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TMI Blog2023 (11) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... poration. In page 504 of the appeal paper book, the letter dt. 25.3.2004 issued by Chettinad Cements Corporation to the appellant is enclosed. This letter shows the lifting of 748 MTs of dry fly ash from MTPS by appellant which is the allotted quota of Chettinad Cements Corporation - Out of the 2162 MTs on two bills raised by M/s.Karthikeyan Transport on M/s.NEC, a quantity of 1322.235 MTs has been sold by M/s.NEC to appellant. This evidence has not been accepted by the adjudicating authority by observing that appellant has not produced copies of allotment order to these brick companies. The adjudicating authority has not been satisfied by the document showing the source but has rejected this by saying the document of source s source is not produced. The appellant has been able to establish that they have procured fly ash from sources other than MTPS. The Ld. Counsel for appellant submitted that the appellant is able to establish the source of the source also. In response to a RTI application for furnishing the list of Cement and ASC sheet companies which use MTPS dry fly ash, the name of appellant is seen mentioned. In the said list the name of Sakthiguhan Construction, Erode i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these appeals being connected they were heard together and are disposed of by this common order. 1. Brief facts are that, the appellant, M/s.Vishaka Industries Limited is engaged in manufacture of Asbestos Cement Sheet, falling under Central Excise Tariff 6811 of the Schedule to Central Excise Tariff Act, 1985. The appellant is registered with the Central Excise department. The appellant was using raw materials like cement, fly ash, cotton pulp, etc. for manufacture of final product viz., Asbestos Cement Sheet. The appellant was availing the duty exemption in terms of Notification No.6/2002-CE dt.1.3.2002 on the finished products. 2. As per notification 6/2002 at serial no.158, for goods falling under Chapter heading 68 of CETA, 1985, the duty to be paid is Nil if the goods are manufactured by use of not less than 25% by weight of fly ash or phosphogypsum or using both of these. The notification states that Condition 36 has to be fulfilled. As per the notification Condition 36 reads as under: If the manufacturer maintains proper account in such form and in such manner, as the Commissioner of Central Excise having jurisdiction may specify in their behalf, for receipt an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cers visited the premises of NEC also being the fly ash supplier from MTPS. Verification carried out by the Officers revealed that there was shortage of quantity of fly ash received by M/s. Visaka Industries Ltd. and the quantity of fly ash lifted by NEC from MTPS. It was observed from simultaneous investigations conducted at the appellant s factory as well as at the premises of NEC that the accounting of fly ash was not in order. The appellant as well as NEC were found to have stated in their private records about the (bogus) excess supply of fly ash purportedly made from MTPS. Statement was recorded by the Officers from Shri D. Manickavasagam, Works Manager of M/s. Visaka lndustries Ltd. and from Shri. N. Santhosh Kumar, Proprietor of NEC. It appeared that though they were aware of the actual quantity of fly ash lifted, NEC has connived with the appellant and prepared faulty/bogus consignment notes and raised them for dispatch of fly ash over and above the actual quantity of fly ash lifted from MTPS. 3.3 As per the data provided by MTPS, it was noticed that if the excess quantity of fly ash recorded by the appellant as received by them for the year 2003-04 2004 05 was reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash from other sources also viz., Siar Traders, Sakthiquhan Construction Products. The department had not conducted any enquiry with other suppliers. None of the documents related to these suppliers are relied upon in the SCN and the quantity procured form them were deliberately excluded in the worksheet. ➢ Further, they also received fly ash from VTPS and RTPP from outside source only but accounted under the head VTPS/RTPP. The department has not suspected such unallotted receipt of fly ash. 4.1 The gist of the reply filed by co-noticee, M/s. Natesan Engineers Contractors (Appellant in Appeal No.40390/2021) is stated in para 5.02 of the impugned order. Relevant part is extracted as under: Small units and brick manufacturers who are in existence only in paper also get allotment from MTPS and many of such units will not use the allotted quota of fly ash but sell it and make profit out of it. From such units, they procured fly ash allotted by MTPS and diverted to M/s. Visaka Industries Ltd., because they are actual users. Perusal of the purchase orders would reveal that two types of supplies i.e., delivery from MTPS quota to M/s. Visaka Industries Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. They have now filed the miscellaneous application along with relevant documents. One of the document is the Memorandum of Understanding between the MTPS and four cement companies Chettinad Cement Corporation Ltd., ACC Cement, RMC etc. This document evidences that these cement companies were also allotted fly ash which have been supplied to the appellant on their request. It is also their case that M/s.NEC procured fly ash from other sources in open market. On perusal of the documents produced before us and after hearing the submissions made by both sides, we are of the considered opinion that the appellant has to be given a further chance of contesting the case with the support of these documents. They have consistently pleaded in the reply to the notice as well as in the appeal that they have received supply of fly ash not only from MTPS but also from various other sources. In fact, the appellant has stated in the reply as under : 2. At the outset, we thank the Hon'ble Commissioner for allowing cross-examination of Sri N. Santhoshkumar as witness in this case. During the cross examination held on 19/11/2008 Sri N. Santhoshkumar inter-alia started that M/s.Natesan Engin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no mention of such documents by the respondent at any point of adjudication? And iv) Has not the Tribunal fallen in error in ignoring the settled position of law that it is the assessee, who has to strictly prove that it has satisfied the conditions to avail the benefit of exemption? 6.1 The Hon ble High Court vide judgement dated 30.11.2018, upheld the Final Order passed by CESTAT. The relevant paras are extracted as below : 25. In the instant case, the Adjudicating Authority has recorded in paragraph 23.01 of the Order-in-Original that the quantity delivered to the assessee as per the MTPS records was found to be reflected in the private register of M/s. Natesan Engineers and Contractors and that there was no dispute over this. The dispute, therefore, appears to be with regard to the quantity received from outside allottees by M/s. Natesan Engineers and Contractors. Mr. Santhoshkumar, Managing Director deposed in his cross examination held on 19.11.2008 that he had evidence to show the procurement of fly ash from other sources. The explanation given by the assessee was that those were third party documents and therefore, they took some time to get those docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h additional reply explaining the documents. It is seen from para 12 of the impugned order that the appellants had furnished explanation to various allegations in the SCN in a tabular form which has been extracted in para 12 of the impugned order. Thus, after due process of law, the adjudicating authority passed the impugned order. The operative part of this order is extracted below: ORDER (i) I confirm and demand an amount of Rs.13,23,85,374/-(Rupees thirteen crores twenty three lakhs eighty five thousand three hundred and seventy four only) (BED Rs.13,12,20,280/- Education Cess Rs.11,65,094/-) towards the Central Excise duty liability on Asbestos Cement Sheets cleared by them during the years 2003-04 2004 05 under Section 11A(2) of the Central Excise Act, 1944, from M/s.Visaka Industries Ltd., (ii) I demand appropriate interest under Section 11AB of the Central Excise Act, 1944 on the amount demanded at SI.No.(i) above; (iii) I impose a penalty of Rs.13,23,85,374/-(Rupees thirteen crores twenty three lakhs eighty five thousand three hundred and seventy four only) under Section 11AC of the Central Excise Act 1944 and Rule 25 of Central Excise Rules 2002 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash. 9.4 In view of the changed allotment policy, the Appellant was forced to procure fly ash from the open market to meet their requirements. Post 2003, the Appellant has been procuring fly ash from the following sources: a) direct allotment from MTPS, b) cement companies and c) brick companies. The fly ash procured from the cement companies and brick companies reached the Appellant through various transport operators like Natesan Engineers and Contractors ( NEC ) etc. The sources of fly ash and their movement from MTPS to the Appellant is captured in the flow chart below : * MTPS direct allotment of fly ash was supplied to Appellant through transport operator-NEC ** Cement Companies supplied fly ash to Appellant through transport operators like NEC, Guru Traders, etc. *** NEC procured Fly Ash from bricks companies and in turn supplied to the Appellant, etc. 9.5 Since the Appellant was using more than 25% fly ash in manufacture of asbestos sheets, the Appellant cleared the asbestos sheets at NIL rate of duty under the NN 06/2002 for the year 2003-04 and 2004-05. The Appellant maintained proper records for receipt and use of fly ash and filed the monthly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. 20.01.2021 Appellant Co-Appellant filed common submissions Annexure 17 Page 482-494 11. 31.03.2021 Impugned Order passed, confirming the demands proposed in the SCN Annexure 1 Page 35-65 12. 02.07.2021 Appellant and Co-Appellant preferred present Appeals Memorandum of Appeals Case of the Department 9.7 The case of the Department as per the impugned order is that the documents produced by the Appellant ought to have reflected the source of fly ash, the source of such source of fly ash, as also the authorization held by the transporters appointed for transportation of fly ash to the Appellant s premises. 9.8 The impugned order has not disputed the evidence adduced by the Appellant, but has proceeded on the basis that the Appellant has not proved the sources of their sources. Grounds A. The Appellant has satisfied the rigors of NN 06/2002. The Impugned Order has adopted extraneous conditions to confirm the present demand by denying NIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shifts to the Department to prove that the evidence produced by the assessee is false. Reliance in this regard is placed on the following decisions: A.7.1. Aveco Technologies Pvt. Ltd. v. CC [2018 (362) E.L.T. 624 (Tri.-Hyd.)], maintained in Commissioner v. Aveco Technologies Pvt. Ltd. [2018 (362) E.L.T. Al64 (S.C.)] A.7.2. High Energy Batteries (I) Ltd. v. CCE [2002 (142) E.L.T. 266 (Tri. - Chennai) A.7.3. Vendhar Movies v. Jt. Dir., D.G., of GST Intelligence, Chennai [2019 (28) G.S.T.L. 545 (Mad.)] B. The impugned order has travelled beyond the SCN B.1. The impugned order has travelled beyond the SCN to confirm the demands against the Appellant and Co-Appellant. The SCN alleged that the Appellant and Co-Appellant had inflated records, without any allegation against the source from where the Appellant had received fly ash for use in manufacture of asbestos sheets. However, the impugned order has now sought the supply source of fly ash and also the primary source of fly ash. B.2. Paragraph 17.01 of the impugned order has confirmed the demand on the basis that the Co-Appellant had not specified the source of procurement of fly ash in the dispatch note/consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nil Products Ltd. v. CCE, [2013 (291) E.L.T. 531 (Tri. - Ahmd.)], maintained in Anil Products Ltd. v. Commissioner [2014 (301) E.L.T. A14 (S.C.)] C.3.3. Kalyani Sharp India Ltd. v. CCE [2008 (226) E.L.T. 197 (Tri. - Mumbai)], maintained in Commissioner v. Kalyani Sharp India Ltd. - 2010 (255) E.L.T. Al8 (S.C.)] C.3.4. Carlisle Trading and Manufacturing (I) P. Ltd. v. Dy. C.C. (SVB), Chennai [2015 (325) E.L.T. 318 (Mad.)] C.3.5. CCE Customs v. D.J. Malpani [2010 (258) E.L.T. 185 (Bom.)] C.3.6. Hi-Tech Arai Ltd. v. CCE [2009 (236) E.L.T. 91 (Tri. - Chennai)] D.The Appellant is eligible for exemption for the year 2003-04 D.1. During the year 2003-04, the Appellant had procured fly ash indirectly from the following sources: Source Quantity (in M.T.) Chettinad Cement Corporation Ltd. (CCCL) 1295 Sakthiguhan Construction Products 21.75 Shri Karthikeyan Transports 1322.235 Total 2638.985 D.2. The Appellant had submitted various evidence to prove the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per SCN (excluding the alleged bogus quantity) (B) 12,479.06 As per the Appellant (considering only 7963.185 MTs in excess of B) (C) 20,442.25 % of fly ash consumed in manufacture As per SCN (B/A * 100) 16.27% As per the Appellant (considering only 7963.185 MTs in excess of B) (C/A* 100) 26.66% E.3. The Appellant had submitted various evidence to prove the source of fly ash from CCCL and MSM Transports. However, there is no finding in the impugned order with respect to procurements from CCCL and MSM Transports. Therefore, to this extent, the source of fly ash is deemed to be accepted. E.4. Further, with respect to procurements from Sakthiguhan Construction Products and SIAR traders, there is no requirement to prove the source of such sources. E.5. In respect of procurements from ACC RMC, the impugned order has not disputed the source of such source and has rejected the procurement from ACC RMC on the sole ground that authorization provided by ACC RMC to Allianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant use fly ash to manufacture asbestos sheets. G. The impugned order has been passed mechanically and with a pre-conceived mind. There is no positive evidence shown by the impugned order to reject the sources of procurements established by the Appellant. None of the evidence produced by the Appellant has been considered in proper light. H. Entire demand is barred by limitation. Consequently, demand fails. H.1. The impugned order has invoked extended period on the ground that the Appellant has not maintained proper records for receipt of fly ash and that they have shown bogus receipt which was unearthed and came to the knowledge of the Department. H.2. It is an admitted fact even as per paragraphs 2.01 and 2.04 of the SCN (pages 188, 190 of Appeal 40388/2021), the Appellant was regularly filing the monthly returns as mandated by the NN 06/2002. In such situations, the Appellant ought not to be saddled with allegations of suppression. There are no grounds for imposing penalties. I. In the interest of brevity, the Co-Appellant adopts the submissions made hereinabove to the extent the demand is made against the Co-Appellant. 10. The Learned A.R, Shri Rudra Pratap S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .8.1999, the percentage by weight of fly ash has to be calculated taking into account the weight of fly ash used with reference to the weight of the finished product in dry condition, i.e., weight of fly ash x 100/weight of Asbestos Cement Products. 10.5 From the data furnished by MTPS, it was noticed that if the excess quantity of fly ash recorded by appellant which is shown as received in their records and returns is reduced, for the year 2004-05 the actual fly ash content percentage in the finished product would fall below 25%. From the data received from MTPS as well as documents recovered from M/s.Natesan Engineers and contractors, co-noticee and the appellant herein, it was noted that the fly ash lifted from MTPS was correctly accounted in their records. The quantity of fly ash lifted from MTPS being very less than the quantity shown in the records/ER-I returns and Form-C and D filed by the appellant M/s.Vishaka Industries, it is clear that they have not used 25% of fly ash in the final product, as claimed by them. The appellant is not eligible for the exemption as per notification 6/2002 dt.1.3.2002. The duty demand confirmed is thus legal and proper. The Learned AR argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Engineers and Contractors, their transport contractor, in their books of account. According to department, this quantity would not be sufficient for the appellant to manufacture and remove cement asbestos sheet during the disputed period of 2003 to 2005, with fly ash content/use of not less than 25%. 12.2 The appellant counters the allegations by submitting that, besides receiving fly ash from MTPS as per direct allotment, they have also received fly ash from Cement companies, and others, for which they furnished documents. It is argued by appellant that though they raised this contention before the adjudicating authority in the earlier adjudication, it was not considered at all. The fly ash received from others has been used to manufacture cement asbestos sheet and thus the quantity of fly ash used by them would be well above 25%. 12.3 According to department, the entire quantity of fly ash received by the appellant, M/s.Vishaka Industries, other than the quantity lifted as direct allotment from MTPS is bogus. 12.4 At this juncture, it needs to be mentioned that in the earlier round of litigation before the Tribunal, the appellant had filed Misc. application to receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mode of procurement Chettinad Cement Corporation Ltd 1295.000 The party got direct allotment of fly ash from MTPS and the assessee directly procured from the party. Shri Karthikeyan Transports 1322.235 The party got fly ash bricks manufacturers. In turn NEC purchased fly ash from this party and supplied to the assessee Sakthiguhan Construction Products 21.750 Directly procured by the assessee from the party TOTAL 2638.985 2004-05 Name of Supplier Quantity (MT) Mode of procurement MSM Transports 2480.000 The party got fly ash from fly ash bricks manufacturers. In turn NEC purchased fly ash from this party and supplied to the assessee ACC RMC 2481.930 ACC RMC got direct allotment of fly ash from MTPS. AMC RMC appointed Alliance Carriers as transport contractors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.85 has been lifted. The letter dt. 25.5.2004 shows that appellant has procured 748 MTs, 547 MTs and 2957.85 MTs in February, March and April respectively, and that the appellant (M/s.Vishaka) has to pay balance of Rs.2,93,589/- towards the cost of fly ash to M/s.Chettinad Cement Corporation Ltd. This letter is extracted as under : 12.9.3 In spite of this document there is no finding as to the procurement made from CCCL. The contention put forward by the appellant about the quantity of fly ash procured through M/s.Karthikeyan Transports is discussed as the letter dt. 20.12.2003 issued by M/s.Karthikeyan Transports which has been referred to by the adjudicating authority. The same is enclosed in the appeal paper book. As per these documents, M/s.Karthikeyan Transports have informed their interest to supply fly ash to M/s.NEC and it is stated in this letter that it is the fly ash from MTPS allotted to brick manufacturing companies. The names of the brick manufacturing companies who have allotments from MTPS, Mettur Dam, for lifting fly ash is also mentioned in this letter. Out of the 2162 MTs on two bills raised by M/s.Karthikeyan Transport on M/s.NEC, a quantity of 1322.235 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.9.8 In the case of procurement of fly ash from M/s.MSM Transport the appellant had explained that MSM had issued letter to NEC dt. 27.11.2004 wherein MSM proposed to supply fly ash to NEC and further supply to be made to appellant. It was also stated that this supply is made from the allotment made to seven brick companies which was indicated in the letter. From the documents, it is seen that the appellant had procured 2480 MTs of fly ash on various dates during February 2005. The appellant had furnished all documents evidencing the procurement through NEC from M/s.MSM Transport. So also, they produced the allotment orders of all the seven brick companies. The adjudicating authority though noted all these evidences produced by appellant has again opted to be silent as to why these procurements are to be considered as not bogus. The duty demand has been confirmed disregarding these documents and supply of 2480 MTs of fly ash. 12.9.9 In the case of ACC RMC, the appellant vide letter dt. 18.9.2003 appointed Alliance Carriers for transportation of fly ash from MTPS to ACC RMC, Bangalore. Alliance Carriers vide letter dt. 10.9.2003, had appointed NEC for the purpose of transporta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed in the notification. The tabulation presented by the counsel for appellant is as under : Ready reckoner: Supply of fly ash received in 2003-04 Supplier Quantity per Impugned Order Findings in the Impugned Order Appellant s Submissions Flow of Supply Visaka s Source Source of source M/s. Chettinad Cements Corporation Ltd. ( CCCL ) Pg. 57, 58: 1295 MT Pg 58: No findings. MTPS CCCL Visaka Pg 504 505: Letters issued by CCCL confirming the supply of fly ash to Visaka. Pg: 144: CCCL is listed in MTPS s RTI response as a recipient of fly ash for the year 2003- 04 vide serial number 9 in table (a). M/s Shakthiguhan Construction Projects ( SCP ) Pg. 57, 58: 21.75 MT Pg 59: No records as to show the source of SCP. MTPS SCP Visaka Pg 513 to 520: Goods Receipt Report prepared by Visaka a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llow Blocks, Mettur Dam. M.R. Hollow Bricks, Mettur Dam. MVM Hollow Blocks, Mettur Dam. Maragatham Hollow Blocks, Mettur Dam. Muthu Hollow Blocks, Mettur Dam. RAVI Hollow Blocks, Mettur Dam. Supplier Quantity per Impugned Order Findings in the Impugned Order Appellant s Source Flow of Supply Visaka s Source Source of source 7. Sakthivel Hollow Blocks, Mettur Dam. Pg. 149: The above six companies are listed in MTPS s RTI response as recipients of fly ash for the year 2004-05 vide serial numbers 81, 82, 83, 84, 87, 90 91. ACC RMC Pg. 58, 59: 2481.930 MT Pg. 59: No evidence of ACC RMC authorizing M/s. Alliance Carriers to appoint other transporters. Pg. 59: No authorization letter of ACC RMC to M/s. Alliance Carriers for sale of fly ash to independent parties. MTPS ACC RMC Alliance Visaka Pg. 543: Lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nits (Sun Hollow Bricks, Cheran Bricks, Sindhu FA Products, Sankar, Emerald FLAG Bricks, ERK Concrete, RM concrete) from whom Shri Karthikeyan Transports has sourced the fly ash, and supplied to appellant. Similarly, SIAR Traders, Salem is listed at Sl.No.18 in this document. These documents which are reply to RTI supports the contentions of the appellant. 12.13 Moreover, it requires to be mentioned that though the case put up by department in the SCN is that except the quantity allotted to appellant by MTPS, the entire quantity of fly ash accounted by them in their books of accounts, ER-I return, Form C, D etc. are bogus, there is indeed mention of supply from ACC RMC in the SCN itself. 13. The Ld. A.R Shri Rudra Pratap Singh had vehemently argued that as the documents were produced after much lapse of time, the veracity of these documents is doubtful. We have given our anxious consideration to this submission made on behalf of the department. We have to say that an appeal was filed by the department before the Hon ble High Court. The same contention was put forward by the department before the Hon ble High Court. After taking note of the argument put forward by the Ld. Stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered. In the preceding paragraphs, we have pointed out the difference in the phraseology and language in Order XLI Rule 27 of the CPC and Rule 23 of the CESTAT Rules. Therefore, we are of the considered view that the decision in the case of Ibrahim Uddin would not render any assistance to the cee t the Revenue. For the above reasons, We find that there is no error in the order passed by the Tribunal. (emphasis supplied) 13.1 We humbly note the observations made by the Hon ble High Court that the authenticity of the documents can always be checked by the adjudicating authority. We have to say that the adjudicating authority has not made any remark in the impugned order as to the authenticity of the documents. At the adjudication level the officer is fully equipped to cross check and verify in case of any doubt as to the authenticity of the documents. 14. After appreciation of the facts, evidence established by documents above, we have to say that the appellant has been able to successfully establish that the alleged bogus quantity of fly ash was actually received in their factory and used in the manufacture of final product. In such circumstances, the allegation th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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