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TMI Blog2015 (4) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... were not transported through the check post. As per Section 14AA, if the Commissioner of Central Excise has reason to believe that the credit of duty availed of or utilized under the rules made under this Act by a manufacturer of any excisable goods; has been availed of or utilized by reason of fraud, collusion or any willful mis-statement or suppression of facts; he may direct such manufacturer to get the accounts of his factory, office, depot, distributor or any other place, as may be specified by him, audited by a cost accountant or Chartered accountant nominated by him. The cost accountant or Chartered accountant so nominated shall, within the period specified by the Commissioner of Central Excise, submit a report of such audit duly signed and certified by him to the said Commissioner mentioning therein such other particulars as may be specified. The manufacturer shall be given an opportunity of being heard in respect of any material gathered on the basis of the audit and proposed to be utilized in any proceeding under this Act or rules made thereunder. Adjudicating authority had not directed to get the account of Appellant would be audited by a Cost Accountant or a Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterials, the appellant s Delhi and Gurgaon office etc. The said officers recorded the statements of various persons including employees and Directors of the Appellant and also the transporters of the input materials, amongst others. 4. A Show Cause Notice dt.23.12.2008 was issued by the Additional Director General of Directorate General of Central Excise, Intelligence, Ahmedabad Zonal Unit proposing, to deny the CENVAT Credit amounting to ₹ 5,57,58,449.00 alongwith interest and to impose penalty on the Appellant No.1, on the ground that the Appellant Company wrongly availed the CENVAT Credit, without actual receipt of the inputs in the factory premises at Bhavnagar. It was further proposed to appropriate the amount deposited by the appellants, during investigation. It was also proposed to impose penalty on Shri K.K. Gupta, Managing Director of Appellant Company (Appellant No.2). By the Adjudication order dt.30.04.2010, the Commissioner of Central Excise confirmed the demand of duty alongwith interest and imposed penalty of equal amount of duty on the Appellant Company. It has also imposed penalty on the Appellant No.2. The Appellants filed appeals before the Tribunal. By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements were recorded of the transport companies. He drew attention of the Bench to the Report for avoiding RTO check post and this cannot be a ground for denial of CENVAT credit as it is evident from records that they received the goods. It is submitted that the Adjudicating authority on the basis of Panchnama, dated 09.01.2007, observed that there was no manufacturing activity, which is contrary to the earlier Panchnama drawn on 10.02.2006, where, it is clearly mentioned that the Appellant had sufficient machineries for cutting of the ingots. He further submits that the Adjudicating authority had not given opportunity for cross examination of the various persons and also not followed the procedure as provided under Section 9D of Central Excise Act, 1944 to examine the witnesses. The learned Senior Advocate drew the attention of the Bench to the relevant portion of the Adjudication order and also various documents to substantiate the receipt and utilization of inputs at their factory. The learned Senior Advocate explained the reasons in detail for import of Copper Ingots to convert into scrap and Cost Accountant certificate. They have filed Written Submissions with the compilation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the order of the Tribunal. It is a second round of litigation. The Tribunal by Final Order No.A/1672-1673/WZB/ AHD/2011, dt.28.09.2011, M/1788/WZB/AHD/11, dt.28.09.2011, remanded the matter for de-novo adjudication after observing principles of natural justice. The relevant portion of the said order is reproduced below:- 4. Another aspect of the case before us to be noted is that there is violation of principles of natural justice. The Appellant sought cross examination of various persons. The Adjudicating authority gave the cross examination on 12.04.2010 of one of the persons. Subsequent to cross examination, the Appellant filed detailed reply on 20.04.2010. It is seen from the records that the Appellant was not granted any personal hearing after 20.04.2010. In our considered view, after receiving the detailed reply, post cross examination, it is mandatory on the part of the Adjudicating authority to grant personal hearing to the Assessee to put forth the defence and consider the same before reaching a conclusion. Absence of personal hearing is gross violation of principles of natural justice. It is seen from the Record of personal hearing on 06.6.2012, before the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of material on record that a particular ground, as stipulated in the said Section, exists and is established; (iii) such an opinion has to be supported with reasons; (iv) before arriving at this opinion, the authority would give opportunity to the affected party to make submissions on the available material on the basis of which the authority intends to arrive at the said opinion; and (v) it is always open to the affected party to challenge the invocation of provisions of Section 9D of the Act in a particular case by filing statutory appeal, which provides for judicial review. 8.3 The Hon ble Delhi High Court in the case of M/s Basudev Garg vs. Commissioner of Customs 2013 (293) ELT 353 (Del.), following the earlier decision in the case of J.K. Cigarettes Limited (supra), held that the statement against the assessee cannot be used without giving them opportunity of cross examining the deponents. It is observed that cross examination is a valuable right of the accused/noticee in quasi judicial proceedings which can have adverse consequences for them. In the case of Commissioner of Customs, Allahabad vs. M/s Govind Mills 2013 (294) ELT 361 (All.), the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of evidences as available on record. In our view, there is no need to remand the matter again for cross-examination, and it may be decided on the basis of evidences, as held by the Adjudicating authority. 9. Learned Authorised Representative for the Revenue submits that during investigation various evidences were unearthed to prove that the appellant had not received the inputs in their factory, such as; (i) No manufacturing activities was found during visit on 09.1.2007. No documents was produced for lower electricity consumption. (ii) Transportation of goods from Delhi/ Indore to Gujarat were not entered through R.T.O. check posts, as no seal of any CTO/ RTO was found in the transport documents. It has not followed the shortest route. (iii) CHAs had deposed that they transported goods only to the border of Delhi at Shahadra and unloaded there. The goods purchased from Metal Appliances, Indore on High Sea Sale basis. But, the Transporter denied transporting the goods to the appellants factory. (iv) Shri Ashok B. Bafna, broker of AIPL stated that he had supplied only invoices without any goods to the appellants and payment received by cheques, which were returned b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Panchnamas were drawn on different dates and there is no contradiction in each other and were prepared in the presence of independent witnesses. 10.3 We find that the matter may be decided without going into the controversies of preparation of Panchnama dated 09.7.2007. The demand of duty is for the period during 2003 to 2007. It is evident from Panchnama dated 10.02.2006 that the various machineries were installed in the factory premises for manufacturing Scrap. So, there is no scope to doubt that machineries were installed in the appellants factory for manufacturing Scrap up to 10.02.2006. Further, there is no material available on record and no enquiry was conducted by the Department that the appellants removed the machineries after 10.02.2006. So, there is no force in the submission of the learned Authorised Representative that there was no machinery installed in the factory for manufacturing Scraps. 11. The appellants refuted the evidences placed by the Revenue before the Adjudicating authority, as the electricity consumption was less because the Bronze (cutting machine) was adjusted in such a manner that while it was running there was no pressure or load on the mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities at Check Post is not a ground to presume that the goods had never been transported to the appellant s factory. There was no efficient checking in the Inter State Check Posts of Gujarat Border. This would be clear from the survey report of 2003 regarding checking of goods at the check posts, Computerized System at the check posts did not have database creation or alert mechanism for habitual violators of norms. The statements of transporters cannot be relied upon as no cross-examination was allowed. 11.2 It is submitted by the appellant that the adjudicating authority has failed to appreciate that the original importers already booked the material from whom the appellant had purchased the inputs were located in or around New Delhi and Indore. The said importers in or around Delhi and Indore used to book their consignments for their final destination i.e. Delhi and Indore. The appellant could not change it. Further reliance on the deposition made by the representatives of Custom House Agent would also be of no assistance to substantiate the case of the Revenue. It is submitted that merely because clearance of the goods taken place at ICD TKD and the same were initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submissions made by them before the predecessor, who adjudicated the case earlier and further went on contending that during the period in dispute, the majority of goods were cleared to M/s. Jindal Stainless Steel Limited (JSL); that the Show Cause Notice no where disputes the said clearances made to JSL; that the allegation that the noticee had no facility to manufacture is not sustainable for the reason that it is impossible for the noticee to manufacture and clear the goods without having the facility to manufacture scrap; that the allegation that the goods were sold locally in Delhi, is also without any merit as no such buyer had been identified in the Show Cause Notice to whom the goods has been allegedly sold by the Noticee; that the Noticee has in its possession documents showing clearances of its finished goods; that no such enquiry has been conducted from the buyer of the finished goods; that without conducting such inquiry the allegation that no clearances were made actually by the noticee and only paper transaction were made to avail CENVAT credit is totally without merit; that the allegation that the noticee had adopted a circuitous route for transporting the goods w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and CENVAT records and also reflected in their audited Balance Sheet. It is also certified the consumption of material in the finished goods are in conformity with statutory Audit Reports. There is no material available on record that such huge quantity of inputs of 103 consignments were sold by the appellant in the open market. Further, there is no evidence of procurement of alternative inputs for manufacturing of finished products. Furthermore, the Revenue has not disputed the evidences placed by the appellants, manufacture of finished goods, cleared on payment of duty. The receipt of huge quantity of materials and their utilization in the manufacture of final product, reflected in statutory records and in conformity with the statutory audit report and evidentiary value of such records can not be discarded on the basis of statements and the evidences of third party, relied upon by the Department which were not testified by allowing cross-examination. Furthermore, after thorough investigation, there is no iota of evidence of cash flow of huge amount involved in the 103 consignment. The adjudicating authority observed that Revenue need not establish its case by mathematical precis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of power like electricity, seizure of cash, etc,, the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording. The Tribunal also noted the fact that the requisite opportunity of cross-examination was also not made available so as to bring to the fore the true picture and therefore, it concluded against the Revenue observing that not permitting the cross-examination of a person in-charge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it so sustain the demand of ₹ 1.85 Crores raised n the Demand notice and confirmed by both the authorities below. 13.4 The Tribunal in the case of M/s Aarya Fibers Pvt. Limited Others Vs Commissioner of Central Excise, Ahmedabad-II 2014-TIOL-15-CESTAT-Ahmedabad held that the probative value of the document needs to be established by independent corroboration. In the said case, the Tribunal set-aside the demand of duty and observed that there being a conspicuous absence of actual d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction per unit is less than the sales value realized during the year 2003-04 and similar is the position in the rest of the years. It may be appreciated that in one year the cost of product is more than the value realized, it can be said that the Company has occurred loss in that particular year. The profit or loss are both sides of the same coin. Sometimes to minimize the loss Company has to continue production even at loss. So far as remaining years are concerned, the cost of production has been much less than the sales value realized. It is very important to note that the main work is to cut the big pieces of copper into smaller pieces so as to be used by the stainless steel manufacturers and automobile bushes manufacturers. Srilankan origin scrap comes in the form of ingots just to save import duty. The same has to be converted into scrap, if it is to be used by the stainless steel manufacturers and automobile bushes manufacturers. 14.2 During the course of hearing before the Tribunal, the learned Authorised Representative for the Revenue placed a copy of letter dated 13.11.2013 of the Deputy Commissioner (O A), Office of the Commissioner of Central Excise, Bhavnagar. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scrap but no duty was payable on the re-melted Ingots. (b) If scrap is imported, and then sent to the Steel Industry, the said industry will first have remove the impurities and only thereafter use for manufacturing steel. It would not be economically viable for the buyer to engage in such a process. It is for this reason, they prefer buying re-melted Copper Ingots rather than the scrap. 14.4 The aforesaid submission was already made by the appellant before the Adjudicating authority and no dispute was raised. We find that the Appellant submitted the cost certificate of the goods showing the economical viability of the goods in converting the ingots to scrap. The Adjudicating authority had not disputed the cost certificate in the Adjudication Order. In our considered view, the viability of manufacturing cost of final product would be determined following the Accounting principle and system of Institute of Cost Accountant and Institute of Chartered Accountant. The appellant submitted that Cost Accountant Certificate. The Deputy Commissioner (O A) by letter dated 12.11.2013 attempted to ascertain the viability of cost, Profit and Loss only on the basis of 7 invoices of suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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