenvat credit and imposition of penalties was set aside, and both appeals were allowed. The Tribunal emphasized that third-party evidence without corroboration is not admissible and highlighted the importance of proper investigation and evidence collection in cases of alleged clandestine removal.