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TMI Blog2023 (10) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... ve not received the imported inputs, where the same have gone. In the absence of any evidence to show the disposal of such imported inputs to any other person, the denial of credit merely on the RTO check post reports and transporter records is not justified. In the present matter incorrect vehicles numbers were recorded on the transportation documents and on that basis revenue alleged that said vehicles are not transport vehicles / incapable of carrying the consignments. In this regard, merely because wrong vehicle number mentioned on the duty paying documents that itself does not prove that the goods have not been transported. It has been observed in various cases that it is common that the wrong vehicles number is mentioned in the documents due to clerical error or due to wrong presentation of vehicle number by the truck drivers. In the case of M/s. Steel Tubes of India Limited v. CCE, Indore [ 2008 (4) TMI 713 - CESTAT NEW DELHI] , it was held that merely because vehicle numbers mentioned in some of the invoices are not of transport vehicles, the same is not sufficient to deny the credit when there is evidence of receipt and utilization of inputs and no evidence of diver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce corroborative evidence on records so as to substantiate the charges of non- receipts of imported goods and substitution of the same with kabadi scrap and availment of the wrong Cenvat Credit. Since the investigation has failed to adduce any corroborative evidences to establish clandestine removal of the goods and failed to discharge the onus to prove the allegations, the allegations are not sustainable - the allegation of clandestine removal of finished goods is not established - Reliance can be placed in COMMR. OF C. EX., COIMBATORE VERSUS SANGAMITRA COTTON MILLS (P) LTD. [ 2003 (11) TMI 146 - CESTAT, CHENNAI] and VAKHARIA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, SURAT-I [ 2004 (4) TMI 413 - CESTAT, MUMBAI] . The learned Commissioner as regard the disputed matter has very consciously considered the facts of the case, allegation of the Revenue and evidences on records and came to the conclusion that the allegation of clandestine removal of the goods and non receipt of inputs, on which credit was availed, are not established by the Revenue. Hence he rightly dropped the proceedings of the show cause notice. There is no infirmity in the order of the learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crap, and appeared to have been procured from local scrap merchants. The whole of such quantities of raw materials totally valued to the tune of Rs. 25,32,223/- were placed under seizure on 12.08.2005. During the course of the search carried out at the godown cum-office premises of M/s Mex India, Mumbai and during the physical stock verification of the excisable goods lying in stock at such godown premises, it was noticed that there was a stock of 11046.240 Kgs. of finished goods of Copper Copper Alloys. Shri Nishit S Morakhia, Proprietor of the firm, admitted that the said goods manufactured by M/s MG and M/s Mukesh Metal Pvt. Limited and cleared without payment of applicable Central Excise Duties. Therefore, the said detained excisable goods were subsequently placed under seizure on 22.11.2005. In respect of such seized excisable goods a Show Cause Notice dated 10.02.2006 was issued to the respondent proposing confiscation of goods and imposition of penalty under the provisions of Rule 25 of Central Excise Rules 2002. 4. After followed the search operations and investigation it appeared that M/s MG and M/s Met India (M/s MI) were engaged in wrong availment of Cenvat Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vide Final Order dated 01.08.2008 CESTAT remanded back the matter for denovo adjudication. Being aggrieved by the above Order of CESTAT the department filed appeal before the Hon ble Gujarat High Court and vide order dated 24.02.2010 the Hon ble High Court remitted the case back to the Tribunal for fresh decision. While passing the fresh Orders in pursuance of the above Order of Hon ble High Court of Gujarat, CESTAT vide Final Order dated 22.03.2011 once again remanded the matter to the Commissioner. Hence in pursuance thereof, the impugned Order In-Original DMN-EXCUS-000-COM-34 to 36-18-19 dated 31.01.2019 has been passed by the Principal Commissioner. The Ld. Principal Commissioner through the impugned order dropped the proceedings initiated under the above three show cause notices. Aggrieved by the said order Revenue is before this Tribunal. 5. Shri C.K. Tiwari Learned Joint Commissioner (AR) for the Revenue reiterated the grounds of appeals and submits that the impugned order passed by the Ld. Commissioner is not sustainable in law as the same has been passed without properly appreciating the facts and the evidence on record. 6. He submits that contradiction appearing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts quantity of invoiced/imported goods. 7. He further submits that in the present matter retractions were nothing more than afterthought, made with a deliberate intent of derailing the investigations, and under the active influence of none other than Shri Rikhab V Mehta, Partner of M/s MG himself. It is settled law that the weight of material /documentary evidences is much more than any other evidence, and the adjudicating authority has grossly erred in brushing aside such documentary evidences. He placed reliance on the Judgment in the case of Mohamed Tahir Arif Bakaswala vs. State of Gujarat in Criminal Appeal No. 1899/2005 other. 8. He also argued that Ld. Commissioner has clearly erred in placing reliance on the decision of the Hon ble Tribunal in the case of Motabhai Iron Steel Industries and M/s Bajrang Castings Pvt. Ltd., which was delivered under totally different/ distinguishable facts of the case. The Ld. Adjudicating authority has not analysed the factual position discussed in the show cause notices in details and has merely relied upon the decision by making reference to the decisions which is not correct. He placed reliance on the para 5 of decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting authority has cast a serious doubt about the genuineness and authority of the verification reports given by the RTO Check-post authorities. Such verification reports being one given by Govt. authorities /officers based on their statutory records maintained on day-to day basis, no efforts whatsoever has been made by the adjudicating authority in ascertaining its genuineness or about the records maintained in this regard by such Govt. authorities /officers before discarding the reports given by them as unreliable, which is grossly erroneous and hence not legal and proper. 11. He further submits that Ld. Commissioner in impugned order referring to Exhibit-Y annexed to the show cause notice wherein the Cenvat credit was alleged to be deniable on the grounds that owners of the vehicle mentioned therein have denied the transportation, the Adjudicating authority has erroneously emphasized that the owner seldom travel by the vehicles and it is the drivers who are in-charge of a vehicle and their statement is sine-qua- non as per the settled law. Accordingly, it has been sought to hold by the adjudicating authority that credit on the goods purportedly transported through vehicles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable on records. 14. He also submits that the unwarranted emphasis of the adjudicating authority on the investigation from other Check posts for entry in to Daman via Maharashtra and NH-8 routes on the basis of Toll Tax Booths and High ways near to Daman is totally misplaced and untenable for the reason that there cannot be any authenticity to those untenable for the reason that there cannot be any authenticity to those evidence submitted by the respondents without examining the period to which such Toll receipts are made available; and whether they were for the same time period, on the face of evidence obtained from statutory authorities such a Commercial Tax/ RTO Check-posts which were admittedly for the time period of investigation. Therefore, such state excise check post authorities are in no way concerned or accountable for the Entry and Exist of any consignment of goods other than liquor. Therefore, the adjudicating authority s findings in this regard are highly misplaced, without logic and understanding about the duties and responsibilities of different arms of Govt. department; and lacking reasoning and hence cannot be accepted. 15. He further submits that in impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of such goods, the goods were initially placed under detention. It was only after detailed investigation in to the source of such excisable goods being admittedly from M/s Metal Gems and M/s Mukesh Metal Pvt. Ltd., as admitted by the none other than Shri Nishit S Morakhia, Proprietor of the firm, that such goods were subsequently placed under seizure on 22.11.2005. Therefore the adjudicating authority s findings in the regards have to be outrightly rejected, being incorrect and contrary to the facts of the case, as well as, her own observations/ findings. Therefore such seized goods were correctly alleged in the show cause notice to be liable to confiscation, which ought to have been upheld by the adjudicating authority. 18. He further submits that the impugned order, after referring to the statement of Shri Jogibhai Patel and the evidences gathered from him, it has been observed and concluded by the adjudicating authority that neither the allegation of procurement of Kabadi Scrap to substitute the quantities of imported inputs can be upheld, nor such a theory can be established. These findings of the adjudicating authority are perverse and contrary to the material evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s without any basis and does not hold any water. 24. He argued that no investigation was made from the drivers of the vehicles who made the trips and allegedly diverted and sold the inputs around Delhi as enquiries with such drivers could determine the real status of the actual unloading in any other premises. Thus inquiry made by the department is incomplete and the inputs has been actually received by the Respondents in their factory premises and details of the said inputs has duly mentioned in the statutory records of the Respondents. Hence , appeal of the revenue is liable to be rejected. He also placed reliance on the Circular No. 1063/2/2018-CX dated 16.02.2018 issued by Central Board and Excise Customs, New Delhi. 25. He placed reliance on the following judgments/ decisions. (i) Commissioner Vs. Motabhai Iron Steel Industries 2015(316)ELT 374 (Guj.) (ii) Motabhai Iron Steel Industries Vs. CCE, Ahmedabad II - 2014(302)ELT 69 (Tri. Ahm.) (iii) M/s AVM Brothers Others Vs. CCE, Bhopal Final Order No. A/58354-58358/2017 dated 13.12.2017. (iv) Gujarat Victory Forging Pvt. Ltd. Vs. CCE, Vadodara-II, -Final Order No. A/11031-11032/2019 dated 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manning these Check Posts are not reliable, as such voluminous record of the vehicular transport from such Check Posts cannot be replied in the short period of one day. Replies from the most of the Check Posts are common, in English and give almost instantly on the same date. How they could examine the entire data over a period of 15 months, the time period of the impugned matter when thousand of vehicles must have passed the said Check Post? This cause a doubt on the verification reports relied by the revenue which appears to be motivated and induced by the officers of DGCEI. There is no enquires made with Check Posts almost next to Dadra, Daman Territories, Gujarat and Maharashtra from where vehicles are coming to Gujarat and Daman, to avoid greater scrutiny and vigilance on the NH8 route. This route on NH 3 is used by doubtful vehicles plying on incorrect number plates, RTO Registration/ permissions. He placed reliance on the enquiries made by the respondents from Daman Check Posts of State Excise Department, where vehicles entering Daman are being recorded. As per the Check Post of State Excise Department, Trucks have crossed into Daman. 29. He also submits that the driv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bazaar Scrap purities are not the standards from which respondents can make their high purity final products. There is no material in the show cause notice that the factory is capable of refining such kabadi scrap to use as raw materials for final products. Further the allegation of substitution by kabadi scrap of imported copper as raw materials in lieu of non- receipt of imported copper, has not been examined from the economic and financial angle by the investigators. 33. We have heard both the sides and carefully gone through the records, grounds of appeals and submissions of parties and finding of the impugned order and various case laws cited by both the parties. We find that the respondents are engaged in the manufacture of copper pipes/copper flats/copper tubes falling under Chapter 74 of the Central Excise Tariff Act, 1985. During the relevant period, the respondents imported re-melting copper ingots, Cathodes and wire bars after purchasing the same on high sea sale basis, paid countervailing duty (CVD) leviable thereon and availed the Cenvat credit accordingly. The dispute in the present appeals relates to the availment of credit of countervailing duty paid by the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue s case that respondents production of final product is not proportionate to the receipt of the imported inputs. The Revenue has also not shown that if the respondents have not received the imported inputs, where the same have gone. In the absence of any evidence to show the disposal of such imported inputs to any other person, the denial of credit merely on the RTO check post reports and transporter records is not justified. 34. We also find that in the present matter incorrect vehicles numbers were recorded on the transportation documents and on that basis revenue alleged that said vehicles are not transport vehicles / incapable of carrying the consignments. In this regard we are of the view that merely because wrong vehicle number mentioned on the duty paying documents that itself does not prove that the goods have not been transported. It has been observed in various cases that it is common that the wrong vehicles number is mentioned in the documents due to clerical error or due to wrong presentation of vehicle number by the truck drivers. This issue has been considered in various judgments which are discussed below. At this stage, we may discuss the various decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed not capable of transportation of goods - No investigations conducted from owner of said vehicles - No statement of any driver recorded - Police complaint and newspaper reports establishing that fake number plates were being used by transporters in transporting goods - In view of this appellant discharging their burden that inputs received in factory and used in manufacture of finished goods cleared on duty payment - Giving them benefit of doubt, credit allowed - Impugned order set aside - Rule 3 of Cenvat Credit Rules, 2004. [para 9] 35. The law as declared in the above referred judgment, when applied to the peculiar facts of the present case leads to only one inevitable conclusion that the inputs were actually received by the respondents, credit cannot be denied on the ground that vehicle number was found wrong in the lorry receipts. 36. We also find that though the reports from the transport or commercial department check posts states that the goods did not cross the border posts, but for this reason, it cannot be concluded that the goods did not pass through the transit state. We find that the ample materials which, inter alia includes weighment slips of trucks with in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey had transported the goods from UP Border office for Respondents at Daman; the goods were received from ICD Tughlakabad under sealed containers through M/s D.V. Bhaskhi and M/s J.M. Baxi who were Customs House Agents. This statements also established that all the imported goods on the BoEs for which credit have been taken by the Respondents in the factories in Daman have been received from ICD Tughlakabad. Further respondents also produced documentary evidences in respect of receipt of imported inputs, use thereof in manufacture of final product, statutory records showing manufacture and clearance of final product on payment of duty, the receipt of imported inputs cannot be doubted. Since the Revenue failed to prove diversion of imported goods with corroborative evidence and also any money flow back related to the said diversion from any other manufacturer/dealers, it cannot be said that they had not received the inputs especially when statements relied upon by the Revenue are contrary to the documentary evidence on record produced by the Respondents. Therefore, the finding of the Adjudicating authority on this issue has to be accepted. We also noticed that in the present case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty records alone cannot be relied upon as admissible piece of evidence - Further, even in these records there is no identification of person to whom said alleged cash transaction belong - Said entries having not been corroborated by any independent evidence, not reliable - On same facts and investigations, credit allowed in respect of another party and no appeal filed against such order - Denial or credit on the basis of these entries not sustainable - Rule 3 of Cenvat Credit Rules, 2004. [paras 21, 22, 23, 24, 26]. 38. From the above judgments, it has been consistently held that demands of whatever nature cannot be confirmed solely on the basis of third party evidence/record. In view of the above discussion, we find that the Cenvat demand cannot be confirmed. We hold that the respondents have satisfied the requirement of receipt of imported raw materials along with cenvatable documents and accordingly, the Cenvat credit taken by them is in accordance with the scheme of the Act read with Cenvat Credit Rules. 39. We also find that the decisions relied upon by the Ld. Adjudicating authority in the case of Motabhai Iron Steel Industries (Supra), M/s Bajrang Castings Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured from. The statements of alleged confession have been retracted and there is no corroboration in the seizure of M/s Metal Best invoices of the vehicle of Jogibhai at the Factory of MG which is alleged to be kept blank to be filled in and used if and when transportation of non-duty paid goods being removed from Daman factories to Bombay or kabadi Scrap being transported from Bombay/Bhiwandi are intercepted by the any agency. Therefore the theory of substitution of unaccounted Kabadi Scrap also utilization in manufacture of clandestine removal of goods without payment of duty due thereon from factory cannot be established. 41. Further, the Cenvat demand is solely based upon the statement of third parties and the assumed interpretation of the same is not sustainable. The charge against the respondents are required to be arrived at on the basis of positive and tangible evidences including the evidences relating to procurement of raw-materials, conversion of the same to final products, clearances of the same and identification of the buyers and receipt of unaccounted cash etc. It has been the ratio of various judgments of the Hon ble Tribunal and High Courts that mere entries in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating order, it stands proved that the respondent herein has received imported duty paid raw materials at their factories and were duly recorded in statutory records and Cenvat credit register. In the light of the concurrent findings of fact recorded by Learned Commissioner and the elaborate order made by the Learned Commissioner, no infirmity was found in the impugned order of the Learned Commissioner so as to warrant interference and we are of the view that the respondent is eligible for the benefit of Cenvat Credit in question. 43. As regard the seizure and confiscation of the goods, we find that the Learned Commissioner has given categorical findings which does not require any interference. The relevant findings of the learned Commissioner is reproduced below : 4.4 (V) The seizure of imported copper Cathods in the factory of MG on 12.08.2005 would be a direct evidence of the said goods being received in the factory premises as it has been received on 11.08.05 and parts of the consignment of 10,164 Kgs, of Copper Cathods entered and issued on 11.08.2005 at Sl No. 143 of RG 23A Pt. I of MG and was laying for cutting near the cutting machine for use in the melting fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the revenue these chits are alleged to contain details of clearances of copper articles of 230 pcs weighing 15749 Kgs, in all. These quantities are further alleged in Annexure B to the SCN issued to MI to be 18269 Kgs of Copper bar of EC grade on which a demand of duty of Rs. 6,05,245/- was proposed by the revenue. However in the present matter nature and carrying capacity of a Jeep has not been established nor any person in the MI factory has been questioned as to how the said goods and on which vehicle they were removed without accounting. Clearly, therefore the allegation of clandestine removal on chits is not established by the revenue in the present matter. 45. We also find that demand of Central Excise duty on the quantity of finished excisable goods seized from the godown premises of M/s Mex India and mentioned in the documents in the forms of chits recovered from the office premises of M/s. MG at Mumbai also not sustainable. Examining these evidences it is found that witnesses retracted their statements. Further the Chits found by the revenue in premises of both the respondents may create doubt but it cannot take place of evidence. It is observed that the alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made revenue has to prove that assessee procured all raw materials necessary for manufacture of final product. The allegations are not sustainable if no investigation conducted by the revenue in respect of raw material essential for production of final goods and no evidence regarding removal of such final product brought on record by revenue. Similar view has been taken by the CEGAT in several other cases such as Jangra Engg. Works v. CCE [2004 (177) E.L.T. 364 (Tri.)], Premium Moulding Pressing Pvt. Ltd. v. CCE [2004 (177) E.L.T. 904 (Tri.)], Vakharia Traders v. CCE [2004 (173) E.L.T. 287 (Tri.)], Nutech Polymers Ltd. v. CCE, Jaipur [2004 (173) E.L.T. 385 (Tri.)], CCE v. Sumangla Steels [2004 (175) E.L.T. 634 (Tri.)], CCE v. Sangamitra Cotton Mills [2004 (163) E.L.T. 472 (Tri.)], CCE v. Velavan Spinning Mills [2004 (167) E.L.T. 91 (Tri.)]. The ratio of these decisions is applicable in the instant case. Since the investigation has failed to adduce any corroborative evidences to establish clandestine removal of the goods as discussed above and failed to discharge the onus to prove the allegations, the allegations are not sustainable. In view of the above discussions, the al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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