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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 ..... ioned in annexure-I of the Notification. Accordingly, VKM had filed the required declaration for availing of the duty exemption under notification No. 56/02-CE and were availing of the same. During the period of dispute, that is, from December 04 to November 2006, the goods manufactured by a manufacturer, availing of this exemption notification were exempt from the duties of excise leviable under Section 3 of Central Excise Act, 1944 and the additional duty of Excise leviable under Additional duty of Excise (Goods of Special Importance) Act, 1957 [AED (GSI)] and and Additional Duties of Excise (Textile and Textile Articles) Act, 1978 [AED(T&TA)] to the extent these duties are paid every month through the PLA, after utilizing, the cenvat credit available at the end of the month to the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Road, Chirawa, Jhunjhunu. (4) M/s Ganpati Sales Corporation, 25/97-98 A, Gali No. 14,Vishwas Nagar, Shahdara, Delhi. (5) M/s Hari Overseas, B-39 Ganpati Plaza, Bhiwadi Distt. Alwar. (6) M/s Sai Nath Enterprises, Kabadi Gali, New Bus Stand, Behror, Distt. Alwar. (7) Jain Sales Corporation, A-4, Ist Floor, Oberoi Building, Dilshad Garden, Delhi. (8) M/s VK Metal Works, 9/84, Shastri Gali, Vishwas Nagar, Delhi and (9) M/s Surya Traders, 15, Kanchan Nagar, Nimbahera, Chitorgarh, Rajashthan. 1.3.1 On enquiry in respect of M/s Bhartiya Trade Linkers, M/s Shri Krishna Traders, M/s Hari Overseas, M/s Sai Nath Enterprises, M/s Ganpati Sales Corporation and M/s Jain Sales Corporation, the same were found to be not existing and non-traceable. As regards M/s Surya Traders, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P) Ltd., (hereinafter referred to as UGTCPL) both based in Delhi. On inquiry with UGTCPL, they confirmed having transported the consignments of scrap from Delhi to VKMs Factory in Jammu and also they confirmed the transportation of ingots from Jammu to Delhi and other places. However, so far as the transportation by KKR is concerned, it was found that which they have an office in Delhi, that they do not have any office in Jammu. Statement of Shri Manoj Yadav, Proprietor of KKR was recorded on 16.03.2010 wherein he stated that though earlier, he had opened a branch office in Jammu at Plot No. 42, Yard No. 06, Narwala Transport Centre, the same has now been closed, that he is transporting the goods for VKM from Delhi to Jammu and from Jammu to Delhi and other places, that he is transporting copper 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant company, while setting up this unit, had not availed this capital subsidy, which gave rise to suspicion that the purpose of setting up this unit was not the production of copper but only the misuse of the exemption notification no. 56/02-CE and to pass on bogus credit to manufacturers using the ingots for manufacturers of various other copper products. 1.8 It is in view of the above investigations that a Show Cause Notice dated 05.01.2010 was issued to VKM, Sh. Shankar Lal Gupta, Devendar Kumar Jain, M/s Vikash Traders, UGTCPL, KKR and others for - (a) Recovery of Central Excise Duty of Rs. 42,37,24,491/- from VKM erroneously refunded to them by various order passed by the Assistant Commissioner under notification no. 56/02-CE on the basis of alleged fraudulent claims 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 consignments involving 247.880 MT of scrap from M/s Sai Nath and M/s Hari Overseas indicated that the vehicles mentioned in the invoices were non-transport vehicles like Auto Rickshaw, Maruti Van, Tempo, Tankers etc; d) At the time of officers visit to the factory premises of VKM on 29.11.2006, there was no manufacturing activity and there was neither any stock of copper scrap nor any stock of used burner blocks which are required for lining the furnace and which have to be replaced after every 18 to 20 heats; e) There was no power connection and the unit was claimed to have been run by a DG Set of 62.5 KVA capacity but the meter reading of the DG Set at that time was 8066.10 Hours from which it appeared that there was little manufacturing activity; and f) Statement dated 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of copper ingots from Jammu to Delhi and various other destinations, the services of the same transporters have been utilized and when the Commissioner has given a finding that there is no evidence to prove that UGTCPL have not transported any material and have issued only bogus GRs, the Department cannot allege that no goods were transported by UGTCPL under their GRs from Jammu to Delhi and other destinations, that as regards the GRs issued by KKR regarding transportation of copper scrap from Delhi to Jammu and transportation of Copper Ingots form Jammu to Delhi and other places, the Department heavily relies on the fact that there was no office of this transport company at 53 Transport Nagar, Jammu and in this regard the Department relies upon the statement of Shri Kulwant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the exemption notification no. 56/02-CE and only on the basis of the order passed by Assistant Commissioner, the appellant unit was taking the self credit in the PLA, that all the orders passed by the Assistant Commissioner are based on the verification report given by the Range Officer regarding details of the production and details of duty payment, that in course of search of the factory, a file containing the purchase bills of light diesel oil had been recovered, that the officers had conducted verification with the suppliers of the LDO (M/s Paras Oil Distributors), who have confirmed having supplied the LDO, that during the entire period of dispute, a total of 94 tankers of LDO were purchased, that when there is no evidence that the purchase of LDO was bogus, the Department 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 factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 28.02.2008 sanctioning refund for April 2007 order dated 28.02.2008 sanctioning refund for month of May 2007, order dated 21.05.2008 sanctioning refund for month of June 2007, order dated 08.05.2009 sanctioning refund for the month of July 2007 and order dated 08.05.2009 sanctioning refund for the month of August 2007, that after the August 2008, the factory of VKM has closed down, that when even after the visit of the officers to the unit in November 2006, the Jurisdictional Central Excise Authorities continued to sanction refund to the appellant unit every month, the Department, cannot allege that during period from December 2004 to November 2006 there was no manufacture and hence no refund by the way of self credit is admissible, that at the time of visit to the factory, 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 Sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y VKM and the requirement of pre deposit of penalty by Sh. Shankar Lal Gupta, Authorized Signatory of VKM may be waived for hearing of their appeals and recovery thereof may be stayed. 2.2 Shri Prabhat Kumar, Advocate, the Ld. counsel representing KKR and Shri D K Jain of M/s Vikash Traders, pleaded that so far as Shri D K Jain of M/s Vikash Traders is concerned though, initially Shri Jain in his statement dated 29.11.2006 and 04.01.2008 had admitted to have issued bogus invoices, he vide his letter dated 05.01.2008 had retracted his statement, that though subsequently under his letter dated 28.01.2008, he again reiterated his statement dated 04.01.2008, in course of his cross examination, during adjudication proceedings on 12.10.2011, he retracted his statement dated 28.01.2008, 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 consig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of the Commissioner in the impugned order and emphasized that bulk of the copper scrap (46%) had been supplied by M/s Vikash Traders, that Sh. D K Jain father of Vikash Jain, Proprietor of M/s Vikash Traders, in his statement dated 26.11.2006 and thereafter on his statement dated 04.01.2008 has clearly stated that no scrap had been supplied by him and only bogus invoices had been issued for some commission, that though, he has retracted his statement dated 04.01.2008 on 05.01.2008, but on 28.01.2008 he had again reiterated his statement dated 04.01.2008, that in view of this, his statement in the cross examination on 12.10.2011 that his statements dated 04.01.2008 and 28.01.2008 had been recorded under duress, is not acceptable, that in addition to M/s VK Traders, 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 regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of copper ingots for the purpose of their visit. He also pointed out to statement dated 28.11.2007 of Shri Atul Navratan Lal Sharma of M/s Singla Road carriers, New Delhi, who was looking after the Transport Companys branch at Ahmadabad, wherein he stated that he was transporting only MS Pipes, Plastic granules etc. while as per the records of VKM this transport company had transported a total of 574.162 MT of copper ingots from Delhi to Ahmadabad. He pleaded that this shows that no copper ingots had been manufactured or cleared by VKM. 3.1. He also pleaded that there was no power connection in the unit during the entire period of dispute though the appellant claim to have carried out production by using the DG set of 62.5 KVA Capacity, the meter reading of the generator 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 requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s firm had issued only bogus invoices regarding supply of copper scrap to VKM without supplying any copper scrap to them. (b) Non-existence of the other suppliers that is M/s Bhartiya Trade Linkers, M/s Krishna Traders, M/s Ganpati Sales Corporation, M/s Hari Overseas, M/s Sai Nath Enterprises, M/s Jain Sales Corporation and M/s Surya Traders. (c) The fact that the cheques being issued by VKM to M/s Vikash Traders regarding supply of scrap were being deposited in M/s Vikash Traders account in Krishna Nagar Delhi Branch of Axis Bank and on the same day, the amounts were being transferred from the account of M/s Vikash Traders to the accounts of M/s Garima International & M/s Aggarwal Sales Corporation. Similarly the cheques being issued by VKM to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure and are not his voluntary statements. In view of the changing statements of Shri DK Jain, it would not be correct to place absolute reliance on the same without corroboration from some other evidence. In this regard, we find that these statements of Shri DK Jain are not corroborated by any other independent evidence, inasmuch as the consignments of scrap from Delhi to Jammu had been transported by using two transporters KKR and UGTCPL. In respect of UGTCPL, the Commissioner himself in para 95 of the impugned order has stated that there is not sufficient evidence to prove that the GRs issued by them were bogus, and that they have not transported any material. Similarly, in respect of the scrap transported under the GRs of KKR, Shri Manoj Yadav, Proprietor, of this 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 expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted to show that M/s UGS Finance and M/s Gainwell Portfolio Pvt. Ltd were the entities controlled by Shri Vinod Kumar Jain of VKM. If there was conclusive evidence linking Shri V K Jain with M/s Agarwal Sale Corporation, M/s Garima International, M/s UGS Finance and M/s Gainwell Portfolio (P) Ltd., a presumption of flowback of money from scrap supplier to VKM and presumption regarding non supply of scrap by scrap suppliers could be made but in absence of any such evidence linking the above mentioned companies with VKM, no such presumption can be made. In this regard, the statement of Sh. Deepak Dhingra, Manager of Krishna Nagar, Delhi branch of Axis Bank stating that one Sh. Rajiv claiming to be an employee of VKM used to withdraw the cash from the accounts of copper 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 UG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crane, Rails, one air compressor, 26 moulds, rails fixed on the ground for movement of moulds, one electronic weighing machine, two winch machines, two hydraulic oil tanks of 12000 Ltr. and 10,000 Ltr. Capacity and one DG Set of 62.5 KVA capacity. There is no evidence that these machines were not in working order. Moreover, it is seen that while during the period of dispute, there was no power connection, the power requirement was being met by 62.5 KVA DG Set. At the time of officers visit to the factory, the total working hours were 8066. Since, the unit had started functioning, sometime in December, 2004, it would amount to working of about 12 hours per day. Therefore, the working of the DG Set also is not compatible with the Departments allegation that there was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictory stand for the period from December 2009 to November 2006 and for period from December 2006 to August 2008 when the machinery installed and the staff employed was the same. 13. 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. 14. From the evidence on record against VKM and its proprietor Sh. Vinod Kumar Jain, as discussed above, the same, in our prima facie view, does not total up to constitute proper evidence 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 ..... 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