Custom, Excise & Service Tax Tribunal
Globe Steel & Alloys Private Limited vs Ranchi Commissionerate on 22 September, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH - COURT NO. 2
Excise Appeal No. 75485 of 2019
(Arising out of Order-in-Original No. 92/Central Excise/Pr. Commr/2018 dated
28.09.2018, read with Corrigenda dated 31.10.2018 and 20.11.2018 passed by the
Principal Commissioner of Central Goods & Service Tax & Central Excise, Central
Revenue Building, 5A, Main Road, Ranchi - 834 001)
M/s. Globe Steel & Alloys Private Limited : Appellant
Vill. Rauta, P.O. Marar - 829 117,
District: Ramgarh (Jharkhand)
VERSUS
Pr. Commissioner of C.G.S.T. and Central Excise : Respondent
Central Revenue Building, 5A, Main Road,
Ranchi - 834 001 (Jharkhand)
WITH
Excise Appeal No. 75486 of 2019
(Arising out of Order-in-Original No. 92/Central Excise/Pr. Commr/2018 dated
28.09.2018, read with Corrigenda dated 31.10.2018 and 20.11.2018 passed by the
Principal Commissioner of Central Goods & Service Tax & Central Excise, Central
Revenue Building, 5A, Main Road, Ranchi - 834 001)
Shri Sunil Bansal, Director, : Appellant
M/s. Globe Steel & Alloys Private Limited
Vill. Rauta, P.O. Marar - 829 117,
District: Ramgarh (Jharkhand)
VERSUS
Pr. Commissioner of C.G.S.T. and Central Excise : Respondent
Central Revenue Building, 5A, Main Road,
Ranchi - 834 001 (Jharkhand)
AND
Excise Appeal No. 75493 of 2019
(Arising out of Order-in-Appeal No. 490/RAN/2018 dated 14.11.2018 passed by the
Commissioner (Appeals), Central Goods & Services Tax &C.Ex., 2 nd and 3rd Floors,
Grand Emerald Building, Between Road No. 1 & 2, Ashok Nagar, Ranchi - 834 002)
M/s. Globe Steel & Alloys Private Limited : Appellant
Vill. Rauta, P.O. Marar - 829 117,
District: Ramgarh (Jharkhand)
VERSUS
Pr. Commissioner of C.G.S.T. and Central Excise : Respondent
Central Revenue Building, 5A, Main Road,
Ranchi - 834 001 (Jharkhand)
Page 2 of 53
Appeal No(s).: E/75485,75486,75493/2019-DB
APPEARANCE:
Shri Kartik Kurmy, Advocate,
Shri Shekhar Snorad, Chartered Accountant,
For the Appellant(s)
Shri B.K. Singh, Authorized Representative,
Ms. Suman, Authorized Representative,
for the Respondent
CORAM:
HON'BLE SHRI R. MURALIDHAR, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NOs. 77454-77456 / 2025
DATE OF HEARING: 19.09.2025
DATE OF DECISION: 22.09.2025
ORDER:[PER SHRI K. ANPAZHAKAN] Excise Appeal Nos. 75485 and 75486 of 2019 have been filed by M/s. Globe Steel & Alloys Private Limited and their Director, namely, Shri Sunil Bansal against the Order-in-Original No. 92/Central Excise/Pr. Commr/2018 dated 28.09.2018, read with Corrigenda dated 31.10.2018 and 20.11.2018, wherein the Ld. Principal Commissioner of C.G.S.T. and Central Excise has disallowed CENVAT Credit amounting to Rs.3,44,11,544/- under Rule 15(2) of the CENVAT Credit Rules, 2004 availed during the period from June, 2011 to August, 2014 and imposed a penalty of Rs.3,44,11,544/- under Rule 15(2) ibid., besides imposing a penalty of Rs.1,00,00,000/- on Shri Sunil Bansal under Rule 26 of the Central Excise Act, 1944 read with Rule 15(2) of the said rules.
1.1. Excise Appeal No. 75493 of 2019 has been filed by M/s. Globe Steel & Alloys Private Limited against the Order-in-Appeal No. 490/RAN/2018 dated 14.11.2018 wherein the Ld. Commissioner (Appeals) has upheld the disallowance of CENVAT Credit Page 3 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB amounting to Rs.18,29,488/- for the period from April, 2014 to March, 2015 as well as the imposition of penalty of Rs.18,29,488/- under Rule 15(2) / 15(3) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944.
2. As the issue involved is common in all these appeals, they are taken up together for disposal by way of a common order.
3. The facts of the case are that M/s. Globe Steel & Alloys Private Limited (hereinafter referred to as the appellant/company)is is engaged in the manufacture of M.S. Ingots (Chapter 72), for which raw materials such as Sponge Iron, Pig Iron, C.I. Scrap, M.S. Scrap, Iron and Steel Scrap (like Pooled Iron), etc., are used by the appellant.
4. In the present case, the appellant have purchased Raw Materials from eleven registered Central Excise Dealers, viz. -
i. M/s. Bajrang Steel Coal & Coke Traders, (BYKPP6085RED001) ii. M/s.Chakradhari Metal Company, (AAGFC9964KED001) iii. M/s Hari Om Steel, (CIBPS1382JED003) iv. M/s. Jai Mata Di Enterprises, (CIBPS1382JED002) v. M/s. Bajrang Steel Traders, (AQWPP1814FXD001) [Common in Appeal Nos.E/75485/2019, E/75486/2019 andE/75493/2019] vi. M/s. Shree Balajee Enterprises, (AKDPA2360AED001) vii. M/s. Shiv Metalicks, (ABOPN9626LED001) viii. M/s L.S. Construction, (AADFL2549NED001) Page 4 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB ix. M/s. Vishwas Metalicks, (AAHFV4711CED001) x. M/s.SatguruMetalicks, (AJBPB8243LED001) xi. M/s. Shriram Power & Steel Pvt. Ltd., (AAFCS1323NED002) The impugned goods were transported from the supplier to the factory of the Appellant.
5. The receipt of impugned goods were duly received by the Appellant and such receipt is duly recorded in their statutory records RG-23A-Part-I / RG-23A-Part-II, disclosed in ER-1 return and accounted for in their books of accounts.The impugned raw materials were received in their factory and consumed in the manufacture of MS Ingots. Such MS Ingots were cleared on payment of Central Excise duty, which facts are not dispute in the instant case.
6. Search and Seizure operations were conducted by the DGCEI at the registered premises of 6 Central Excise registered dealers and 5 Manufacturers from whom the registered dealers said to have procured the goods, on dated 15.07.2014, 08.07.2014 and 04.07.2014 as follows:-
Manufacturers:
(i) M/s. Aditya Enterprises, Plot NO.IV-C/4(P), Bokaro Industrial Area, Bokaro (BCBPS6955CEM001)
(ii) M/s A. S. InfratelPvt. Ltd. Chiragora, Samson Road, Dhanbad, Hirak Road, Saraidela, Dhanbad (AAJCA4354REM002)
(iii) M/s. Ganesh Udyog, Baramundi, Near Asrafi Hospital, B. Politechnic, Dhanbad (AJMPK4448DEM001) on 04.07.2014;
(iv) M/s. Shree Ram Engineering & Casting, Jawahar
Nagar, Near Red Rose School, Mango,
Page 5 of 53
Appeal No(s).: E/75485,75486,75493/2019-DB Jamsehdpur (ABXFS8223KEM001) on 20-03- 2015;
(v) M/s. Ganpati Enterprises, P.O. B. Polytechnic, 40, Bishanpur, Babudih, Dhanbad-828130 (AMDPK1998DEM001), on 01-07-2015 Central Excise registered dealers:
(i) M/s L. S. Construction, Near Kali Mandir Road,
Godown of Ajay Singh, Ghorabanda,
Jamshedpur Kr. (AADFL2549NED001);
(ii) M/s. Jai Mata Di Enterprises, Block No.04, Ward No.2, 1B, Gopal Marg, Shastrinagar, Kadma, Jamshedpur (CIBPS1382JED002), on 04.07.2014;
(iii) M/s.Chakradhari Metal Co., Ward No.7, Khata No. 34, Plot No. 554, Marawaripara Road, Jugsalai, Jamshedpur (AAGFC9964KED001);
(iv) M/s. Bajrang Steel Coal & Coke Traders, Plot No. 1183,NH-33 Dimna Road near DVC Power House Mango, Jamshedpur (AQWPP1814FXD001);
(v) M/s. Hari Om Steel, H. No.9. Road No.11.
Daiguttu, Mango, Jamshedpur (CIBPS1382JED001), on 08-07-2014;
(vi) M/s. Shiv Metalicks, a proprietorship firm,
Bajpayee Complex, Jugsalai, Jamshedpur
(ABOPN9626LED001) which was earlier
registered as Partnership Firm
(ABOFS5031NXD001), on dated 15-07-2014
7. In the course of investigation, statements of the following persons were recorded under Section 14 of the Act: -
Page 6 of 53Appeal No(s).: E/75485,75486,75493/2019-DB
(a) Mr. Nitesh Pandey, Proprietor of M/s Bajrang Steel Coal & Coke Traders and Partner of M/s Chakradhari Metal Company,
(b) Mr. Ajay Kumar Sharma, Proprietor of M/s Jai Mata Di Enterprises and M/s Hari Om Steel,
(c) Mr. Satish Pandey, Proprietor of M/s Bajrang Steel Traders,
(d) Mr. Amit Agarwal, Proprietor of M/s Shree Balaji Enterprises,
(e) Mr. Manish Kumar Naredi, Proprietor of M/s Shiv Metalliks,
(f) Mr. AjayKumar Singh, Partner of M/s L.S. Construction
(g) Mr. Manoj Kumar Pareek, Partner of M/s Vishwas Metalliks,
(h) Mr. Harpal Singh Bhatia, Proprietor of M/s SatguruMetallicks,
(i) Mr. Ajay Jain, Director of M/s Shriram Power & Steel Pvt. Ltd.
(j) Mr. Sudarshan Singh, Proprietor of M/s Aditya Enterprises,
(k) Mr. Dharamvir Kumar, Proprietor of M/s A.S. InfratelPvt. Ltd.
(l) Mr. Nitesh Pandey, Partner of M/s Shree Ram Engineering & Casting,
(m) Mr. Shiv Shankar Kumar, Proprietor of M/s Ganapati Enterprises,
(n) Mr. Arvind Dubey, Owner of Vehicle No. JH05W4991,
(o) Mr. Kamlesh Yadav Owners of JH05AL-0707, JH05AF-0707, JH05Q-0707;Page 7 of 53
Appeal No(s).: E/75485,75486,75493/2019-DB
8. Statement of Shri Sunil Bansal, Director of the appellant-company was recorded on 27.07.2015, 10.08.2015 and 13.08.2015 wherein he has inter alia stated to have purchased these goods from another purchaser registered under Central Excise and that the goods were received in their factory.
9. On the basis of the various statements recorded from the Manufacturers, Dealers and the Director of the Appellant company and the purported details of 21 vehicles said to have been used to transport the impugned goods, the officers came to the conclusion that the appellant company M/s. Globe Steel & Alloys Private Limited has wrongly availed the credit on the basis of the Invoices issued by various Dealers/Manufacturers without actual receipt of the goods into the factory.
Excise Appeal Nos. 75485 and 75486 of 2019
10. A Show Cause Notice dated 22.06.2016 [First Show Cause Notice] was issued alleging that the appellant has wrongly availed CENVAT Credit amounting to Rs.3,44,11,544/- on inputs purchased from 11 dealers during the period June, 2011 to August, 2014 without receiving the underlying goods in the factory. On a test check basis, 21 invoices involving CENVAT Credit of Rs.15,99,466.13 (out of the total disputed credit of Rs.3,44,11,544/-) i.e., 4.6%, were randomly picked up and the vehicle registration numbers appearing on those invoices were verified from online portal. It purportedly emerged that all these 21 vehicle numbers pertain to L.M.V. which could not be used to transport the impugned goods. Accordingly, it was alleged that the appellant has taken CENVAT Credit on the basis of fake invoices without actual receipt of goods.
Page 8 of 53Appeal No(s).: E/75485,75486,75493/2019-DB 10.1. The appellant submitted its reply vide letters dated 12.09.2018 and 31.12.2016, thereby disputing and denying the allegations levelled 10.2. On adjudication, the Ld. Principal Commissioner, C.G.S.T., Central Excise and Service Tax, Ranchi vide the Order-in-Original dated 28.09.2018 has confirmed the disallowance of CENVAT Credit amounting to Rs.3,44,11,544/- (Rupees Three Crore Forty Four Lakh Eleven Thousand Five Hundred and Forty Four only) under Rule 15(2) of the CENVAT Credit Rules, 2004 availed by the appellant-company during the period from June, 2011 to August, 2014, along with interest, and imposed a penalty equivalent to the amount of CENVAT Credit disallowed,under Rule 15(2) ibid. A personal penalty of Rs.1,00,00,000/- was also imposed on Shri Sunil Bansal, amongst others, under Rule 26 of the Central Excise Act, 1944 read with Rule 15(2) of the said rules.
10.3. Aggrieved by the above disallowance of credit, along with interest and penalties thereon, Excise Appeal Nos. 75485 and 75486 of 2019 have been filed by M/s. Globe Steel & Alloys Pvt. Ltd. and Shri Sunil Bansal respectively.
Excise Appeal No. 75493 of 2019
11. Subsequently, another Show Cause Notice dated 09.10.2015 was issued alleging wrong availment of CENVAT Credit amounting to Rs.18,22,648.00/- on Inputs purchased from M/s. Shree Balajee Enterprises during the period from 01.04.2014 to 31.03.2015 without receiving these items in the factory along with wrong availment of Page 9 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB CENVAT Credit of Rs.6,840.00/- in respect of Service Tax paid on transportation of these goods. The appellant disputed the above allegations by way of their reply dated 22.12.2016.
11.1. The matter was adjudicated vide Order-in- Original No. 08/Adjn./DC/CE/RMG DIVN/2017-18 dated 16.11.2017 wherein the Ld. Deputy Commissioner, C.G.S.T. &C.Ex., Ramgarh has disallowed CENVAT Credit to the tune of Rs.18,22,647.62/-, GTA Credit of Rs.6,840/-, along with interest thereon, and imposed penalties of Rs.18,22,648/- & Rs.6,840/- under Rule 15(2)/Rule 15(3) of CENVAT Credit Rules, 2004.
11.2. The appellant pursued the matter before the Ld. Commissioner (Appeals), Central Goods & Services Tax & C.Ex., Ranchi, who vide the impugned Order- in-Appeal dated 14.11.2018, has rejected their appeal.
11.3. Aggrieved by the above Order-in-Appeal dated 14.11.2018, Excise Appeal No. 75493 of 2019 has been filed by M/s. Globe Steel & Alloys Pvt. Ltd.
12. At the outset, it has been informed by the appellant no investigation has been conducted at the factory of the appellant-company. No stock of raw materials or finished goods were undertaken. Thus, it is their plea that there was no discrepancy in stock of raw materials and finished goods in their factory.
12.1. Further, it has also been stated before us that no enquiry / investigation was conducted with the transporters & suppliers; only statements of two transporters, namely, Mr. Arvind Dubey (Owner of JH-
Page 10 of 53Appeal No(s).: E/75485,75486,75493/2019-DB 05W-4991) and Mr. Kamlesh Dubey (Owner of JH- 05AC-0707, JH-05AF-0707and JH-05Q-0707) were recorded on 22.03.2016 and 28.03.2016 respectively; as the Department relied upon the statements recorded from these transporters, the appellant requested for their cross examination. However, the appellant mentions that despite repeated requests vide letters dated 01.08.2016, 31.12.2016 and 31.01.2017, the opportunity to cross-examine the above said persons was not granted.
12.2. It is also the case of the appellant that the investigation officers did not conduct any enquiry with the person dealing with purchase and maintaining inventory at the appellant's factory; no enquiry was made with security staff posted at the factory gate of the appellant; no investigation was also made with the weighbridge operator of the appellant's factory.
12.3. Furthermore, the appellant has submitted in this regard that the investigation was selectively conducted at the transporter's end. On a test check basis, 21 invoices involving CENVAT Credit of Rs.15,99,466.13 (out of the total disputed credit of Rs.3,44,11,544/-) i.e., 4.6%, were randomly picked up and the vehicle registration numbers appearing on those invoices were verified from online portal; it purportedly emerged that all these 21 vehicle numbers pertain to L.M.V. which could not be used to transport the impugned goods. In respect of rest of the invoices involving CENVAT Credit of Rs.3,28,12,077.87, it is stated that there is no allegation that those were pertaining to cases of L.M.V; resultantly, it has been alleged that the appellant has taken CENVAT Credit on the basis of fake invoices without actual receipt of goods. Thus, Page 11 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB the appellant submits that the denial of CENVAT Credit merely on the basis of the findings that some of the vehicles said to have been used for transportation were found to be L.M.V. and could not have been used to transport the impugned goods, is not legally sustainable. In support of their contention, the appellant relied on the following decisions:
(i) Commissioner of Central Excise, East Singhbhum v. Tata Motors Limited [2013 (294) E.L.T. 394 (Jhar.)],
(ii) Commissioner of C.Ex., Cus. and Service Tax v.
Juhi Alloys Ltd. [2014 (302) E.L.T. 487 (All)]
13. It is also the appellant's submission that the impugned goods were received by the appellant- company under cover of central excise invoices and the vehicles which transported the impugned goods are all Heavy Motor Vehicles. The receipt of impugned raw materials are recorded in the:-
(i) monthly returns filed under Rule 7 of the CENVAT Credit Rules, 2004 (RG-23A-
Part-I)
(ii) Entry Book of Duty Credit (RG-23A-Part-
II)
(iii) ER-1 returns
13.1. The ER-1, RG-23A-Part-1, RG-23A-Part-II, ER-
4 returns filed by them were regularly scrutinized by the Department as per Return Scrutiny Circular No. 185/4/2015-S.T. dated 30-06-2015, Board M.F.(D.R.) letter F.No.224/37/2005-CX.6 dated 24-12-2008 and Circular No. 887/07/2009-CX dated 11-05-2009 and no discrepancies were noticed.
Page 12 of 53Appeal No(s).: E/75485,75486,75493/2019-DB
14. During the course of hearing, the Ld. Counsel appearing on behalf of the appellants have put forth various arguments, on merits as well as on limitation, which are summarized as under: -
(i) The entire case is based on the statements recorded under Section 14 of the Central Excise Act, 1944. There is no other evidence on record in support of the charge. Since these oral statements have not been tested in terms of Section 9D of the Central Excise Act, they cannot be treated as admissible evidence and are, therefore, irrelevant.
(ii) The entire case of department is based on statement of 11 Central Excise dealers and 2 transporters only (owner of 4 trucks out of more than 350 nos. trucks involved in the instant case)
(iii) The appellant-company purchased impugned raw materials and received the same in their factory, recorded in RG-23A Part-I & RG-23A Part-II in the inventory and books of accounts and made payments to the suppliers through proper banking channel. These facts are not in dispute.
(iv) They have maintained proper records of receipt, disposal, consumption and inventory of inputs in accordance with Rule 9(5) of the CENVAT Credit Rules, 2004. [Raw materials Inventory, RG-23A-Part-I, RG-23A-Part-II]
(v) There is no tangible, cogent, corroborative evidence to prove non-receipt of goods by the Appellant.Page 13 of 53
Appeal No(s).: E/75485,75486,75493/2019-DB
(vi) In the instant case, it is undisputed that-
• All "Central Excise dealers" are registered under Central Excise Rules, 2002 and their registration were valid and active during the material period • Purchase are covered under Excise Invoices evidencing supply of impugned goods to the appellant;
• Quantity of impugned goods received are recorded in RG-23A-Part-I;
• Entry Book of Duty Credit (RG-23A-Part-II) along with ER-1 returns;
• Payment made to Suppliers through proper banking channel;
• The consumption of the impugned goods in the manufacture of final product (MS Ingot) is not disputed and payment duty on clearance of such final product is accepted by the Department without any demur;
• There is no evidence of refund of any cash to the appellants by the dealers.
• Statement of Shri Sunil Bansal, Director were recorded on dated 27-07-2015, 10-08-2015 and 13-08-2015. He categorically stated to have purchased these goods from registered dealer and that the goods were received in their factory.
• No investigation at the factory of the appellant- company was undertaken. No stock of raw materials or finished goods were taken, and hence, there is no discrepancy in stock of raw Page 14 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB materials and finished goods in their factory to bring home the charge;
• The vehicles which transported the impugned goods are all Heavy Motor Vehicles.
• Further, no enquiry / investigation was conducted with the transporters. Only statements of two transporters, namely Arvind Dubey and Kamlesh Dubey Owner of 4 trucks were recorded out of total more than 350 trucks involved in the case.
(vii) It is submitted that substantive benefit of CENVAT Credit cannot be denied on assumption and presumption without substantive evidence.
(viii) The statutory records (RG-23A-Part-I & RG-
23A-Part-II) are authentic documents and substantive evidence of receipt of impugned goods by the appellants.
(ix) In the case of Kobain Electronic P. Ltd. Vs. CCE reported in (2016) 343 ELT 545 (Tri.-Ahmd.), it is held that RG-23A-Part-I & RG-23A-Part-II are statutory records and the only authentic documents to establish receipt of inputs/capital goods.
(x) The benefit of CENVAT Credit is a substantive benefit and it cannot be denied for technical violations.
(xi) It is alleged that the Central Excise dealers
purchased impugned goods from 5
manufacturers (M/s. Aditya Enterprises, M/s A.S. InfratelPvt. Ltd., M/s Ganesh Udyog, M/s Page 15 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB Shree Ram Engineering & Casting and M/s Ganapati Enterprises) are found to be non- existing while it is undisputed that -
(a) The said manufacturers are registered and their registration was active
(b) Statements are recorded from the proprietors, partners and directors of the said manufacturers.
(xii) Further, on the basis of simple letters received from seven existing manufacturers (M/s Crackers India Alloys Ltd., M/s Shah Sponge & Power Pvt. Ltd., M/s TATA Steel Ltd., M/s MSP Sponge Iron Ltd., M/s Maa Tara Ispat Industries Ltd., M/s Scania Steel & Power Ltd., and M/s Yazdani Steel & Power Ltd.). No investigation was conducted with seven manufacturers, nor were any summon was issued or statements recorded under Section 14 of the Central Excise Act, 1944.
(xiii) In respect of wrong availment of CENVAT Credit amounting to Rs.18,22,648.00/- on Inputs purchased from M/s. Shree Balajee Enterprises during the period from 01.04.2014 to 31.03.2015, the said Central Excise dealer namely, was not made a co-Noticee and no penalty has been proposed against him; no contravention has also been alleged therein against the supplying dealer.
(xiv) In the case of Hindustan Engineering & Industries Ltd. Vs. CCE reported in 2025-VIL- 702-CESTAT-CE, it has been held by this Tribunal that the registration have been issued by the department at the given address, and the Page 16 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB traders/manufacturers did not exist, only fake invoices have been issued. Under the circumstances, the assessee has correctly availed credit on the strength of invoices and denial of CENVAT Credit is not sustainable.
(xv) The simple letters by the seven manufacturers stating that they have not sold goods, the Central Excise dealers have been accepted as true and conclusive, while the appellant's detailed books of accounts and statutory records (RG-23A Part-I & II) is treated as untrue, which is contrary to the principles of preponderance of probabilities, particularly, when the Department does not dispute that the impugned goods were used by the Appellant in manufacturing finished goods. It is also not the case of the Department that such finished goods could have been manufactured without the corresponding quantity of the impugned raw materials, nor there is any allegation or evidence of alternative sourcing of raw materials.
(xvi) The impugned goods were received and consumed in the manufacture of their final products on which duty was paid and accepted by the department. The consumption of the impugned goods in the manufacture of final product (MS Ingot) is not disputed and payment duty on clearance of such final product is accepted by the department without any demur and transports not verified. In this connection, the appellants rely on Nirmal Inductomelts Vs. CCE reported in 2025-VIL-721-CESTAT-DEL-CE.
Page 17 of 53Appeal No(s).: E/75485,75486,75493/2019-DB (xvii) It is also not the case of the department that the impugned goods not transported by the transporters. Only two transporters owning 4 vehicles i.e. Sri Arvind Dubey, Owner of one vehicle (JH-05W-4991) and Sri Kamlesh Dubey, Owner of 3 vehicles (JH-05AL-0707, JH-05AF, JH-05Q-0707) out of total more than 350 vehicles involved in the instant case, stated that they have not transported the goods. Further, the statements of said two transporters are not tested under Section 9D, hence, by operation of Section 9D, said statements have become irrelevant piece of material.
(xviii) The payment to the said suppliers have been made by the appellant through proper banking channel which are not found to be false, which means that the impugned goods were received by the Appellant. The appellantsrelies on the decision in the case of Nico Extrusions Ltd., Vs. CCE reported in 2022-VIL-643-CESTAT-AHM- CE;
(xix) The appellants have taken all the precautions in terms of Rule 7(4) and Rule 9(5) of CENVAT Credit rules, 2004. An assessee cannot be expected to go behind the invoices issued by the supplier and look into the conduct and modus operandi of the registered dealers or the manufacturers.
(xx) On a test check basis, 21 invoices involving CENVAT Credit of Rs.15,99,466.13 were randomly picked, and hold that the said goods were transported by Motor Cycles etc., which is practically not possible. It is submitted that the Page 18 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB said invoices constitute just 4.6% of total CENVAT Credit of Rs.3,44,11,544/-.
(xxi) In the case of Gurparlad Singh Vs. DFO reported in AIR 1998 ORI 177 and Rajkumar Gond Vs. State of MP in M.C.V.C. No.12506 of 2017, it was found that many transporters are using fake number plates for transportation of goods. Therefore, fake number plates does not conclusively proves non-transportation of goods. It may give rise to doubts or suspicion.
(xxii) It is fairly well settled that suspicion however great cannot replace legal proof and tax can be demanded on suspicion or doubt.
(xxiii) In the instant case, the burden of proof of non-
receipt of the impugned goods by the Appellant is on the department which the department has failed to discharge. It is submitted that RG-23A Part-I & RG-23A Part-II are substantive piece of evidence which must be disproved by sufficient corroborative evidence.
(xxiv) It is further submitted that no CENVAT can be disallowed on sample basis without testing the merit of each transactions on its own right.
(xxv) In the case of Indian Gum Industries Ltd Vs. Asst. Commissioner reported in [2014] 70 VST 108(Raj), the Hon'ble Rajasthan High Court under Paragraph 18 records that:
"On examination .....The methodology, which is pressed into service by the assessing authority for drawing this sort of conclusions solely on the basis of sample transactions and statement of truck owners and drivers, Page 19 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB prima facie, fall short of the requisite enquiry for unearthing the truth. This court is quite conscious about the fact that evasion of tax is a menace to the society and the Revenue Authorities acting as watchdogs are empowered to unearth truth for penalizing potential tax evaders. However, this court cannot lose sight of a very vital aspect of the matter that no revenue authority should term a genuine sale transaction as a sham on mere conjecture and surmises.......".
(xxvi) The entire case is based on the statements of 15 persons, without any corroborative evidence. Since these oral statements have not been tested in terms of Section 9D of the Central Excise Act, they cannot be treated as admissible evidence and are, therefore, irrelevant.
(xxvii) The appellants vide their letters dated 01- 08-2016 and 31-12-2016 demanded cross examination of all the witnesses whose statements are relied upon in support of the charge, which was denied by Ld. Principal Commissioner.
(xxviii) The statements recorded from different witnesses are irrelevant piece of material due to non-compliance of Section 9D of the Central Excise Act, 1944, hence, has to be eschewed from evidence. The appellants rely on the following decisions/judgments in this regard: -
• G.Tech Industries Vs. UOI reported in 2016 (339) E.L.T. 209 (P & H); and • Madhura Ingots & Steel Company Pvt. Ltd.
15-07-2021 in Excise Appeal No.75817 of 2019.
Page 20 of 53Appeal No(s).: E/75485,75486,75493/2019-DB (xxix) Entire demand is barred by normal period of limitation.
(xxx) In the instant case the entire sets of facts are disclosed in the RG-23A-Part-I & RG-23A-Part- II, ER-4 return submitted with the Department which were scrutinized as per Return Scrutiny Circular No.185/4/2015-S.T. dated 30-06-
2015, Board M.F.(D.R.) letter F.No.224/37/2005-CX.6 dated 24-12-2008 and Circular No.887/07/2009-CX dated 11-05- 2009.Hence, there was no suppression of facts etc. warranting invocation of extended period of limitation. The appellants rely on the following judgments:-
• Sara Bhai M. Chemicals Vs. CCE reported in 2005 (179) ELT 3(SC);
• Vandana Global Ltd. Vs. CCE, reported in 2022 (12) TMI 450-CESTAT New Delhi.
14.1. In view of the above submissions, the Ld. Counsel for the appellants have prayed for setting aside the impugned orders as being untenable and arbitrary and for allowing their appeals, with consequential reliefs.
15. On the other hand, the Ld. Authorized Representatives of the Revenue appearing before us have reiterated the findings of the lower authorities in the orders impugned herein. It is his submission that CENVAT Credit has been availed by the appellant-
company on the basis of invoices issued by non- existent dealers. Thus, all the goods said to have been supplied by the said dealers were only paper transactions in the name of those non-existent central excise dealers; statements recorded from 21 transporters categorically revealed that no such Page 21 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB transportation of inputs to the factory of the appellant company took place. Accordingly, the Ld. Authorized Representative of the Revenue contends that the CENVAT Credit availed by the appellant-company fraudulently and irregularly, has been rightly disallowed in the impugned orders. Also, it is his submission that penalty has been rightly imposed on the persons for their act of omission and commission in the matter. Accordingly, he prayed for rejection of the instant appeals filed by the appellants.
16. Heard both sides and perused the records of the case.
17. We find that CENVAT Credit amounting to Rs.3,44,11,544/-availed by the appellant has been disallowed on the allegation that the said credit has been availed by the appellant-company on the basis of invoices issued by non-existent dealers. Thus, it has been alleged in the impugned order that all the goods said to have been supplied by the said dealers were only paper transactions in the name of those non- existent central excise dealers and hence the CENVAT Credit availed by the appellant-company was irregular.
17.1. On similar grounds, wrong availment of CENVAT Credit amounting to Rs.18,22,648.00/- on Inputs purchased from M/s. Shree Balajee Enterprises during the period from 01.04.2014 to 31.03.2015 without receipt of items in the factory along has also been alleged by the Revenue, besides the allegation of wrong availment of CENVAT Credit of Rs.6,840.00/- in respect of Service Tax paid on transportation of these goods.
Page 22 of 53Appeal No(s).: E/75485,75486,75493/2019-DB 17.2. We find that the investigating officers have not conducted any enquiry at the factory of the appellant- company. No stock of raw materials or finished goods were taken. Thus, we agree with the submission of the appellant that there was no discrepancy in stock of raw materials and finished goods in their factory. We also find that no investigation was conducted with the person dealing with purchase and maintaining inventory at the appellant's factory, to establish the charge of non-receipt of materials in the factory. It is also a fact that no enquiry was made with security staff/personnel posted at the factory gate of the appellant; no investigation was also made with the weighbridge operator of the appellant's factory.
17.3. We find that in the present case, the investigation was selectively conducted at the transporter's end. On a test check basis, 21 invoices involving CENVAT Credit of Rs.15,99,466.13 (out of the total disputed credit of Rs.3,44,11,544/-) i.e., 4.6%, were randomly picked up and the vehicle registration numbers appearing on those invoices were verified from online portal. It purportedly emerged that all these 21 vehicle numbers pertain to L.M.V. which could not be used to transport the impugned goods. We find that in respect of rest of the invoices involving CENVAT Credit of Rs.3,28,12,077.87, there is no allegation that those were pertaining to cases of L.M.V. Resultantly, it was alleged that the appellant has taken CENVAT Credit on the basis of fake invoices without actual receipt of goods. However, we find that there is no corroborative evidence brought on record by the investigation to substantiate these allegations.
Page 23 of 53Appeal No(s).: E/75485,75486,75493/2019-DB 17.4. It is also observed that the entire case has been made on the basis of the statements recorded from 15 persons, without there being any corroborative evidence. Since these oral statements have not been tested in terms of Section 9D of the Central Excise Act, we are of the opinion that these statements cannot be treated as admissible evidence and are, therefore, irrelevant. We also note that the appellants vide their letters dated 01-08-2016 and 31-12-2016 had demanded cross examination of all the witnesses whose statements are relied upon in support of the charge, which was denied by Ld. Principal Commissioner. The statements recorded from different witnesses are thus irrelevant pieces of materials due to non-compliance of Section 9D of the Central Excise Act, 1944 and hence, have to be eschewed from evidence. Thus, we are of the considered view that denial of cross examination vitiates the entire proceedings, which have been built on the basis of such untested statements.
17.5. A similar issue has been examined by the Tribunal, Chennai in the decision rendered in the case of M/s. Geetham Steels Pvt Ltd Vs. Commissioner of GST & Central Excise Salem [2025 (3) TMI 1098 - CESTAT Chennai], wherein it has been observed as follows: -
"57. If we notice the provisions of Section 9D, what flows from it is that 9D(1) stipulates when a statement given under section 14 would be relevant for the purpose of proving, "in any prosecution for an offence", the truth of the facts which it contains and provides for various scenarios in the sub- sections thereto at (a) and (b). It is only when the Department first adduces evidence in the proceedings before the adjudicating authority, of the existence of the aforementioned scenarios in section 9D(1)(a) that the deponent's statement is taken as a substantive piece of evidence, without the Page 24 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB deponent deposing thereto before the adjudicating authority. That would still not obviate the requirement of the Gazetted officer before whom the statement was given, deposing the factum of such statement having been recorded from the deponent- which is the method or manner of proving the recording of the statement, which statement under section 14 is already considered relevant for the purpose of proving the truth of the fact it contains- that is to say, the said deposition of the Gazetted Officer stating that the deponent had indeed given the statement before him, would be the manner of admitting or mode of proof of the admissible substantive evidence.
58. Again, 9D(1)(b) provides for the deponent's statement given before the Gazetted Officer to be admitted as substantive evidence, when the person who made the statement is examined as a witness in the case before the adjudicating authority and the adjudicating authority is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. This sub section (b) of Section 9D(1) takes care of a situation where the witness who is deposing before the adjudicating authority turns hostile and on an evaluation of the circumstances of the case the adjudicating authority decides to discard the version given by the witness before it and instead place reliance on the earlier statement given before the Gazetted Officer. As elucidated supra, this also applies in a case where the witness deposing stands by his earlier statement and is thereafter offered for cross-examination to the opposite side and in case of minor inconsistencies/no inconsistency, if the adjudicating authority is of the opinion, having regard to the circumstances of the case that the statement should be admitted in evidence in the interests of justice, the adjudicating authority can do so as per this Section 9D(1)(b).
59. However, implicit in this procedure stipulated in 9D(1)(b) is the necessary requirement for the adjudicating authority to depose all the deponents who have given statement under Section 14, save as those that are unavailable in the scenarios given in 9D(1)(a), for the purposes of evaluating whether the statements are voluntary, to attest that he had deposed the contents of the statement and then take a considered decision whether the truth of the Page 25 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB facts contained in the statement stand proved or disproved in the facts and circumstances of the case. In other words, it is only after such examination in chief, that the adjudicating authority can arrive at a considered decision, whether to declare the witness appearing before it as a hostile witness and then to decide in the facts and circumstances whether to rely on the earlier statement; or if upon finding major inconsistencies between his earlier deposition and in the contradictions brought about in cross- examination, to not rely on the earlier statement; or if it is only minor discrepancies as that which does not majorly disturb the essential truth of his deposition, to rely upon it, if in the circumstances of the case, the adjudicating deems it fit in the interest of justice.
60. Therefore, we are of the view that Section 9D(2) not only legislatively mandates the adjudicating authority to apply the provisions of S.9D(1), depending on the facts and circumstances of the case, to the extent possible , but also when read along with Section 9D(1)(b), leads to the inexorable conclusion that the adjudicating authority necessarily has to conduct an examination in chief of the deponent of the statement so as to determine not only the voluntary nature as well as truthfulness of the facts the statement given under Section 14 before the Gazetted Officer contains, but also to determine whether or not the witness is hostile, and to decide whether or not to place reliance on the statement as per the mandate of Section 9(1)(b) in the circumstances of the case, as has been elaborated supra. This interpretation is also in consonance with the decision of the Honourable Apex Court in K I Pavunny's case as stated supra, wherein the Apex Court emphasised that in the case of a retracted confession the court should examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise and if the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. Such an interpretation is also in line with the decision of the jurisdictional Madras High Court cited supra and given the parimateria provisions of the Customs Act, 1962, we are of the view that the said interpretation would hold good under the parimateria provisions of Customs Act as well."Page 26 of 53
Appeal No(s).: E/75485,75486,75493/2019-DB 17.6. The above issue has also been examined by the Principal bench, CESTAT, New Delhi, in the case of M/s. Surya Wires Pvt. Ltd. Vs. Principal Commissioner, C.G.S.T., Raipur vide Final Order Nos. 50453-50454 of 2025 dated 01.04.2025 in Excise Appeal No. 51148 of 2020 [CESTAT, New Delhi], wherein the Tribunal has observed as under:
"22. It would now be appropriate to examine certain decisions interpretating section 9D of the Central Excise Act and section 138B of the Customs Act.
23. In Ambika International vs. Union of India [2018 (361) E.L.T. 90 (P&H)] decided on 17.06.2016, the Punjab and Haryana High Court examined the provisions of section 9D of the Central Excise Act.
The show cause notices that had been issued primarily relied upon statements made under section 14 of the Central Excise Act. It was sought to be contended by the Writ Petitioners that the demand had been confirmed in flagrant violation of the mandatory provisions of section 9D of the Central Excise Act. The High Court held that ifnone of the circumstances contemplated by clause (a) of section 9D(1) exist, then clause (b) of section 9D(1) comes into operation and this provides for two steps to be followed. The first is that the person who made the statement has to be examined as a witness before the adjudicating authority. In the second stage, the adjudicating authority has to form an opinion, having regard to the circumstances of the case, whether the statement should be admitted in evidence in the interests of justice. The judgment further holds that in adjudication proceedings, the stage of relevance of a statement recorded before Officers would arise only after the statement is admitted in evidence by the adjudicating authority in accordance with the procedure contemplated in section 9D(1)(b) of the Central Excise Act. The judgment also highlights the reason why such an elaborative procedure has been provided in section 9D(1) of the Central Excise Act. It notes that a statement recorded during inquiry/investigation by an Officer of the department has a possibility of having been recorded under coercion or compulsion and it is in order to neutralize this possibility that the Page 27 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB statement of the witness has to be recorded before the adjudicating authority. The relevant portions of the judgment are reproduced below:
15. A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set. out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein.
16. Section 90 of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. v.
CCE, 2009 (242) E.LT. 189 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 90, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well.
22. If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps are required to be followed by the adjudicating authority, under clause (b) of Section 9D(1), viz.
(i) the person who made the statement has to first be examined as a witness in the case before the adjudicating authority, and
(ii) the adjudicating authority has, thereafter, to form the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice.
23. There is no justification for jettisoning this procedure, statutorily prescribed by plenary parliamentary legislation for admitting, into evidence, a statement recorded before the gazetted Central Excise Officer, which does not suffer from the handicaps contemplated by clause (a) of Section 9D(1) of the Act. The use of the word "shall" in Section 90(1), Page 28 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB makes it clear that, the provisions contemplated in the sub-section are mandatory. Indeed, as they pertain to conferment of admissibility to oral evidence they would, even otherwise, have to be recorded as mandatory.
24. The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement, recorded during inquiry/investigation, by the gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D(1) mandates that the evidence of the witness has to be recorded before the adjudication authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned.
25. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 90(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 90(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the adjudication Page 29 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice.
26. In fact, Section 138 of the Indian Evidence Act, 1672, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross- examination has to precede re-examination.
27. It is only, therefore, -
(i) after the person whose statement has already been recorded before a gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and
(ii) the adjudicating authority arrives at that the a conclusion, for reasons to be recorded in writing, statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for cross-
examination, can arise.
28. Clearly, if this procedure, which is statutorily prescribed by plenary parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof."
(emphasis supplied)
24. The Punjab and Haryana High Court in Jindal Drugs that was decided on 21.06.2016 also held that unless and until one of the circumstances contemplated by clause (a) of section 1388(1) of the Customs Act applies, the adjudicating authority is bound to strictly follow the procedure contained in clause (b) of section 138B(1) of the Customs Act, before treating a statement recorded under section 108 of the Customs Act as relevant.
25 In Hi Tech Abrasives Ltd. vs. Commissioner of C. Ex. & Cus., Raipur [2018 (362) E.LT. 961 (Chhattisgarh)] decided on 04.07.2018, the Page 30 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB Chhattisgarh High Court also examined the provisions of section 9D of the Central Excise Act. The allegation against the appellant was regarding clandestine removal of goods without payment of duty and for this purpose reliance was placed on the statement of the Director of the Company who is said to have admitted clandestine removal of goods. The contention of the appellant before the High Court was that the statement of the Director could be admitted in evidence only in accordance with the provisions of section 9D of the Central Excise Act. After examining the provisions of sub-sections (1) and (2) of section 9D of the Central Excise Act, and after placing reliance on the judgment of the Punjab and Haryana High Court in Ambika International, the Chhattisgarh High Court held:
9.3 A conjoint reading of the provisions therefore reveals that statement made and signed by a person before the Investigation Officer during the course of any inquiry or proceedings under the Act shall be relevant for the purposes of proving the truth of the facts which it contains in case other than those covered in clause (a), only when the person who made the statement is examined as witness in the case before the court (in the present case, Adjudicating Authority) and the (Adjudicating Authority) forms an court that to opinion having regard the circumstances of the case, the statement should be admitted in the evidence, in the interest of justice.
9.4 The legislative scheme, therefore, is to ensure that the statement of any person which has been recorded during search and seizure operations would become relevant only when such person is examined by the adjudicating authority followed by the opinion of the adjudicating authority then the statement should be admitted. The said provision in the statute book seems to have been made to serve the statutory purpose of ensuring that the assessee are not subjected to demand, penalty interest on the basis of certain admissions recorded during investigation which may have been obtained under the police power of the Investigating authorities by coercion or undue influence.Page 31 of 53
Appeal No(s).: E/75485,75486,75493/2019-DB 9.5 The provisions contained in Section 9D, therefore, has to be construed strictly and held as mandatory and not mere directory. Therefore, unless the substantive provisions contained in Section 90 are complied with, the statement recorded during search and seizure operation by the Investigation Officers cannot be treated to be relevant piece of evidence on which a finding could be based by the adjudicating authority. A rational, logical and fair interpretation of procedure dearly spells out that before the statement is treated relevant and admissible under the law, the person is not only required to be present in the proceedings before the adjudicating authority adjudicating authority is obliged under the law to examine him and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. Therefore, we would say that even mere recording of statement is not enough but it has to be fully conscious application of mind by the adjudicating authority that the statement is required to be admitted in the interest of justice. The rigor of this provision, therefore, could not be done away with by the adjudicating authority, if at all, it was inclined to take into consideration the statement recorded earlier during investigation by the Investigation officers. Indeed, without examination of the person as required under Section 9D and opinion formed as mandated under the law, the statement recorded by the Investigation Officer would not constitute the relevant and admissible evidence/material at all and has to be ignored. We have no hesitation to hold that the adjudicating officer as well as Customs, Excise and Service Tax Appellate Tribunal committed illegality in placing reliance upon the statement of Director Narayan Prasad Tekriwal which was recorded during investigation when his examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. In taking this view, we find support from the decision in the case of Page 32 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB Ambica International v. UOI rendered by the High Court of Punjab and Haryana."
(emphasis supplied)
26. In Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd. [2021 (375) E.L.T. 545 (Del.)] decided on 01.06.2020, the Delhi High Court examined the provisions of sections 108 and 1388 of the Customs Act. The department placed reliance upon the statements recorded under section 108 of the Customs Act. The Delhi High Court held that the procedure contemplated under section 1388(1)(b) has to be followed before the statements recorded under section 108 of the Customs Act can be considered as relevant. The relevant paragraphs of the judgment of the Delhi High Court are reproduced below:
"76. We are not persuaded to change our view, on the basis of the various statements, recorded under Section 108 of the Act, on which the Learned ASG sought to rely. Statements, under Section 108 of the Act, we may note, though admissible in evidence, acquire relevance only when they are, in fact, admitted in evidence, by the adjudicating authority and, if the affected assessee so chooses, tested by cross-examination. We may, in this context, reproduce, for ready reference, Section 1388 of the Act, thus:
A Division Bench of this Court has, speaking through A.K. Sikri, J. (as he then was) held, in 3 & K Cigarettes Ltd. v. Collector of Central Excise [2009 (242) E.L.T. 189 (Del.)] that, by virtue of sub-section (2), Section 1388(1) of the Act would apply, with as much force, to adjudication proceedings, as to criminal proceedings.
We express our respectful concurrence with the above elucidation of the law which, in our view, directly flows from Section 138B(1) of the Act or, for that matter, Section 90 of the Central Excise Act, 1944,
77. The framers of the law having, thus, subjected statements, recorded under Page 33 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB Section 108 of the Act, to such a searching and detailed procedure, before they are treated as relevant in adjudication proceedings, we are of the firm view that such statements, which are yet to suffer such processuall filtering, cannot be used, straightaway, to oppose a request for provisional release of seized goods. The reliance, in the appeal before us, on various statements recorded during the course of investigation in the present case cannot, therefore, in our view, invalidate the decision, of the Learned Tribunal, to allow provisional release of the seized 25400.06 grams of gold jewellery, covered by Bill of Entry No. 107190, dated 20th April, 2019."
(emphasis supplied)
27. In Drolia Electrosteel decided on 30.10.2023, a Division Bench of the Tribunal examined the provisions of section 9D of the Central Excise Act and after placing reliance upon the decision of the Punjab and Haryana High Court in Jindal Drugs, observed that if the mandatory provisions of section 9D(1)(b) of the Central Excise Act are not followed, the statements cannot be used as evidence in proceedings under Central Excise Act. The relevant portions of the decision of the Tribunal are reproduced below:
14. Evidently, the statements will be relevant under certain circumstances and these are given in clauses (a) and (b) of subsection (1).
There is no assertion by either side that the circumstances indicated, in (a) existed in the case. It leaves us with (b) which requires the court or the adjudicating authority to first examine the person who made the statement and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence. Of course, the party adversely affected by the statement will have to be given an opportunity to cross examine the person who made the statement but that comes only after the statement is, in the first place, after examination by the adjudicating authority, admitted in evidence. This has not been done in respect of any of the 35 statements. Therefore, all the Page 34 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB statements are not relevant to the proceedings.
15. It has been held in a catena of judgments including Jindal Drugs Pvt. Ltd. versus Union Of India [2016 (340) E.L.T. 67 (P&H)] that section 9D is a mandatory provision and if the procedure prescribed therein is not followed, statements cannot be used as evidence in the proceedings under Central Excise Act.
16. Therefore, the 35 statements relied upon in the SCN are not relevant and hence also not admissible."
(emphasis supplied)
28. It, therefore, transpires from the aforesaid decisions that both section 9D(1)(b) of the Central Excise Act and section 1388(1)(b) of the Customs Act contemplate that when the provisions of clause
(a) of these two sections are not applicable, then the statements made under section 14 of the Central Excise Act or under section 108 of the Customs Act during the course of an inquiry under the Acts shall be relevant for the purpose of proving the truth of the facts contained in them only when such persons are examined as witnesses before the adjudicating authority and the adjudicating authority forms an opinion that the statements should be admitted in evidence. It is thereafter that an opportunity has to be provided for cross-examination of such persons. The provisions of section 9D of the Central Excise Act and section 1388(1)(b) of the Customs Act have been held to be mandatory and failure to comply with the procedure would mean that no reliance can be placed on the statements recorded either under section 14D of the Central Excise Act or under section 108 of the Customs Act. The Courts have also explained the rationale behind the precautions contained in the two sections. It has been observed that the statements recorded during inquiry/investigation by officers has every chance of being recorded under coercion or compulsion and it is in order to neutralize this possibility that statements of the witnesses have to be recorded before the adjudicating authority, after which such statements can be admitted in evidence."
Page 35 of 53Appeal No(s).: E/75485,75486,75493/2019-DB 17.7. Thus, by relying on the decisions cited supra, we are of the opinion that as the statements relied upon in this case have not been tested as mandated under section 9D of the Central Excise Act, 1944, therefore, these statements cannot be treated as admissible evidence in these proceedings.
18. We observe that the other evidence relied upon by the adjudicating authority in the impugned order is the statements of the transporters. In this regard, we find that the investigation has selectively taken 21 invoices involving CENVAT Credit of Rs.15,99,466.13 (out of the total disputed credit of Rs.3,44,11,544/-) i.e., 4.6%. We have also taken note of the submission of the appellant that these invoices were randomly picked up and the vehicle registration numbers appearing on those invoices were verified from online portal and that it purportedly emerged that all these 21 vehicle numbers pertain to L.M.V. which could not be used to transport the impugned goods. In respect of rest of the invoices involving CENVAT Credit of Rs.3,28,12,077.87, we observe that there is no allegation that those were pertaining to cases of L.M.V. Resultantly, the allegation has been fastened on the appellant that they have taken CENVAT Credit on the basis of fake invoices without actual receipt of goods. We are of the view that the denial of CENVAT Credit merely on the basis of the findings that some of the vehicles said to have been used for transportation were found to be L.M.V. and could not have been used to transport the impugned goods cannot sustain. In this regard, we find the ratio of the following decisions cited by the appellant to be squarely applicable: -
Page 36 of 53Appeal No(s).: E/75485,75486,75493/2019-DB
(i) Commissioner of Central Excise, East Singhbhum v. Tata Motors Limited [2013 (294) E.L.T. 394 (Jhar.)],
(ii) Commissioner of C.Ex., Cus. and Service Tax v. Juhi Alloys Ltd. [2014 (302) E.L.T. 487 (All.)] 18.1. The same issue was also examined by this Tribunal in the case of M/s. Hindustan Engineering & Industries Ltd. & ors. v. Commissioner of Central Excise, Kolkata-IV, wherein vide Final Order Nos.
76107-76116 of 2025 dated 02.05.2025 [CESTAT, Kolkata], it has been observed as under:
"21. Again, in this case, statements of transporters were recorded, who claimed that no transportation of goods had been done from the premises shown to the manufacturing unit of the appellant. We find that in fact, in this case, the appellant has procured the said goods through dealers, which were received from the respective manufacturers, as shown by the dealers of the goods. The appellant-company is concerned with the procurement of inputs from the dealers and not from the manufacturers. Therefore, if the statements of transporters wherein the transporters have denied transportation of the goods from the said manufacturers' unit to the appellant's unit are relied, that is not admissible evidence in support of the Revenue since the appellants have procured the goods from the dealers only.If Annexures RTO & V of Relied upon Documents to the Show Cause Notice are carefully examined, it would be seen that there are references to trucks and heavy goods vehicles. It follows that it cannot be stated that all the vehicles which were shown to have transported the disputed inputs were incapable of carrying waste and scrap. At paragraph no. 4.31 at page no. 261 of the order under challenge, the ld. adjudicating authority made sweeping observations regarding physical movement of goods without sufficient proof. Further, we observe that summons had been issued to 226 vehicle owners and out of six, only four had turned up who failed to provide evidence of transportation. On appreciation and re-appreciation of the evidences on record, we disagree with the Page 37 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB findings recorded at paragraph no. 4.31, page no. 261 of the impugned order.
21.1. Furthermore, we find that out of more than 1600 consignments, there were 5 cases where the motor vehicle registration number mentioned in the documents was not in respect of goods transport vehicles. The appellant-company had explained that the goods were duly received in its factory and such receipt cannot be questioned merely because in a few cases the motor vehicle registration number may have been wrongly mentioned in the invoice. Such explanation was ignored by the Ld. Commissioner. Then again, out of more than 1600 consignments, there were 9 cases where the quantity of goods supplied exceeded the official load capacity of the goods transport vehicle used. The appellants had explained that it was the regular practice of transporters to overload their vehicles and that the receipt of goods in the appellant's factory cannot be questioned merely because the vehicle came overloaded. Again, the Ld. Commissioner chose to pay no heed to the said explanation and he ought not to have done so.
22. We find that this Tribunal and various High Courts have had the occasion to deal with similar situations as have emerged in the instant case.
22.1. In the case of Commissioner of Central Excise, East Singhbhum v. Tata Motors Limited [2013 (294) E.L.T. 394 (Jhar.)], the Hon'ble High Court has observed as under: -
"7. This argument does not appeal to us. Once a buyer of inputs receives invoices of excisable items, unless factually it is established to the contrary, it will be presumed that when payments have been made in respect of those inputs on the basis of invoices, the buyer is entitled to assume that the excise duty has been/will be paid by the supplier on the excisable inputs. The buyer will be therefore entitled to claim Modvat credit on the said assumption. It would be most unreasonable and unrealistic to expect the buyer of such inputs to go and verify the accounts of the supplier or to find out from the department of Central Excise whether actually duty has been paid on the inputs by the supplier. No business can be Page 38 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB carried out like this, and the law does not expect the impossible."
22.2. Further, we observe that in the case of Commissioner of C.Ex., Cus. and Service Tax v. Juhi Alloys Ltd. [2014 (302) E.L.T. 487 (All.)], the facts of the case were as under: -
"3. The assessee is engaged in the manufacture of MS Bars, Rounds, SS flats and SS Products. The assessee is a registered dealer and had procured raw material through M/s. MK Steels (P) Ltd. The inputs covered by the invoices raised by M/s. MK Steels (P) Ltd. were received by the assessee and were entered in the Cenvat credit account. Inputs were used for the manufacture of final products which were cleared against the payment of duty. On enquiry by the Assistant Commissioner, Central Excise Commissionerate, Bolpur, it was found that the original manufacturer of MS Ingots, namely Sarla Ispat (P) Ltd., Durgapur, was non-existent. The assessee availed of the Cenvat credit on the strength of invoices which were issued by M/s. MK Steels (P) Ltd., which was the first stage dealer. A notice to show cause was issued to the assessee which resulted in an order of adjudication confirming a demand of duty under Rule 14 of Cenvat Credit Rules, 2004 (hereinafter referred to as the 'Rules of 2004') read with Section 11A(1) of Central Excise Act, 1944. A personal penalty was imposed on the Director of the assessee as also the Authorized Signatory of the assessee. In appeal, the Commissioner (Appeals), Central Excise, Kanpur held that in terms of the provisions of Rule 7(4) of Cenvat Credit Rules, 2002 (hereinafter referred to as the 'Rules of 2002') read with Rule 9(5) of the Rules of 2004, a manufacturer is required to check the particulars as mentioned in the invoices issued by the first stage dealer. During the course of the hearing before the Commissioner (Appeals), the assessee submitted, inter alia, Form 31 issued by the Uttar Pradesh Trade Tax Department, the ledger account evidencing payments by cheques made to M/s. MK Steels (P) Ltd., and Form RG 23-A, Part-II. It was held that the assessee has received goods against the Page 39 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB invoices of M/s. MK Steels (P) Ltd. for which payment was made by cheque and that the manufactured goods were cleared against the payment of central excise duty. The Commissioner (Appeals) also held that the transaction on the part of the assessee was bona fide and a buyer can take only those steps which are within his control and would not be expected to verify the records of the supplier to check whether in fact he had paid duty on the goods supplied by him. The only reasonable steps which he can take is to ensure that the supplier is trustworthy, the inputs are in fact received and that the documents, prima facie, appear to be genuine. The fact that the assessee made payment by cheque was held to be a proof of his bona fides. The Commissioner (Appeals) also relied on a circular of the Central Board of Excise & Customs (C.B.E. & C.) dated 15 December, 2003 clarifying that cenvat should not be denied to a user-manufacturer as long as bona fide nature of the consignee's transaction is not doubted. Moreover, if the manufacturer-supplier has received payment from the buyer in respect of goods supplied including excise duty, action should be initiated against him under Sections 11D and 11DD. In the circumstances, it was held that cenvat credit could not be denied to the assessee."
and the Hon'ble High Court has observed as under:-
"7. In the present case, both the Commissioner (Appeals) and the Tribunal have given cogent reasons to indicate that the assessee had taken reasonable steps to ensure that the inputs in respect of which he has taken the Cenvat credit are goods on which the appropriate duty of excise, as indicated in the documents accompanying the goods, has been paid. Admittedly, in the present case, the assessee was a bona fide purchaser of the goods for a price which included the duty element and payment was made by cheque. The assessee had received the inputs which were entered in the statutory records maintained by the assessee. The goods were demonstrated to have travelled to the premises of the assessee under the cover Page 40 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB of Form 31 issued by the Trade Tax Department, and the ledger account as well as the statutory records establish the receipt of the goods. In such a situation, it would be impractical to require the assessee to go behind the records maintained by the first stage dealer. The assessee, in the present case, was found to have duly acted with all reasonable diligence in its dealings with the first stage dealer.
The view which the Tribunal has taken is consistent with the judgment of the Jharkhand High Court in Commissioner of C. Ex., East Singhbhum v. Tata Motors Ltd. - 2013 (294) E.L.T. 394 (Jhar.), where it was held as follows :-
"... Once a buyer of inputs receives invoices of excisable items, unless factually it is established to the contrary, it will be presumed that when payments have been made in respect of those inputs on the basis of invoices, the buyer is entitled to assume that the excise duty has been/will be paid by the supplier on the excisable inputs. The buyer will be therefore entitled to claim Modvat credit on the said assumption. It would be most unreasonable and unrealistic to expect the buyer of such inputs to go and verify the accounts of the supplier or to find out from the department of Central Excise whether actually duty has been paid on the inputs by the supplier. No business can be carried out like this, and the law does not expect the impossible."
8. The judgment of the Division Bench of the Himachal Pradesh High Court in A.B. Tools Limited v. Commissioner of Central Excise - 2010 (256) E.L.T. 382 (H.P.), on which reliance has been placed by the revenue, does not indicate that any contrary view of the law has been taken.
9. Ultimately, the issue in each case is whether, within the meaning of Rule 9(3) of the Rules of 2004, the assessee has taken Page 41 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB reasonable steps to ensure that the inputs in respect of which he has taken Cenvat credit were goods on which appropriate duty of excise was paid. Once it is demonstrated that reasonable steps had been taken, which is a question of fact in each case, it would be contrary to the Rules to cast an impossible or impractical burden on the assessee."
22.3. This Tribunal, in the case of Surinder Steel Rolling Mills v. Commissioner of Central Excise, Chandigarh [2016 (343) E.L.T. 935 (Tri. - Chandigarh)], while dealing with such a situation, has observed that: -
"6. In this case, I find that the investigation at the end of the appellant has been done after four and half years of the investigation started at the end of manufacturer/supplier and not even the factory of the appellant was searched. Further, the appellant taken the credit on the goods and informed the department during investigation. The goods were found entered in the statutory records. The same has been issued for further manufacturing and they have paid duty on manufactured goods. As no investigation was conducted at the end of the transporter to reveal the truth whether they were transported the goods or not. In the circumstances, the revenue cannot deny to take credit to the appellant. As argued by the learned AR that the manufacturer/supplier was not having manufacturing facility, therefore, the credit cannot be allowed to the appellant. I observe as per the provision of Central Excise Act or the Rules, there is no duty cast on the appellant for verification of contents of manufacturer/supplier before procuring the goods as it has been given without credible evidence by the Revenue that the appellant has not received the goods. In the circumstances, the credit cannot be denied to the appellant. Therefore, I hold that the appellant is entitled to take credit on the invoices in question. Consequently, the impugned order is set aside and the appeal is allowed with consequential relief, if any."
22.4 One may also apply to the instant case the ratio laid down by the Hon'ble Gujrat High Court in Page 42 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB the case of Commissioner of C.Ex. & Customs v. D.P.Singh, reported in 2011 (270) ELT 321 (Guj.),special leave to appeal wherefrom was dismissed by the Hon'ble Supreme Court in Commissioner v. D.P.Singh, reported in 2014 (305) ELT A75 (SC).
22.5. In our view, it has been sufficiently established by the appellant-company that the manufacturer M/s. Ganga Sales Corporation was shown as active on the NSDL website even as on July 26, 2011. Mahendra Kumar Gourisaria, proprietor of M/s. Ganga Sales Corporation did not comply with any of the several summons issued to him. It would be evident from the impugned order that the name of Mahendra Kumar Gourisaria was mentioned by Bharat Ratna Jhunjhunwala, Dipak Kumar Nathani, Debesh Ranjan Ghosal who operated M/s. Ganapati Udyog and M/s. IRO Steel Corporation and Manoj Kumar Agarwal, Proprietor of M/s. GRE. In spite of so many persons mentioning Mahendra Kumar Gourisaria and the Department itself regarding him as one of main kingpins and beneficiaries (ref. Q. 14 put to Debesh Ranjan Ghosal on January 13, 2012), the said Mahendra Kumar Gourisaria and his proprietary concern, M/s. Ganga Sales Corporation were not made parties to the proceedings and the Show Cause Notice was not issued to them. This is a major flaw vitiating the entire proceedings. On the other hand, a letter dated September 6, 2011 signed by Mahendra Kumar Gourisaria on the letterhead of M/s. Ganga Sales Corporation to the effect that they had done no business for the last five years and that they had surrendered the Central Excise registration in 2005 was accepted by the Revenue. It is pertinent to mention that the Ld. Commissioner himself in paragraph 4.39 (Page 264 of the impugned order) observed that M/s. Ganga Sales Corporation had surrendered Central Excise registration in 2007 (and not in 2005 as mentioned in the letter dated September 6, 2011). But then a perusal of the alert circular dated July 2, 2009 (of which the appellant came to know only in August, 2011), would show that M/s. Ganga Sales Corporation continued to be registered with the Central Excise Department and continued to operate even on the date of issue of the said circular viz. July 2, 2009. It is difficult to reconcile the Revenue's stand on these aspects and the purported finding by the Commissioner that Ganga Sales Corporation surrendered its central Page 43 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB excise registration in 2005/2007 is not altogether free from doubt. One must also bear in mind that the Department started investigating M/s. Venkatesh Sales Corporation only in 2011, its registration as manufacturer was revoked on August 8, 2011 and alert circular was issued on October 24, 2011.
22.6. We find that the case of the Revenue is that the manufacturers and traders / dealers were non-existent during the impugned period. However, it is a fact on record that that M/s. Ganapati Udyog, M/s. Green Rose Enterprise, M/s. IRO Steel Corporation and M/s. Ganga Sales Corporation were having an 'active' status in the portal of the respondents. Therefore, on that ground, it cannot be alleged that the appellant has received only invoices and not goods."
18.2. Thus, by relying on the decisions cited supra, we hold that CENVAT Credit availed by the appellant- company cannot be denied on the basis of the statements selectively recorded from some of the transporters and some discrepancy found in the vehicle numbers and on the basis of statements alone it cannot be concluded that the appellant has not actually received the goods into the factory and received only invoices. Consequently, we hold that the denial of CENVAT Credit availed by the appellant on this ground is not sustainable.
19. In the present case, it is also pertinent to note that the appellant-company had purchased impugned raw materials and received the same in their factory, recorded in RG-23A Part-I & RG-23A Part-II in the inventory and books of accounts and made payments to the suppliers through proper banking channel. These facts are not in dispute. They have maintained proper records of receipt, disposal, consumption and inventory of inputs in accordance with Rule 9(5) of the CENVAT Credit Rules, 2004. [Raw materials Inventory, RG-23A-Part-I, RG-23A-Part-II]. We find Page 44 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB that there is no tangible, cogent, corroborative evidence to prove non-receipt of goods by the appellant.
19.1. In the instant case, it is undisputed that all the "Central Excise dealers" are registered under Central Excise Rules, 2002 and their registration were valid and active during the material period. All purchases are covered under Excise Invoices evidencing supply of impugned goods to the appellant; Quantity of impugned goods received were recorded in RG-23A- Part-I; Entry Book of Duty Credit (RG-23A-Part-II) along with ER-1 returns; payments were made to Suppliers through proper banking channel; the consumption of the impugned goods in the manufacture of final product (MS Ingot) is not disputed and payment duty on clearance of such final product is accepted by the Department without any demur; there is no evidence of refund of any cash to the appellants by the dealers; Statements of Shri Sunil Bansal, Director were recorded on dated 27-07- 2015, 10-08-2015 and 13-08-2015, wherein he has categorically stated to have purchased these goods from registered dealer and that the goods were received in their factory.
19.2. It is thus observed that the investigation has obtained simple letters from seven manufacturers stating that they have not sold goods. On the basis of these letters, the investigation has assumed that the Central Excise dealers have not received the goods. The investigation has accepted the letters as true and conclusive, while the appellant's detailed books of accounts and statutory records (RG-23A Part-I & II) were treated as untrue, which is contrary to the principles of preponderance of probabilities, Page 45 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB particularly, when the Department does not dispute that the impugned goods were used by the appellant in manufacturing finished goods. We find that it is not the case of the Department that such finished goods could have been manufactured without the corresponding quantity of the impugned raw materials, nor there is any allegation or evidence of alternative sourcing of raw materials. We also observe that the consumption of the impugned goods in the manufacture of final product (MS Ingot) is not disputed and payment duty on clearance of such final product is accepted by the Department without any demur and transports not verified. Thus, we find that the impugned goods were received and consumed in the manufacture of their final products on which duty was paid and accepted by the Department. In this connection, we refer to the decision rendered in the case of Nirmal Inductomelts Vs. Commissioner of Central Excise & C.G.S.T. reported in 2025-VIL-721- CESTAT-DEL-CE, wherein a similar issue has been addressed by the Tribunal.
19.3. Regarding the evidence of transportation submitted by the Revenue, we observe that it is not the case of the Department that the impugned goods were not transported by the transporters. Only two transporters owning 4 vehicles i.e. Sri Arvind Dubey, Owner of one vehicle (JH-05W-4991) and Sri Kamlesh Dubey, Owner of 3 vehicles (JH-05AL-0707, JH-05AF, JH-05Q-0707), out of the total of more than 350 vehicles involved in the instant case, stated that they have not transported the goods. Further, as the statements of said two transporters are not tested under Section 9D, hence, by operation of Section 9D, said statements have become irrelevant piece of material.
Page 46 of 53Appeal No(s).: E/75485,75486,75493/2019-DB 19.4. We also find that the payment to the said suppliers have been made by the appellant through proper banking channel, which are not found to be false. This means that the impugned goods were received by the appellant. In this regard, it is apt to rely on the decision in the case of Nico Extrusions Ltd., Vs. Commissioner of Central Excise & Service Tax, Daman reported in 2022-VIL-643-CESTAT-AHM-CE, wherein it has been held as under: -
"5.9 The next Issue for consideration is regarding the Cenvat Credit demand of Rs. 4,57,79,503 in respect of Invoices Issued by Supplier M/s Metec Asia Pvt. Ltd., Silvassa. The case of the Revenue is that the Appellant has avalled the Cenvat Credit on Inputs mainly copper/Nickle, supplied by M/s Metec Asla Pvt. Ltd. without actual receipts of the said goods in their factory and without using the sald goods in manufacture of their finished goods. The revenue in support of their allegations rely on the statement of transporters and RTO reports. However, we find that the Revenue falled to establish beyond doubt that the goods received were only on paper and physically there was no receipt of goods by the appellant. The Revenue has not shown anything on record to establish that the goods were not physically received as well as completely ignored the documents and exculpatory statements of the supplier showing that the goods were actually transported. We also find that The Hon'ble Gujarat High Court dealing with the issue in the case of Motabhai Iron Steel Industries (supra) 2015 (316) E.L.T. 374 (Guj)-2014-VIL-314-GUJ-CE agreed with the Tribunal despite the fact avallable In that case that as per RTO reports the vehicle were not capable of carrying the goods but on the basis of other facts, such as the goods were found duly recorded in the appellants factory and consumed In the production, Page 47 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB the payment were made through banking channels, no evidence of non-supply of the goods by the consignor etc. considering these facts, the Hon'ble Gujarat High Court Itself upheld the order of the Tribunal.
5.10 In the present matter we also observed that these facts are not under dispute that the appellant have recorded the receipt of the goods in books of account and payment of the same was made through cheque. The finished goods were cleared on payment of Central Excise duty. Transportation charges were also paid by banking Chanel and such payment was accounted for In the books of account. There is no corroborative evidence that the inputs shown in the invoices of supplier by the appellant were not used in the manufacture of final product. Department has not disputed the correctness of quantity manufactured by the appellant recorded in production records. There is no allegation by the department regarding the financial flow back that against the said goods for which the payments were made through cheque, any cash payment was received by the appellant. With all these undisputed facts, merely on the basis of the transporter statements, it cannot be concluded that the inputs were not received by the appellant. Therefore the facts are established that the appellant have received the inputs in their factory used in the manufacture of final product and same was cleared on payment of duty. Therefore, there are no substantial evidence which result the disallowance of credit. The evidences placed by department before us are not cogent to establish that appellant is guilty of fraudulent availment of Cenvat credit. Mere suspicion or assumptions and presumptions cannot be the basis for such serious allegation of fraudulent availment of credit. From the facts and evidences placed before us, we are of the view that Impugned Page 48 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB demand alleging fraudulent availment of credit is not sustainable.
5.11 The last Issue for consideration is regarding the Cenvat Credit demand of Rs. 81,76,443/- in respect of Invoices Issued by Supplier M/s Meal Links Alloys Ltd., M/s N.D. Metal Ind. Ltd., M/s Merchandiser Pvt. Ltd. and M/s Kothari Metals. We find that Ld. Commissioner while confirming the demand in this matter relied on the statements of transporter and He did not consider the statements of suppliers that they had stated and admitted the supply of goods to the Appellant and receipts of payment of goods through banking channel. Moreover it is on records that in the present case all the transporters had been arranged by the suppliers and therefore in our view when the suppliers had admitted the supply of goods, the denial of cenvat credit on the basis of transporters statements not sustainable. The contention of the Ld. Commissioner Is that Investigation shown that the supplier of the material has not actually supplied the material as the transporter denied the transportation of the material not sustainable in the absence of any corroborative evidences. In this case the appellant's submission is that they had received the material in question from the suppliers, the suppliers in his statement admitted that supply of the material and payments made through banking channel the material was duly entered in the statutory records and Issued for manufacture of finished goods. The payments were made through banking channel and there is no evidence on record to show that the amounts for consideration paid by the appellants were subsequently received by them. In these circumstances, as the material in question is received by the appellant under the cover of duty paying Invoices and payments were made through banking channel, we find merit in the contention of Page 49 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB the appellant. Consequently, the Impugned orders are not sustainable In the eyes of law.
5.12 Without prejudice, we also find that in the whole matter department has relied upon the 125 witnesses, out of which 106 were called for cross- examination and only 32 were cross-examined. While disposing off the earlier appeal of appellant in this matter tribunal vide its order dtd. 27.08.2009 had remanded the matter to the Ld. Commissioner for fresh decisions after allowing cross-examination of witnesses whose statements had been relied upon to confirm the demand. It Is well settled law that statements recorded by the Central Excise officers during the course of investigation cannot be relied upon, unless procedure prescribed under Section 9D of the said Act Is scrupulously followed. Such statement would have no evidentiary value if the person making It is not subjected to examination- In-chief before the adjudicating authority and also not produced for cross-examination as stipulated under Section 9D(1)(b) of Central Excise Act, 1944. From the chart produced by the Appellant we find that In almost cases the witnesses have not been examined by the Adjudicating authority and such statements cannot be admitted as evidence. The demand confirmed alleging fraudulent availment of Cenvat credit on strength of invoices without receiving inputs can not be held sustainable solely based on statements of transporters and their records to the Appellant inasmuch as the suppliers in their statements had admitted supply of goods on duty paying documents and Appellant also produced documentary evidences in respect of receipt of inputs, use thereof in manufacture of final product, statutory records showing manufacture and clearance of final product on payment of duty. Since the Revenue failed to prove alternative source of receipt of raw materials and also money flow back Page 50 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB from manufacturer/supplier to the assessee, 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 Appellant. Therefore, the contention of the Adjudicating authority on this Issue cannot be accepted.
5.13 We also noticed that in the present case the reliance of third party i.e transporters documents /statements was placed while confirming demand against present appellant Is also observed to be unjustified and unreasonable. It Is necessary to check the evidentiary value of the third party evidence. The relevant case law In the case of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal v. CCE, Raipur in Appeal Nos. E/52062 & 52066/2018-2018-VIL-1380-CESTAT-DEL-CE supports the appellant, which held as follows.
9. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Reference can be made to Hon'ble Allahabad High Court decision In the cases of Continental Cement Company v. Union of India 2014 (309) E.L.T. 411 (All.)-2014-VIL-431-ALH-CE as also Tribunal's decision in the case of Raipur Forging Pvt. Ltd. v. CCE, Raipur-I-2016 (335) E.L.T. 297 (Tri. Del.) - 2016-VIL-1185- CESTAT-DEL-CE, CCE & ST, Raipur v. P.D. Industries Pvt. Ltd. 2016 (340) E.L.T. 249 (Tri. Del.) - 2015-VIL-904-CESTAT-DEL-CE and CCE & ST, Ludhiana v. Anand Founders & Engineers - 2016 (331) E.L.T. 340 (P & H)- 2015-VIL-738-P&H-CE. It stand held in all these judgments that the findings of Page 51 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods.
In the matter of Commissioner of C. Ex., Indore v. Prag Pentachem Pvt. Ltd. Reported In 2018 (360) E.LT. 1025 (Tri. Del.)- 2015-VIL-1308-CESTAT-DEL- CE the Tribunal observed as under:
Cenvat credit - Bogus transactions - Invoice only received without goods -Evidence Third party evidence Revenue, Inter alia, relying on written slops/entries of laptop seized from residence of cashier of dealer Issuing Invoices, alleging that these contain details of cash transaction in respect of goods not of business The seized records therefore are third party records - Settled law in catena of decisions Including that of Apex Court In 1998 AIR SC 1406 that third party 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].
Thus, it has been consistently held that demands of whatever nature cannot be confirmed solely on the basis of third party's evidence/record.
06. In view of the our above discussion, we find that the demand of Cenvat cannot be sustained. We find Page 52 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB that the appellant have satisfied the requirement of receipt of inputs along with cenvatable Invoices and use of such Inputs in the manufacture of final product, accordingly, the Cenvat credit taken by them is In accordance with the scheme of the Act read with Cenvat Credit Rules. Therefore, the Impugned order is not sustainable, hence the same is set aside."
20. Thus, by relying on the ratio of the decisions cited supra, we hold that on the basis of the statements recorded from the dealers and transporters and some discrepancy found in the vehicle numbers, it cannot be concluded that the appellant has not actually received the goods into the factory and received only invoices. In view of the above findings, we hold that the appellant company has correctly availed credit on the strength of invoices received from various dealers and manufacturers and hence, we hold that the denial of CENVAT Credit to the appellant-company is not sustainable. Accordingly, we set aside the disallowance of CENVAT Credit in the impugned orders.
20.1. As the credit availed by the appellant is legal and proper, the question of demanding interest or imposing penalty does not arise. Accordingly, we set aside the demands of interest and imposition of penalties as confirmed in the impugned orders.
21. Regarding the penalty imposed on Shri Sunil Bansal, Director of the appellant-company, we find that penalty has been imposed on him on the allegation that he was instrumental in availing the irregular credit. Since the credit availed by the appellant company is found be regular, as per the Page 53 of 53 Appeal No(s).: E/75485,75486,75493/2019-DB discussions hereinabove, and there is no infirmity in availment of credit by the appellant-company, we hold that the penalty imposed on the Director namely, Shri Sunil Bansal, is not sustainable. Accordingly, the same is set aside.
22. In view of the above findings, we pass the following order:
(i) We hold that the denial of CENVAT Credit to the appellant company vide the impugned orders is not sustainable. Accordingly, we set aside the disallowance of credit in the impugned orders along with interest. The penalties imposed vide both the orders are also set aside.
(ii) We hold that the penalty imposed on the Director namely, Shri Sunil Bansal, is not sustainable. Accordingly, the penalty imposed on Shri Sunil Bansal vide the impugned order stands set aside.
23. The appeals filed by the appellants are disposed of on the above terms.
(Order pronounced in the open court on 22.09.2025) Sd/-
(R. MURALIDHAR) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd