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TMI Blog2018 (2) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... here the main appellant issued the invoices. In that case, the Tribunal has taken a consistent view that Cenvat Credit cannot be denied merely on the basis of statements, which are un-corroborative in nature. The case of the Revenue is that the buyers made payment of the cheques and the main appellant returned cash after deducting 2-3% commission. The Investigating officer had not made any attempt to examine the Bank Account. No cash was recovered at any place, as the matter involved huge amount of cash - The Tribunal in the case of Aum Aluminium Private Limited Vs. Commissioner of Central Excise, Vadodara [2012 (4) TMI 557 - CESTAT AHMEDABAD] observed that un-accounted sales proceeds in substantial cash from factory or office premises or anywhere else in direct control of the assessee are not recovered and therefore, the charge of clandestine removal of goods cannot be sustained. The appellant cleared the goods on payment of Central Excise duty and also paid VAT/CST. The entire transaction is duly recorded in the books of accounts which were duly audited. Such documents and records cannot be brushed aside merely on the basis of various statements of the transporter, some buyers et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search and seized several records and documents. It has also recorded the statements of the buyers, transporters etc. of the main appellants. A Show Cause Notice dated 12.02.2007 was issued to 36 Noticees including the appellants herein. 2. By the impugned Order, the Adjudicating authority confirmed the demand of Cenvat Credit of ₹ 9,73,52,981/- along with interest and also imposed penalty of equal amount of Cenvat Credit on the main appellant. It has appropriated the amount of ₹ 15 Lacs as deposited by the main appellant. It has further imposed penalty of ₹ 1 Crore upon Shri Naresh Guleria, Director of the main appellant under Rule 26 of the Central Excise Rules, 2002. It has also confirmed the demand of Cenvat Credit along with interest and imposed penalties on the manufactures of Wires and Cables, who have availed Cenvat Credit on the basis of the invoices issued by the main appellant. It has also imposed penalties on the dealers who had supplied the duty paid inputs to the main appellant. Hence the appellants have filed these appeals before the Tribunal. 3. The Learned Advocates on behalf of the main appellant and its Director argued the matter at length and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consumption. It is admitted fact on record that the appellant having three generators, two of them was 125 KVA each in running condition installed in their factory. (l) During the material period, the main appellant had supplied PVC Compound/Master Batches to 86 buyers, out of which 25 buyers are located in Delhi-I Commissionerate and remaining 61 buyers are located in the jurisdiction of other commissionerate, outside Delhi-I. The present Show Cause Notice relates to 25 buyers located in Delhi-I Commissionerate. There are 16 buyers to whom Show Cause Notices were issued outside Delhi-I and out of which notices have been dropped for 14 parties. That no Show Cause Notices were issued against 45 buyers, outside Delhi-I Commissionerate, which would show that the main appellant was undertaking the manufacture of the subject goods. (m) The duty amount of ₹ 9,37,52,981/- is demanded thrice in so far as the supplier of the inputs, buyers and the main appellant herein are concerned. (n) It is significant to note that on 26.05.2006, the Director of the main appellant was arrested. The statements recorded prior to 26.05.2006 of various persons including the Director of the Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the statement in its written submission. It is also submitted that 25 parties located in Delhi had accepted and deposited the amount in respect of Cenvat Credit on the basis of the invoices issued by the main appellant. There are other 22 parties, who had approached settlement commission and had admitted their duty liability in respect of Cenvat Credit demand on the basis of the invoices issued by the main appellant. 6. Heard both the sides and examined the case records. 7. We find that the case of the Revenue is that the main appellant stated to be manufacturing PVC Compound and Master Batches showing more production of PVC Compound and Master Batches, whereas study of consumption of power supplied by NDPL and Generators installed in their factory would reveal that the main appellant actually manufactured less quantity of PVC Compound and Master Batches. The main appellant issued only Invoices for the excess quantity to various buyers/manufactures of Wires and Cables, Co-Noticees herein, without supplying the corresponding materials mentioned in those Invoices. The other allegation is that the main appellant showed Rasin CP 172 SG used in the manufacture of PVC Compound / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... big amount from the Bank, except for meeting their day to day work. We find that the Factory premises and the residence of the main appellant were searched and not a single discrepancy was found in the Accounts. The Investigating officers had not examined the Bank Account. Thus, we find force in the submission of the learned Counsel that money has not been returned by the buyers. 10. The other aspects of this matter as contended by the Learned Counsel that such transaction of cash against cheque would cost heavy loss, is worked out hereunder - a. Total sale of buyers during July 2002 to Feb. 2006 66.72 crore (net of CE duty, CST & DVAT b. As against 1% to 3%, average commission alleged to be taken as = 2% c. Total Commission comes to = ₹ 1,33,44,494/- d. DVAT paid = ₹ 42,44,608/- e. CST paid = ₹ 1,00,78,349/- f. Total (DVAT+CST) = ₹ 1,43,22,957/- 11. The above table would show that the 2% commission would be paid against 4% CST @ applicable rate of DVAT paid to the Government and other expenses. Thus, either from the Bank Account or the calculation as mentioned above, it is difficult to accept the findings of the adjudicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal aspects of the use of the said resin. On the contrary, the Learned Counsel submitted that during the material period, the average consumption of the said resin with total consumption of other resin was 10.94% only and this was confirmed by the Director of the main appellant in his statement dated 14.02.2006. It is contended that insulation resistance, tensil strength, elongation, capacitance and thermal stability are higher with the use of the said resin. It is seen that the test result does not speak that the C.P. 172 SG Resin cannot be used for the manufacture of PVC Compound used in the Wire and Cable Industry. In our considered view, if the credit availed on the inputs and utilized in the final product is not within the normal limit with regard to the nature of finished products, the books of accounts of the manufacturer could have been examined by the expert in the field, namely Cost Accountants or Chartered Accountants under the provisions of the Central Excise Act, 1944, which has admittedly not been done in the present case. Therefore, we are unable to accept the findings of the Adjudicating authority in respect of costing of the final products on the basis of mere pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating authority had overlooked the purchase of diesels during the material period. We find that there is no dispute that three generators, two of them were of 125 KVA, in running condition installed in their factory. There is no corroborative evidence of diversion of the raw materials and therefore, such stand of Revenue cannot be accepted. 16. The Learned Counsel for the main appellant submitted that during the relevant period, they had supplied PVC Compound/ Master Batch to 86 nos. of buyers, out of which 25 buyers are located in Delhi-I Commissionerate and the rest of the 61 buyers are in the jurisdiction of the other Commissionerates. In the present case, the purported Show Cause Notice was issued to the 25 nos. of buyers within the jurisdiction of Delhi-I Commissionerate. Similar proceedings were initiated to the other buyers outside Delhi-I Commissionerate. It is submitted that Show Cause Notice was issued to 16 buyers outside Delhi -I, out of which notice was dropped against 14 parties and the other cases are pending. No Show Cause Notice was issued against 45 customers outside Delhi-I. In context with availment of Cenvat Credit on the basis of invoices issued by the main a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot tenable. Further, we note that there is no discussion regarding how could the main appellant manufacture such quantity of final products in the absence of inputs as recorded in their statutory records. Admittedly, during the impugned period, the main appellant did manufacture final products and cleared them on payment of duty. No examination of this aspect has been made either in the investigation or by the Adjudicating Authority. 7. We also note that based on the same set of investigations, the invoices issued to various other manufacturer, who were dealing with KPIPL in producing PVC compounds and master batches were questioned. In many cases, the proceedings were concluded by denying credits availed in such transactions. On appeal, we find that the Tribunal had upheld the appellant's plea regarding correctness of the credit availed. We take note of these decisions as recorded below:- 1. Tirupati Plastomatics Vs. CCE, Jaipur - 2016(335) ELT 482 (T-D) 2. M/s.Cords Cable Ind. Vs. CCE-Final Order dt.26.2.2015(T- D) 3. M/s.KEI Ind. Ltd. Vs.CCE-Final Order dt.1.6.2015(T-D) 4. M/s.Rajan Engg. Vs.CCE-Final Order dt.14.07.2011 (T-D) 5. M/s.Positive Plastic Vs.CCE-Final Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty. The Tribunal in the case of Tejwal Dyestuff Vs. CC, Ahemdabd - 2007(216) E.L.T 310 (Tri.-Ahmd.) observed as under:- "The receipt of these inputs in the factory premises of the assessee having been established, coupled with the fact that, as per the declarations and returns and other statutory record, the inputs were in fact used in the final products by the assessee, the lethargy of the Revenue Officers in not verifying the relevant statutory records and invoices, as to what exact quantity of raw material was used in the final products, and that in how many final products such inputs could have been used, existence of the particulars in the RG-23 Register reflecting the invoices and the existence of octroi receipts as also the expert opinion in respect of LAB having been used in the final product, altogether create a doubt as to the correctness of the contents of the statements of Naresh, Hitesh and Ilesh. The pre-ponderance of probabilities in the context of all other evidence vis-a- vis the confessional statements does not lead to the conclusion of inadmissibility of Modvat/Cenvat credit as reached by the Commissioner." 18. The Adjudicating authority strongly relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it is held that the mere filing of application before Settlement Commission under Section 32E of the Act for waiver of interest, penalty and immunity from prosecution and suo motu payment of duty as per show cause notice may not necessarily per se construed as admission of the allegations in the show cause notice as regards the fraud, collusion etc. Inference in this regard may be drawn from the contents of the application, that is, pleadings of the applicant and finding of the Settlement Commission, if any. Issue No. 1 pertains to the merits of the case and parties generally agreed that the same may be decided by the Division Bench at the stage of final disposal of the appeal." 20. Therefore, we do not find any force in the submission of the Learned A.R. that some of the buyers have settled the case before the Settlement Commission and hence, the present demand should be upheld. We find that the appellant cleared the goods on payment of Central Excise duty and also paid VAT/CST. The entire transaction is duly recorded in the books of accounts which were duly audited. Such documents and records cannot be brushed aside merely on the basis of various statements of the transport ..... X X X X Extracts X X X X X X X X Extracts X X X X
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