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TMI Blog2017 (12) TMI 1430X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjudication is to be done on the basis of evidence produced before the Adjudicating Authority. As per Evidence Act evidence in totality is to be taken into consideration and therefore, finding recorded in the impugned Order by the Original Authority who passed the said Order dated 29/01/2010 is bad in law. The Original Authority did not understand the process either of assessments or of adjudication. Further the investigations were not undertaken to find out wherefrom the inputs were received by the appellant for the goods they manufactured and on which they paid duty and which were exported, if they had been received the inputs from M/s Ruchi Infotech System, Jammu or the other suppliers of inputs. The Original Authority was pre-determined to adjudicate the matter in the manner in which he has decided the issue and he was not just and fair and did not discharge his duty as an independent adjudicator. Demand set aside - appeal allowed - decided in favor of appellant. - Appeal No. E/1654-1663/2010, 1710-1713/2010, 1407/2010, 2389/2010, 3094/2010, 1070/2011 & 1869-1871/2011-EX[DB] With E/Stay/1652-1661/2010, 1714-1717/2010, 1442/2010, 2220/2010, 2876/2010, 1321/2011 & 2482- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ength of invoices issued by the units namely M/s Abhay Chemicals, Jammu, M/s Amarnath Industries, Kathua, M/s Rajdhani Aromatics, Samba, M/s Gaurav-Agrochem, Kathua, M/s G. L. Traders, Jammu, M/s V. S. Industries, Jammu, M/s Narbada Industries, Jammu, M/s Bhagwati Enterprises, Kathua, M/s Essar Overseas, Kathua, M/s Khazana Corporation, Jammu, M/s V. K. Sales, Kathua M/s Jay Ambey Corporation, Jammu should not be demanded and recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Sub-section (1) of Section 11A of the Central Excise Act, 1944. Further, M/s Arora Aromatics were called upon to show cause as to why rebate amounting to ₹ 6,71,18,555/- pertaining to the duty paid on the goods exported and refunded as rebate on export of the goods should not be recovered under the of Section 11A of the Central Excise Act, 1944. Through the said Show Cause Notice dated 28/11/2008, there was a proposal to impose penalty under Rule 26 of the Central Excise Rules, 2002 on Shri Pankaj Somani, General Manager of M/s Arora Aromatics, Shri Santosh Saharia, Attorney Holder of M/s National Chemicals, Tinsukia, Shri Anil Kumar Goel, Attorney Holder of M/s Rap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t rebate of duty paid was claimed and they received the said rebate. On 01/02/2006 a team of Central Excise Officers visited the factory premises of M/s Arora Aromatics and conducted various investigations. The investigations were mainly concentrated on the inputs received from M/s Ruchi Infotech System, Jammu who were availing benefit of Notification No. 56/2002-CE 57/2002-CE both dated 14/11/2002. The said Notification No. 56/2002-CE dated 14/11/2002 provides for refund of duty paid through PLA to the units manufacturing goods in Jammu Kashmir and simultaneously the manufacturers receiving the goods manufactured by units in Jammu Kashmir as their inputs were allowed Cenvat credit of entire duty paid even when the duty paid through PLA was refunded to the manufacturers of the goods in Jammu Kashmir Rule 12 of the Cenvat Credit Rules, 2004 allowed availment of such Cenvat credits. M/s Arora Aromatics were also receiving inputs from other units situated in Jammu, in respect of whom there was a proposal for recovery of Cenvat credit amounting to ₹ 9,10,10,103/- as stated above. M/s Arora Aromatics were also receiving inputs from M/s National Chemicals, Tinsukia. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Infotech System, Jammu did not have capacity to manufacture the goods, claimed to have been cleared by them which were used as inputs by M/s Arora Aromatics did not survive. Therefore, there was no strength in the allegation that without movement of inputs into the factory M/s Arora Aromatics have taken Cenvat credits. M/s Arora Aromatics submitted to the Original Authority the record in the Order-in-Original, copies of the Assessment Order issued by Uttar Pradesh Sales Tax Department, whereby the assessments including those of purchased by M/s Arora Aromatics were finalized for the Years 2003-04 up to the Year 2006-07 and in all those assessments, the purchase of raw-materials such as Menthol, Menthol Flakes De-mentholized (DMO), etc. from the suppliers at Jammu Kashmir including M/s Ruchi Infotech System, Jammu were assessed and no discrepancy whatsoever was noticed. M/s Arora Aromatics also submitted to the Original Authority making a reference towards enquiries conducted by Central Excise, Commissionerate, Dibrugarh in respect of M/s National Chemicals, Tinsukia, Assam and contended that during the visit to the said unit on 09/11/2005 Officers found that they had purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/11/2002 being accepted by Commissioner of Jammu. The ld. Original Authority has held that no assessment was being done by the Department and their units were working under self-assessment procedure. (C) In respect of the statement by the appellant that the Central Excise Officers working in Jammu conducted P.B.C. checks on the units supplying inputs to the appellant, the Original Authority as held that he did not find any such remark on the P.B.C. check report that production of Menthol Flakes was seen by the Officers by their own eyes. (D) In respect of the physical verification of the material i.e. inputs received by the appellant and verified by the local Assistant Commissioner on the receipt of the same in the factory of appellant M/s Arora Aromatics, the Original Authority has held that the verification report about receipt of inputs into the factory of M/s Arora Aromatics was arranged by the appellant and therefore, he did not accept the same. 5. On the basis of such findings, the Original Authority confirmed the demand. The operative part of the said order is reproduced below:- (1) (a) I disallow the Cenvat Credit amounting to ₹ 15,87,77,553/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the erroneously sanctioned/paid rebate amounting to ₹ 6,71,18,555/-) [Rupees Six Crore Seventy One Lakh Eighteen Thousand Five Hundred Fifty Five only], from M/s Arora Aromatics, under the provisions of Section 11A of the Central Excise Act, 1944 with extended period of limitation which was sanctioned/paid to M/s Arora Aromatics on the goods exported on payment of duty out of the Cenvat credit accumulated in their account fraudulently, alongwith interest as applicable rate read with Section 11AB of the Central Excise Act, 1944. (2) I impose penalty of ₹ 50,00,000/- (Rupees Fifty Lakh only) upon Shri Pankaj Somani, General Manager of M/s Arora Aromatics, Sambhal, Moradabad under Rule 26 of the Central Excise Rules, 2002 for their involvement in fraudulent availment of Cenvat credit and utilization thereof for payment of duty on the goods exported by M/s Arora Aromatics, under rebate claim. (3) I impose penalty of ₹ 10,00,000/- (Rupees Ten Lakh only) upon Shri Santosh saharia, Attorney Holder of M/s National Chemicals, Tinsukia, Assam under Rule 26 of the Central Excise Rules, 2002 for their involvement in fraudulent act as discussed above. (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acs Six Thousand Nine Hundred Twenty Two only] representing amount of Cenvat credit fraudulently availed by M/s Arora Aromatics during the period from 16/07/2008 to 30/06/2009, I order to recover the same from M/s Arora Aromatics alongwith interest payable under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A 11AB of the Central Excise Act, 1944. (2) I impose a penalty of ₹ 1,03,06,922/- [Rupees One Crore Three Lacs Six Thousand Nine Hundred Twenty Two only] upon M/s Arora Aromatics under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. (3) I impose penalty of ₹ 97,58,732/- [Rupees Ninety Seven Lacs Fifty Eight Thousand Seven Hundred Thirty Two only] upon M/s Ruchi Infotech System, Jammu, under Rule 26(2)(ii) of the Cenvat Excise Rules, 2002. (4) I impose penalty of ₹ 5,48,190/- [Rupees Five Lacs Forty Eight Thousand One Hundred Ninety only] upon M/s Amarnath Industries, Kathua, under Rule 26(2)(ii) of the Cenvat Excise Rules, 2002. (5) I impose penalty of ₹ 5,00,000/- [Rupees Five Lacs only] upon Shri Pankaj Somani, General Manager of M/s Arora Aromatics, Sambhal, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reason to doubt the veracity of the invoice. A certificate dated 30.04.2009 was also provided from the engineers who have actually installed the said heating tanks. The Original Authority has held that the said certificate has been issued after the issue of show cause notice and hence it is afterthought and not acceptable. Appellants claim is that the said certificate is only to further the contention that heating tanks were already there and supplied by M/s. J.K. Insulation. The invoice was already resumed by the Department and hence there is no question of the certificate of installation to be an afterthought. The fact that the melting tank was found by the Central Excise officers of Jammu during PBC checks, was placed before the Original Authority. However, the Original Authority has not agreed to the PBC checks on the ground that there is no remark of verification about the installation of melting tanks. (ii) Appellants submit that the fact that stock of menthol was found in the melting tanks of PBC checks by the officers and the melting tanks were already available in the factory of supplier of inputs. The Central Excise Officers have clearly mentioned in PBC check da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti forms at the Madhopur check post in the State of Punjab shows the different description of the goods passing through the borders. Appellants have adduced various evidence to show that the movement of the goods to the factory of M/s. Ruchi Infotech System as well as from the factory of M/s. Ruchi Infotech System to the premises of main Appellant( Arora Aromatics) have taken place and the documents obtained under the Right to Information Act from the Department of Trade Taxes, Punjab have been placed on record. Regarding the description, the Department of Trade Taxes, Punjab in its reply dated 20.04.2011 to RTI application dated 10.06.2009 has clearly mentioned that their computer system is unable to accept the description of the menthol for the reason that the commodities like MENTHOL FLAKES, MENTHOL SOLUTION and DEMENTHOLIZED OIL are not in their system and these commodities will be included/entered in the system at the earliest. Further, they have clearly mentioned in the report dated 26.02.2009 that the word mentholis not appearing in the list of commodities master which the system has adopted. Thus the finding of the Original Authority that description is different is not sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jammu units to intimate the local Central Excise range staff about the receipt of the materials. Accordingly the Appellants have submitted due intimations of the receipt of the materials. Thereafter, the then Commissioner was not satisfied by the mere intimation and therefore, gave further oral directions to the range staff to physically verify the material received. Accordingly, the Appellants have placed on record various intimations of the inward consignments which were verified by the local range staff regarding receipt of the materials. Thereafter, the Original Authority gave further oral directions to the staff that in addition to the intimation in writing, verification by the staff, samples should also be drawn from the consignments received from Jammu units. Accordingly, samples were also drawn from a number of inward consignments. (g) In such a situation, the Appellants submitted to the Original Authority that the receipt of the materials from Jammu units cannot be doubted. At internal page 301 of the impugned order, the Original Authority has not agreed with the claim and the verbal directions to check consignments/draw samples and has held that no such requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted in view of various documents, PBC checks, order of the Commissioner, Jammu, documents maintained by the DIC officers, border check records, sales tax records and the check post obtained under the RTI which Original Authority has not agreed to. There are several suppliers such as M/s. Abhay Chemicals, M/s. Rajdhani Aromatics, M/s. Gaurav Agro Chem and others in respect of which the Cenvat Credit to the extent of ₹ 9,10,10,103/- has also been denied. There is no investigation, no findings in any manner by the Original Authority about the supply of input materials by these manufacturers at Jammu. There is no whisper about any documentary evidence to contend that the materials have not been supplied by these input suppliers. For this reason also, the impugned order is not sustainable. The list of documents in support of the Appellants claim about the factual receipt of the raw materials are under: (i) PBC Checks (ii) Order of the Commissioner, Jammu (iii) Sample copy of register maintained as per DIC (iv) Intimations at Meerut (v) Refund orders from Jammu (vi) Verification by C.E. officers Range Billari (vii) Drawl of samples by the range ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law. The Original Authority did not understand the process either of assessments or of adjudication. Further the investigations were not undertaken to find out wherefrom the inputs were received by the appellant for the goods they manufactured and on which they paid duty and which were exported, if they had been received the inputs from M/s Ruchi Infotech System, Jammu or the other suppliers of inputs. Further, the additional evidence submitted by the appellant indicated that in respect of units in Jammu, Central Excise Officers visited the factory premises and seen that the manufacturing process going on was evidence by them and such evidences being on record and submitted by the appellant it was the duty of the Original Authority to accept them and not to discard by saying that the Officers have not seen the goods being manufactured by their own eyes. Further, the receipt of inputs was verified by the Officers of Central Excise Department and sample of the same were also drawn and forwarded for Chemical Examination. Such evidence was also not accepted by the Original Authority, Therefore, it appears that the Original Authority was pre-determined to adjudicate the matter in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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