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TMI Blog2019 (8) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire amount was paid in cheque and in case of diversion of goods in Delhi, the cash on account of excess freight was returned back to the Appellant. Though the allegation is of diversion of granules, but no investigation has been made from the transporter, truck driver as to where the said goods were diverted. Even Shri Asopa who had written/ maintained the records on the basis of which the allegation of non receipt/ diversion of granules was made was not questioned about the recipient of such goods. Further it is nowhere appearing in the show cause notice as to how the consideration of such alleged diverted goods were received - The statement of Shri Asopa stands retracted by him during his cross examination and hence cannot be relied upon. Moreover the records maintained by him are in isolation and hence not reliable. The show cause notice and the impugned order has held that since the route passing through Pithol check post is the shortest route, hence the vehicles not passing through the said route cannot be said to have transported goods to Appellant s factory. Only on the basis of such assumption, it cannot be concluded that since the vehicles did not pass through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Central Excise, Vapi. The brief facts of the case are that the Appellant, M/s Resham Petrotech are engaged in the manufacture of Polyethylene Sheathing Compound falling under chapter 39 of Central Excise Tariff Act at their factory located at Silvassa. They are using Polyethylene Granules as basic raw materials which is procured by them from M/s GAIL, Pata and are also availing credit of the duty paid on said raw material. Based upon the investigation, they were issued show cause notice dated 25.11.06 alleging that they have availed cenvat credit of ₹ 1,26,99,671/- during the period August, 2002 to March, 2003 and of ₹ 47,94,058/- during the period Jan,2004 to October, 2004 without receipt of Polyethylene granules in their factory and instead used reprocessed granules in manufacture of their finished goods. The show cause notice relied upon the File No. A/29 seized from factory which showed receipt of accounted as well as unaccounted Reprocessed Granules by the Appellant Unit. Record No. A/9 maintained by Shri Rohit Kumar Asopa, Accountant was also seized from Delhi office which allegedly contains details of accounts between the Appellant Unit and transporter M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of sale of said granules. The remaining amount of credit of ₹ 49,00,218/- was alleged to have been wrongly availed by M/s Resham during the period August 02 to March 03 and was proposed to be recovered alongwith penalty and interest. 1.1 A further demand for the period January 04 to Oct. 04 was made against M/s Resham by relying upon the report of the Commercial Tax Officer, Pithol Check Post, Jhabua (M.P) who vide his letter dated 15.09.2006 intimated that only 22 consignments had crossed the Pithol Check Post out of 157 consignments shown to have been received by M/s Resham. Accordingly, demand of cenvat credit of ₹ 1,26,99,671/- was proposed against M/s Resham. A further demand of cenvat credit of ₹ 78,495/- was made on the ground that during the physical stock verification of finished goods and raw materials, a shortage of 8250 kg of polyethylene granules involving duty of ₹ 7,84,95/- was found and Shri Gopalji Lal Karn, Manager and Authorised Signatory admitted that the said quantity has been sold in the open market. 1.2 The demands were confirmed by the adjudicating authority vide order dt. 28.02.2008. On an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, which has passed through the check-post. On the basis of such communication, the demand has been made against the Appellant by alleging that the remaining consignments did not pass through the said Check-post. The reason for disallowance as per the adjudicating authority and the show cause notice is that the said route is shortest route and if the vehicle has not passed through the check post, it means that the goods were not transported to factory of M/s Resham and therefore credit on such goods is not admissible to the appellant. The Revenue has relied upon the seized record Sr. No. A/29, which was seized from the Appellant s Delhi office and which contained details of transportation of goods by M/s Bombay Golden (India) from GAIL. It is alleged that there has been payment of transportation charges to M/s Bombay Golden for period August 02 to March 03 to the tune of ₹ 41,31,793/- and further entry of receipt of ₹ 30,66,235/- as cash from the said transporter. A reference of certain other pages of the said file was given regarding receipt of cash from transporter and transportation of goods from Pata to Delhi and not to Silvassa. Reliance was also placed on the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that his statement is not voluntary one but he was compelled to write the statement from a copy already made by the DGCEI officials. The said copy was given to him to write down his statement by copying from the same. He was told that time would not permit him to ask questions and to write the statements within one hour. He had to write that he had written the figures as per the dictation of Shri Pradeep Lohia, director of the appellant company. Shri Asopa could not disclose the actual source on the basis of which he had written the figures in a loose paper. In his statement he did not specify for which the concerned figures in the rough sheet pertained. The statement of Shri Asopa has got no evidentiary value. Further his statement stands retracted and it is a settled law that the retracted statement cannot be made basis for making demand against the Appellant. 2.3 Even the transporter Shri Harish Arora s statement is in general. The goods which were not used by the Appellant in their factory and were sold, the credit on such goods was already reversed. As regard reprocessed granules purchased by them, he submits that they were also doing trading of such granules a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ESHI POLYTEX LTD.2000 (122) E.L.T. 641 (S.C.), RAJENDRA BAJAJ 2010 (253) E.L.T. 165 (Bom.), JHA SHIPPING AGENCY2011 (264) E.L.T. 321 (Cal.), ANIL PANNALAL SAROGI2009 (241) E.L.T. 219 (Tri. - Mumbai) to submit that without cross examination, such report could not have been relied upon. 2.5 Even the reliance placed by the adjudicating authority on communication of the Commercial Tax Officer of Pithole check-post is only assumption as the same has been relied upon without considering the fact that there are other alternate routes available to transport the goods from Pata to Silvassa. The Ld. Counsel takes us through list of 57 invoices and copies thereof showing other check-post stamps evidencing that the goods have been transported through alternate check-posts. Pointing out such instances, he draws our attention to Invoice No. 30304054150 dated 29.6.2004 evidencing LR No. 376244 showing the stamp of Jamli Sendhva Check post to Silvassa annexed to the bill. Similarly he relies upon Invoice No. 30304056249 dated 27.7.2004, which showed transportation of goods from UP to Silvassa via Mandar. In case of Invoice No. 30303067462 dated 31.3.2004 bearing LR No. 332918 showin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Closing stock of granules as per book as on 31.10.2004 136 h Physical stock as on 27.10.2004 as per panchnama 132 As per para 2.2 of show cause notice at page 26 of Appeal book 2.7 He submits that considering the procurement of re-processed granules, it is clear that all the quantities of virgin granules shown to have been procured in their record was consumed. Further there is difference of only 4 MT between book balance quantit y and physical quantity which is even less than the 1% of the quantity procured and it clearly shows that there has been no diversion of raw material. He submits that there is no evidence for the diversion of material having been sold to other buyers or receipt of the consideration. No buyer of alleged diverted quantity was found. In such circumstances, no demands can be made against the appellant. He also submits that there is no evidence for procurement of replacement of alleged quantity of virgin material by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri T. G. Rathod Ld. AR appearing for the revenue reiterates the findings of the impugned order. He submits that there was only vague request for cross examination. Hence the cross examination has been rightly denied. He relies upon judgments in case of Pankaj P. Shah 2018 (361) ELT 984 (RAJ.), Harisons Steel P, Ltd. 2017 (354) ELT 442 (BOM.), Lawn textile Mills P. Ltd. 2018 TIOL 1924 HC MAD- CX, SM Steel Ropes 2014 (304) ELT 591 (TRI) and Umesha Textiles Pvt. Ltd. 2014 (314) ELT 176 (SC). 4. Heard both the sides and perused the case records. In earlier round of hearing, the matter was remanded back by the Tribunal to examine the issue afresh. The diversion of the raw material is based upon the statement of the transporter and the private records seized from the factory and office premises of the Appellant. The papers written by Shri Rohit Kumar Asopa kept in seized records A/29 is alleged to be containing details of payment of transportation charges to the transporter, M/s Bombay Golden (India) and receipt of cash by the appellant from the said transporter. The said papers were found to be written by Shri Rohit Kumar Asopa and as per his statement, it was w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputer written paper, which was prepared by the officers themselves and the statement was not voluntary. Even though in his statement, Shri Asopa has stated that the seized records were maintained by him as per the instructions of the director Shri Pradeep Lohia, but we find that Shri Lohia in his statement has refused instructing Shri Asopa of maintaining any records. There is no source document on the basis of which such papers were written by Shri Asopa. Only on the ground that the records maintained by Shri Asopa of which no source is ascertainable it cannot be concluded that the Appellant has used reprocessed granule in place of virgin granules for production of Sheathing Compound. No examination of final product manufactured by the Appellant has been done to canvass the allegation that reprocessed granules has been used. The show cause notice could have easily quantified the quantity cleared to the vendors of M/s BSNL/ MTNL and other vendors which require use of only virgin material in manufacturing sheathing compound. The other clearances as per the Ld. Counsel in case where the reprocessed granules has been consumed, as per the pricing requirement of such parties and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of even a single driver has been recorded. Moreover it is not necessary that the driver should take only shortest route. It is normal for the vehicle driver to by pass the route where there is possibility of long waiting in passing through check post or for different logistic reason. We find that no investigation or statement of any of the truck drivers has been recorded to show that the goods were diverted elsewhere. The Ld. Counsel has shown us the alternative routes and we find that in some of these routes there is not much bigger difference in road distance in comparison to route on which Pithol Check post lies. The Ld. Counsel has also shown us that during the impugned period of Jan. 04 to Oct. 04, 57 consignments involving 687.475 MT were transported to Silvassa through available routes other than Pithol check-post. The Appellant has enclosed copies of 20 invoices and 37 LRs having the stamping of other check-post other than Pithol check-post along with their reply which was not even considered or discussed in the impugned order. In such case we do not find any substance in the contention of the show cause notice that if the goods has not been transported through shortest ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter. Thus in absence of evidence of diversion of material the demand of cenvat credit is not sustainable as held in various following cases: In case of Himalayan pipe Industries 2013 (293) ELT 739 (TRI), the Tribunal held as under: 5. As regards the Revenue s appeal, we find that Commissioner has extended the benefit to the assessee on the basis of ST XXVI-A form produced by them during the course of adjudication. Revenue s contention is that same do not belong to the virgin raw materials inasmuch as, as per the statement of one Shri Rajender Thakkar, authorized signatory, they were also receiving the recycled HDPE granules. They were getting reprocessed second HDPE granules. The assessee s contention is that all the receipts are from virgin HDPE granules manufacturers and such submission cannot be relied upon as documentary evidence produced by the assessee. We agree with the said contention of the assessee. There is no documentary evidence on record to reveal that what was received by the manufacturer is reprocessed granules and not the virgin granules as reflected in the records. We accordingly, reject the Revenue s appeal. In ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information revealed from Sales Tax Department are not reliable as the appellant has produced certain documents which show with the transaction have been declared by the appellant. Admittedly, in the case the appellant has produced the certificate issued by the Excise Taxation Department, certifying that these goods have been received in their factory, therefore, the Cenvat credit cannot be denied. 11. The revenue has also relied on the various statements of supplier/transporters and also relied on the statement of Parveen Kumar Garg of M/s. LOT initially made on 25-2-2005. The same was retracted by him from next date 26-2-2005 which was despatched on 28-2-2005 thereafter, various summons have been issued to Sh. Praveen Kumar Garg but Sh. Praveen Kumar Garg never appeared nor the cross-examination of Sh. Praveen Kumar Garg was granted in that circumstances, statement of Sh. Praveen Kumar Garg have no evidentially value in the light of the decision in the case of M/s. Vishnu Co. Pvt. Ltd. (Supra) wherein the Hon ble High Court of Delhi has observed as under : 38. In the present case it needs to be first observed that there was no confession as su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of the appellant. The allegation of the revenue that the furnace oil is not required for manufacturing by the appellant but the same was available in the factory premises of the appellant, in that circumstances, the revenue is failed to prove their case by cogent evidence to show that the furnace oil has not required by the appellant. 14. In view of the above observations, the case of the revenue is not sustainable in the eyes of law as the same is lacking positive evidence to deny Cenvat credit on furnace oil. 15. Input shell, the following order is passed (i) Cenvat credit on Bura Scrap denied consequently the duty on Bura Scrap along with interest is payable, (ii) Duty on shortage of M.S. Ingot is confirmed, (iii) Cenvat credit on furnace oil is allowed, and (iv) No penalty is imposable on the appellants. In case of G.S Alloys Castings Ltd. 2016 (331) ELT 310 (TRI), the Tribunal held as under: 8. Even if I do not take into consideration the affidavit of Shri D. Srinivasa Rao in terms of the earlier order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the sides, I find that in this case an audit took place and it was presumed by the department that the respondent No. 1 shown as burning loss to the tune of 5.62% to 5.68% respectively during the periods 2006-2007 to 2007-2008 and no statement was recorded of any person to explain such shortage. No effort was made to examine whether during the course of manufacture, any waste and scrap arose or not? Further, when the respondent No. 1 explained that they have cleared waste and scrap on payment of duty, no effort was made to ascertain the truthfulness on the fact. No effort was made to visit the premises of respondent No. 2 to ascertain that the respondent No. 2 has received waste and scrap or not. The whole investigation/audit remained faulty and the show cause notices were issued to both the respondents in the wake to allege that respondent No. 1 has cleared the goods clandestinely. In the show cause notice it was not considered that when the respondent No. 1 has cleared waste and scrap on payment of duty therefore, on such quantity of waste and scrap, further, duty was not required to be demanded. 7. Further, I find that during the course of adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssumption and presumption it was alleged that respondent No. 2 has not received the goods. Accordingly, I find that whole investigation is faulty and the show cause notices were issued to the respondent without producing any evidence on records. 9. In that circumstances, I do not find any infirmity in the impugned order. The same is upheld. Consequently, the appeals filed by the Revenue are dismissed. In case of Good Earth Steel Pvt. Ltd. 2018 (9) GSTL 177 (TRI), Tribunal passed the following order: 5. Having considered the rival contentions and on perusal of the records, I find that the Adjudicating Authority has failed to follow the directions given by ld. Commissioner (Appeals) in the earlier round of litigation, wherein it was directed to produce the persons whose statements have been relied upon by Revenue and also the persons who had given contradictory statements, for their cross-examination in the proceedings. I find that the Adjudicating Authority failed to exercise powers vested in him for the purpose of ensuring the attendance of witnesses. From the Order-in-Original, I find that the ld. Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appear on the said date 23rd October, 2008. Shri Shashi Shekhar, SIO, DGCEI, Kanpur appeared for cross-examination but counsel for the party did not come to attend and had sent request for adjournment, on medical grounds. I find that the Adjudicating Authority has failed to follow the directions of the ld. Commissioner (Appeals) to ensure the attendance of the witnesses in spite of all the powers of ensuring attendance of witnesses as are provided in the Code of Civil Procedure, 1908 are vested in the Adjudicating Authority. It is further matter of fact on record that the respondents have manufactured final products, out of the raw materials alleged to be not received, and removed the finished products on payment of duty and further filed tax returns for the same, and such returns are not questioned by the Revenue. I further find that the Revenue have failed to establish the source of raw material, in the absence of non-receipt of inputs on which Cenvat credit was taken, leads to the conclusion that the entire case of Revenue is on the basis of presumptions. I, further, find that the ld. Commissioner (Appeals) have recorded that the payments for purchase of raw materials have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e delivered and received by the dealers and the final product which disclose absence of PFY element, it is difficult to establish the contention that there is any cogent evidence in relation to the charge against the respondents. In case of Mittal Appliances Ltd. 2018 (12) GSTL 297 (MP). the Tribunal held as under: 4. Considering the aforesaid, the Commissioner vide order dated 6-5-2010 dropped the demand. The order was assailed in appeal before the Learned Tribunal. On due consideration of the material evidence which has come on record the Tribunal came to the conclusion that no case is made out to reverse the findings recorded by the Commissioner and upheld the order and dismissed the appeal. Relevant Paragraph Nos. 4 to 6 reads as under :- 4. The Cenvat credit availed by the appellant was sought to be denied mainly on the basis of certain irregularities alleged with reference to transportation and non-existence of evidence for transportation of duty paid inputs to the premises of the respondent. The dispute relates to 18 invoices. The respondent claims that these raw materials were actually cleared and received from M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vedi Director of M/s. Saral Logistics System Pvt. Ltd., from his office situated in Rama Chauraha. The question regarding the transportation of raw material has been discussed at length by the original authority (Paras 23, 24 of the impugned order). 5. On due consideration of the aforesaid so also the argument advanced by the Counsel for the parties, we are of the view that there is no material to reverse the findings of fact recorded by the CESTAT and Commissioner. No substantial question of law arises in this appeal. 10 We also find that in earlier round of appeal, the Tribunal had directed to re-examine the statement which was not done by the adjudicating authority. The statement of Shri Rohit Kumar Asopa stands retracted by him and the director of the appellant, Shri Pradeep Lohia, has refused diversion of goods, as alleged in the show cause notice. Moreover, in absence of any investigation to identify the buyer of the diverted material and receipt of consideration by the appellant company, we are of the view that merely on the basis of transporter s statements or the private records, it cannot be concluded that the appellant, M/s Res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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