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TMI Blog2015 (11) TMI 1478X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2006 to August 2008 when the machinery installed and the staff employed was the same. Even if statement of Sh. Atul Sharma, Manager of the Ahmadabad Branch of M/s Single Road Carriers, Delhi is believed, it would prove only the non transport of copper ingots of VKM from Delhi to Gujarat. By itself, this statement cannot lead to inference that there was no manufacture of copper ingots by Jammu unit of VKM and there was no transportation of copper ingots from Jammu to Delhi. - The allegation against VKM is showing bogus receipt of copper scrap and bogus manufacture and clearances of copper ingots without manufacturing and clearing any goods. This is the allegation which has been upheld against VKM in the impugned order. If this is so, there would be no duty liability against VKM and since VKM have paid the duty and have taken its refund under notification no. 56/02-CE, it amounts to non-payment of duty. Hence, in our prima facie view, there cannot be any fault recovery of duty from there as refund under notification no. 56/02-CE given to VKM is of the duty which was paid by them, while the same were not required to be paid. The real allegation against VKM would be the issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent possible for payment of duty. The manufacturer availing of this exemption is, first, required to pay the duty payable for a month to the extent possible through the cenvat credit available at the end of the month and if any duty is still payable, the same is paid through PLA and thereafter he can claim the refund of the duty paid through PLA either by making application to the Assistant/ Deputy Commissioner or he can avail the refund by the way of self credit entry in the PLA and inform the Assistant/ Deputy Commissioner who, passes an order sanctioning the refund claim available under this notification. In this case the appellant unit, after payment of duty through PLA in the manner prescribed in this notification were filing ER-1 return and refund applicaiton and only after the Assistant Commissioners Order sanctioning the refund of the duty paid through PLA, were taking the credit in the PLA. 1.2 On 29.11.2006, the factory premises of VKM was visited by the Officers of DGCEI. On that day, there was no production in the factory. The officers conducted the search of the factory in presence of witnesses and took over RG-1 registers, the PLA registers, the scrap registers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premises on search was found to be of one Sh. Gunwant Lal Sharma, a tax consultant who stated that who stated that one Sh. Satish Kumar used his services and address for registration of a firm M/s Surya Traders with Sales tax authorities and that no business transaction has taken place from this premises. 1.3.2 As regards, M/s Vikash Traders, its proprietor was found to be one Shri Vikash Jain who stated that his father Shri D.K. Jain is managing this business. On inquiry with Shri DK Jain, he stated that M/s Vikash Traders is a consignment agent for M/s Agrawal, sales corporation and M/s Garima International. He, thereafter, in his statement dated 29.11.2006 stated that M/s Vikash Traders were only issuing invoices to VKM without supplying of any copper scrap and for which they were they were getting commission from M/s Garima International and Agarwal Sales Corporation. 1.3.3 It was also found that M/s Vikash Traders, M/s Bhartiya Trade Linkers, M/s Shri Krishna Traders, M/s Hari Overseas, M/s Sai Nath Enterprises and M/s Surya Traders, M/s Ganpati Sales Corporation and M/s Jain Sales Corporation had account in Krishna Nagar, Delhi Branch of Axis Bank. It was found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r scrap from Delhi to Jammu, that for transportation of copper scrap from Delhi to Jammu, the GRs are issued from Delhi Office, and that as regards the transportation of Copper Ingots from Jammu to Delhi and other places, he has authorized Shri Shankar Lal Gupta of VKM to issue the GRs. On inquiry at Jammu, it was found that there was one M/s Reen Road Carriers at plot no. 42, transport nagar, Narwal, Jammu and Shri Kulwant Singh, Proprietor of M/s Reen Road Carriers in his statement stated that no firm named M/s Kanpur Kashmir Roadways existed at that address, that about two years back he had allowed one Shri Manoj Yadav, Proprietor of KKR to use his office address and telephone number in his records like GRs etc., and that Shri Manoj Yadav, usually handed over his GR books to the factory owners and the factory owners in turn issued the GRs according to their convenience. 1.6. Though, Shri Shankar Lal Gupta, Authorized Signatory of VKM is his statement on 29.11.2006, the day of the search had stated that copper ingots are being manufactured in the factory of VKM from Copper Scrap, in one shift, in his furhter statement recorded on 21.01.2009 he stated that no production was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aims made by them, along with interest thereon under section 11AB; (b) Imposition of penalty on VKM under section 11AC of Central Excise Act 1944; and (c) Imposition of penalty under Rule 26 of the Central Excise Rule, 2002 on Shri Vinod Kumar Jain, Proprietor of VKM Shri Shankar Lal Gupta, Authorized Signatory of VKM, DK Jain of M/s Vikash Traders, KKR, UGTCPL and other noticees. 1.9. The above Show Cause Notice was adjudicated by Commissioner vide order in original dated 16.11.2012 by which (a) the Commissioner confirmed the duty demand of ₹ 42,37,24,491/- against VKM holding that the same has been erroneously refunded to them under notification no. 56/02-CE, (b) Confirmed the demand of interest on the above mentioned duty demand under section 11AB and imposed penalty of equal amount on them under section 11AC; and (c) Imposed penalty under Rule 26 of the Central Excise Rule 2002, of Rs, 10,00,000/- Shankar Lal Gupta, Authorized Signatory of VKM, of ₹ 5 Lakh on Shri DK Jain of M/s Vikash Traders, of ₹ 2 Lakh on KKR, and of ₹ 1 Lakh on Shri Suresh Kumar, Proprietor M/s Krishna Traders. No penalty was imposed on UGTCPL. Similarly no pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 21.01.2009 of Shri Shankar Lal Gupta, stating that there was no manufacture of copper ingots from copper scrap in the factory of VKM, and that the copper scrap received was being returned as such under the invoices of copper ingots, that as regards, the statement dated 29.11.2006 of Shri DK Jain, the same has been retracted by him, that though in his subsequent statement dated 04.01.2008, he again stated having issued bogus invoices regarding supply of copper scrap to VKM, statement 04.01.2008 was retracted by him on 05.01.2008, that though subsequently Shri DK Jain under his letter dated 28.01.2008 again reiterated the statement dated 04.01.2008, but in course of his cross examination during adjudication proceedings on 12.10.2011, he again retracted his statement dated on 28.01.2008, that in view of frequent changing of statements by Shri DK Jain, he has to be treated as an unreliable witness and hence, his statements have no evidentiary value, that though, the Department alleges that the cheques issued by VKM to M/s Vikash Traders for supply of scrap were being deposited by M/s Vikash Traders in their account in the Krishna Nagar Delhi Branch of Axis Bank and immediately there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Singh, proprietor of M/s Reen Road Carrier, 42 Transport Nagar, Jammu, wherein he has stated that though about two years back he had allowed one Shri Manoj Yadav, proprietor of KKR to use his address and telephone number in its GRs, but no such firm had existed at 53 Transport Nagar, Jammu address and that Sh. Manoj Yadav used to hand over the GR books to the factory owners, that the Department has ignored the statement of Shri Manoj Yadav, wherein he has staed that though initially he had set up an office in Jammu but he has closed the same, and that he had handed over the GR books to Shri Shankar Lal Gupta of VKM for issue of the GRs for transportation of ingots from Jammu to Delhi and other destinations, that in view of this it cannot be concluded that GRs issued by KKR were bogus and no goods were being transported under their GR, more so, when no such statement has been made by Shri Manoj Yadav, Proprietor of KKR, that not only this, any truck carrying any goods from Delhi for the state of J K has to pass through Punjab and vice versa and in this regard, as per the Departments own inquiries at the check posts, at the Haryana-Punjab border and Punjab-J K Border, the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment cannot allege that the oil fired furnace for manufacture of copper ingots was not functioning, that as noted in the punchnama of search of factory on 29.11.2006, the stock of LDO found in the factory tallied with the quantity of LDO mentioned in the records, that at the time of officers visit, as per meter reading of the DG Set, it had worked for 8066 Hours, that assuming that every month the factory was working for 25 days, this would come to about 12hours working of DG Set every day, that from the meter reading of the DG Set no adverse conclusion can be drawn, that just because there was no stock of copper ingots or copper scrap, at the time of officers visit, no adverse conclusion can be drawn, that similarly just because at the time of officers visit, no stock of used burner blocks was found in the factory, no adverse conclusion can be drawn as the same may have been disposed of, more so, when at the time of visit, in addition to one oil fired melting furnace melting furnace, the other machinery like tqo hydraulic cylinders, one each blower and chimney, one pusher machine, one EOT crane, one air compressor, rails fixed on the ground for movement of moulds, 26 moulds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory, a file containing the weighment slip of the copper scrap received and weighment slips of the copper ingots being dispatched had been recovered which show that the copper scrap was being received and the copper ingots were being cleared, that though the Department has sanctioned refund by the way of self credit under notification No. 56/02-CE to VKM for period from December 2004 to November 2006, no Show Cause Notice up till now has been issued to the appellant for denial of self credit for the subsequent, that the Department cannot take stand that while during period post November 2006 period, there was manufacture, but during period from December 2004 to November 2006, there was no manufacture, that inquiry conducted for transportation of copper scrap between Rajasthan Delhi is in respect of 51 consignments involving 460.29 MT of scrap which constitutes, only 4.3% of the total scrap which has been received by VKM during period of dispute, that during period of dispute, a total of 1320 consignments of scrap had been received whose entries and exit in Punjab and entry in the check post on the Punjab J K Border are duly recorded and same is the position in respect of 1212 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.01.2008, that Shri Jain had retracted his statement and since his statement is not corroborated by any other evidence on record, it cannot be concluded that he has issued bogus invoices, more so, when there are entries at the check posts in Punjab, regarding the passing of the consignments of copper scrap through Punjab and also there are entries in the check post at Punjab J K Border regarding entry of the consignments of copper scrap into the state of J K, that some of the consignment of copper scrap supplied by M/s Vikash Traders, had been transported by UGPCTC in respect of whom, the Commissioner in para 95 of the order has given a finding that there is no evidence to hold that the GRs issued by them are bogus, that in view of this the Department cannot allege that no goods had been transported under the GRs regarding Copper scrap issued by UGTCPC, that as regards, the consignments transported by KKR, the Department has chosen to rely upon the statement of Shri Kulwant Singh, proprietor of M/s Reen Road Carriers, 42 Transport Nagar, Jammu, that no adverse conclusion can be drawn from this statement, that just because KKR had no office in Jammu, but had office in Delhi, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are eight other suppliers, all of whom have been found to be non-traceable that when out of nine suppliers, one supplier M/s Vikash Traders has stated that he had issued only bogus invoices and other eight suppliers have been found to be non-existent, the only conclusion which can be drawn is that no copper scrap had been received by VKM from the 9 suppliers, that the Department has also conducted inquiry regarding transportation of scrap, claimed to have been received from the suppliers in Rajasthan, that in this regard, on inquiry with 19 transporters who had transported 24 consignments of scrap weighing 212.41 MT it was revealed that those transporters had not transported any scrap and similarly inquiry in respect of 27 consignments involving 247.88 MT of scrap revealed that the registration no. of vehicles claimed to have been used for transportation were Auto Rickshaw, LCVs, Tempos, Tankers etc., in which the goods covered under invoices could not have been transported, that when there was no supply of scrap from the scrap suppliers, there is no question of receipt of any scrap by VKM in their factory at Jammu and there is no question of manufacture of any copper ingots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erator on the date of visit, that is, on 29.11.2006 indicated that as on that date it had run only for 8066 Hrs. which is not sufficient to produce the quantity of copper ingots which is claimed to have been produced during this period. 3.2 Shri Pramod Kumar accordingly pleaded that the appellant have not been able to establish prima facie case in their favour and hence this is not the case for waiver from the requirement of per-deposit. 4. Shri B L Narsimhan in rejoinder, pleaded that the appellant had applied for power connection on 14.12.2004, the month in which the unit had commenced production and the same was sanctioned only in December 2006, by an order dated 12.12.2006 by Assistant Executive Engineer and since then, the unit has a power connection of 50 HP. He pleaded that though during the period of dispute there was no power connection, the power requirement for operating various machines was being met by the DG Set. 5. We have considered the submissions from both the sides and perused the records. The allegation against VKM is that during the period from December 2004 to November 2006, they did not manufacture any goods in their factory and only showed productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other suppliers were also being deposited in their accounts in Krishna Nagar, Delhi Branch, of Axis Bank and on the dame day, the amounts were being withdrawn and were being deposited in the account of M/s UGS Finance Pvt. Ltd. and M/s Gainwell Port Folio (P.) Ltd. (d) Inquiry with certain transporters regarding movement of scrap from Rajasthan to Delhi which indicated that while in some cases the transporters have denied having transported the scrap, in other cases the vehicles claimed to have been used were non-transport vehicles. (e) Statement dated 21.01.2009 of Shri Shankar Lal Gupta authorized signatory of VKM stating that there was no manufacturing activity in the factory of VKM, that no copper ingots were being manufactured and that the copper scraps received was being returned back as such but under the invoices pertaining to copper ingots. (f) Statement of Shri Kulwant Singh proprietor, of M/s Reen Road Carriers, 42, Transport Nagar, Jammu, wherein he has stated that no firm name Kanpur Kashmir Roadways had existed at 53 Transport Nagar, Jammu, which was the address of M/s Kanpur Kashmir Roadways at Jammu. (g) At the time of officers visit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s transport company has confirmed having transported the goods. Not only this, the consignments of any goods in course of their movement from Delhi to J K have to pass through Punjab and there are entries regarding these consignments in the check posts at Haryana-Punjab Border and Punjab - J K Border. Beside this, all the consignments of goods being imported into the state of J K and the consignments of goods being exported from the state of J K to other states attract toll tax, unless the same is exempted. The toll tax exemption in respect of the imported goods is subject to the condition of being used in the manufacture. It is seen that the appellant unit was availing of exemption from Toll Tax in respect of copper scrap received by them and the copper ingots being sold by them to buyers outside in J K and in this regard they were maintaining the import and export register which was being regularly checked by the toll tax authorities and specific exemption order in this regard has been passed. Therefore, we are of the prima facie view, merely on the basis of the statements of Shri DK Jain of M/s Vikash Traders, it cannot be inferred that this firm had issued bogus invoices for sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrap suppliers is of no help as the said Rajiv has not been traced. There is nothing in the statement of Sh. VK Jain of VKM on this point. There is no evidence on the point as to on which persons introduction, the accounts of various copper scrap supplies were opened in Krishna Nagar, Delhi branch of the axis bank and who are the actual persons behind M/s Agarwal Sales Corporation, M/s Garima International, M/s UGS Finance and M/s Gainwell Portfolio. Though, Sh. Jitendra K. Maheshwari, Director of M/s Gainwell Portfolio stated that he had also taken the premises of M/s UGS Finance on rent, and he named one Sh. Surendra Kr. Jain as the person behind these two finance companies, there is no evidence to link Sh. Surendra Kr. Jain with Sh. Vinod Kr. Jain. There is nothing in the statement of Sh. Surendra Kr. Jain to link him with VKM and its proprietor Sh. Vinod Kr. Jain. In any case, as discussed above, the Departments allegation of non receipt of scrap is not compatible with the statement of Shri Shankar Lal Gupta, that the scrap consignments were being received in trucks but were being returned back without any processing but under the invoices of copper ingots. 9. Next comes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no manufacturing activity. No inquiry has been conducted with the adjoining units of other manufacturer to prove that the power generated by the DG set in VKM was being sold to other manufacturers. It is also seen that for running of the DG Set, HSD was being used and there is record of purchase of HSD also which also stands verified by the Department. 10. During the period of dispute, the factory was being visited by the Jurisdictional Central Excise Officers from time to time and they have made remarks in the RG-1 register regarding conducting production of based (PBC) Checks. The officers were cross examined and in course of cross examination, they have maintaining this stand. There is no allegation against the Departmental officer that they colluded with VKM. Beside this, it is also seen that toll tax authorities had also verified the import and export register for the purpose for toll tax exemption and on the basis of this verification only the exemption from toll tax had been granted. 11. In course of manufacture of copper ingots from copper scrap, copper waste called keeth arises. The appellant during the period of dispute classified copper keeth under heading 2620 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of probability. There are gaping holes lift in the investigator- like total lack of evidence to link Sh. Vinod Kumar Jain, Proprietor of VKM with the accounts of various copper scrap suppliers opened in Krishna Nagar, Delhi branch of Axis Bank to link him with Sh. Jitendra Kumar Maeshwari, Director of M/s Gainwell Portfolio and Sh. Surendra Kumar Jain, named by Sh. Jitendra Kumar as the person behind M/s Gainwell Portfolio and M/s UGS Finance which cannot be bridged by invoking section 114 of the Indian Evidence Act, 1872. 15. The allegation against VKM is showing bogus receipt of copper scrap and bogus manufacture and clearances of copper ingots without manufacturing and clearing any goods. This is the allegation which has been upheld against VKM in the impugned order. If this is so, there would be no duty liability against VKM and since VKM have paid the duty and have taken its refund under notification no. 56/02-CE, it amounts to non-payment of duty. Hence, in our prima facie view, there cannot be any fault recovery of duty from there as refund under notification no. 56/02-CE given to VKM is of the duty which was paid by them, while the same were not required to be paid. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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