Customs, Excise and Gold Tribunal - Mumbai
Classic Strips Ltd. And Ors. vs Commissioner Of Central Excise on 27 July, 2006
Equivalent citations: 2006(111)ECC396, 2006ECR396(TRI.-MUMBAI), 2007(208)ELT89(TRI-MUMBAI)
ORDER Krishna Kumar, Member (J)
1. Heard both sides.
2. The issue relates to fraudulent availment of modvat credit on invalid documents and imposition of penalty on the main appellant as well as co-noticees. We have perused the impuned order. After perusal of the same and the records, we find that the order of the Commissioner while dis-allowing the modvat credit is solely based on various oral statements. Briefly stated the facts of the case are that on the specific information that M/s. Classic Strips Pvt. Ltd. the manufacturer of Printed self-adhesive PVC stickers/stripes availed modvat / Cenvat facility under the then Rule 57A of Central Excise Rules, 1944 (now Rule 4 of the Cenvat Credit Rules, 2002). The impugned order does not appear to have discussed any documentary or corroborative evidence to sustain disallowance of the modvat credit.
3. The appellants are non SSI unit and are availing the benefit of Cenvat credit scheme on the duty paid inputs under Cenvat Credit Rules, 2002. Some of their inputs are printing inks, dyes & pigments, which they are procuring from various manufacturers and registered dealers. Searches were made in the factory and the statement of the company recorded. The show cause notice issued made allegations that the appellant was availing modvat credit fraudulently on the basis of dealers invoices without actually receiving the goods. No copy of the test report was given to the appellants to enable them to file their reply within the time limit granted in the show cause notice. No independent enquiry was conducted despite written request of the appellant as admitted in the letter dated 7.8.2002. The panchnama dated 1.9.1999 which was drawn on the day of the surprise visit clearly mentioned that no discrepancies in the stock of finished goods as well as raw materials was noticed and the same were according to the book balances. The appellant submitted that the opinion of the UDCT was a conclusive and clear report, which would nullify the hearsay evidence and was cogent and reliable since it was the department who had made a reference to UDCT and whose opinion was not disputed by the appellants, being in their favour. The appellant further submitted that it was clear that the Department held willfully suppressed the outcome of the UDCT opinion. The failure of the investigation to carry out proper investigation could not be at the expense of the appellant and to their prejudice.
4. The Id. DR has reiterated the impugned order. Alter heating and perusal of the records, we find that for the following reasons we need to waive the pre-deposit and after waiver allow the appeals at the stay stage itself:
(a) The Commissioner has failed to carry out the direction of the Tribunal as contained in the order dated 24.6.2004.
(b) The Commissioner has failed to consider the documentary evidence relied on by the appellants.
(c) The Commissioner has only chosen to follow the previous order without considering the direction of the Tribunal as mentioned in the said order.
(d) The Commissioner has sought to counter the documentary evidence submitted by the appellants by way of delivery challans mentioning the vehicle nos. of the transporters who have claimed that they have never gone out of Biwandi and which clearly prove that deliveries have been made outside Bhiwandi by these very vehicles all along.
(e) Had the investigation been done in the proper perspective and unbiased manner the appellant could not have noted that each of the delivery challans produced by the appellants also bears the corresponding Central Excise Invoice no, which is a cenvatable/modvatable duty paying document and would surely have all particulars.
(f) The respondent has not considered any of the bonafide facts that the stock of inputs and finished goods of the appellants was perfectly tallying with the statutory records as recorded in the Departments own panchnama dated 01.09.1999 during the surprise visit, the availability of material issue slips showing the issue for production and that cheque payments had been made for each of the consignments, while unshaken reliance is being placed on the transporters statements, which the appellants have during investigation stage itself complained to the Commissioner as being recorded by using questionable means, even though the statements have been proved to be false as aforesaid through undisputable evidence, which has not been negated by the respondent himself. Besides, the non-maintenance of any records by the transporters is also apparently not an issue of concern to the respondent while the perfectly tallying stocks and absence of any statutory lapse or shortcoming on part of the appellants is of no consequence to the respondent.
(g) It is clear from the para 114 of the impugned order that there was contradictions in the statement of transports and as such the statement could not have been relied on in the impugned show cause notice and ultimately on the basis of the present impugned order. Without upholding the relevant documentary evidence it was not competent for the Commissioner to have chosen not to make proper enquires and ascertain the truth. The oral statement cannot be relied on the face of the documentary evidence. The documentary evidence excludes the oral evidence and the documentary evidence is the primary evidence whereas the statements are secondary evidence. No where the secondary evidence could be preferred over the documentary evidence. The failure of the Commissioner in this regard is a serious legal lacune in the impugned order and the impugned order deserves to be set aside on this ground alone. The Id. Counsel for the appellants relied on the case of Gurpreet Industries v. CCE where in it has been held "Demand cannot be sustained only on basis of a private diary without considering production capacity, raw material purchased, labour employed, power consumed, etc. At the most it may raise a doubt but that cannot take place of proof. There is a long distance between 'may be true' and must be true' and the whole distance must be covered by legally reliable and un-matchable evidence." In another decision reported in Kashmir Vanaspati (P) Ltd. v. CCE it has been held that the "Demand based on note book maintained by labourers containing un-authenticated entries cannot be sustained, unless the same is supported by other evidence, such as raw material consumed, goods actually manufactured, packed, etc."
(h) The Commissioner has not denied the fact that the statement of the transporters have been relied on over the documentary evidence produced by the appellant.
(i) The whole case of the Department is based on assumption and presumption, conjunctures and surmises and no positive evidence has been brought on record by the Commissioner to substantiate the allegation made against the appellant. The direction by the Tribunal as contained in the remand order has been totally ignored by the Commissioner and the Commissioner has merely followed the order of his predecessor. This itself is sufficient to set aside the impugned order. Since there is no willful mis-statement or suppression on the part of the appellant the question of invoking longer period does not arise and the demand is, therefore, time barred.
(j) Since the demand itself is not sustainable, the question of penalty does not arise.
5. Accordingly after waiving pre-deposit, we set aside the impugned order and allow the appeals filed by the appellants with consequential relief, if any.
(Pronounced in Court on 27.7.2006).