Custom, Excise & Service Tax Tribunal
M/S Sunland Metal Recycling Industries vs Commissioners Of Central Excise, ... on 3 February, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad -ooOoo- Appeal No. : E/333,334/2012 [ Arising out of OIO-01/MP/VAPI/2012 dtd 23.1.2012 passed by Commissioners of Central Excise, Customs and Service Tax-VAPI ] 1. M/s Sunland Metal Recycling Industries 2. Shri Surendra P Kachhara - Appellant(s) Vs Commissioners of Central Excise, Customs and Service Tax-VAPI - Respondent (s)
Represented by For Assessee : Shri Alok Barthwal, Advocate Shri R K Jain, Advocate For Revenue : Shri L Patra, Authorised Representative For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical) Date of Hearing / Decision : 03/02/2016 ORDER No. A/10101-10102/2016 dtd 3/2/16 Per : Mr.P.K. Das, These appeals are arising out of a common order and therefore both are taken up together for disposal.
2. The relevant facts of the case, in brief, are that M/s Sunland Metal Recycling Industries (hereinafter referred to the assessee), a partnership firm, engaged in the manufacture of Ingots of Aluminium Alloy, Brass, Copper Alloy and Zinc Alloy classifiable under Chapter 76, 74 and 79 of the Schedule to Central Excise Tariff Act 1985. The assessee used imported raw materials such as, scrap of Aluminium, Brass, Copper etc. amongst others, for manufacture of the final product and availed Cenvat Credit of Countervailing Value Duties (CVD) of Customs paid on the imported goods under the Cenvat Credit Rules 2004. The Central Excise officers of Directorate General of Central Excise Intelligence (DGCEI), gathered information that the assessee engaged M/s Pankaj Shipping & Transport Company (in short M/s PSTC) a Customs House Agent (CHA), for clearance of imported goods from the ports, and who was also acted as transporter for transport of the goods from the port to assesses factory at Silvasa. It has received information that certain containers were unloaded in midway at Bhiwandi and from there the same were sold to different customers in cash. The assessee availed cenvat credit on the imported material diverted in mid-way. On 27.11.2006 he Central Excise Officers conducted search of various premises of M/s PSTC. The Central Excise officers collected Daily Loading Register (DLR) of M/s PSTC and also recorded the statements the employees of PSTC. As a follow up action, on 1.12.2006, a search was conducted at the factory premises of the assessee and seized various documents and recorded the statements of the various persons of the assessee.
3. A show cause notice dtd 6th Sept. 2009 was issued proposing the demand of duty alongwith interest and to impose penalty on the assessee and to impose penalty on Shri Surendra P Kachhara, partner of the assessee, amongst others. By the impugned order, the Adjudicating authority confirmed the demand of Cenvat Credit of Rs 61,32,005/- alongwith interest and imposed penalty on the assessee, on the ground that the assessee wrongly availed Cenvat Credit on the imported of inputs during the period from Sept. 2004 to March 2006. It has also imposed penalty of Rs 6,00,000/- on Shri Surendra P Kachhara, partner of the assessee amongst others. Hence, the assessee and its partner filed these appeals against the impugned order.
4. The Ld Advocate on behalf of the assessee and its partner submits that the assessee during the investigation as well as in reply to show cause notice and at the time of personal hearing before the Adjudicating Authority categorically submitted that they have received the duty paid inputs in their factory and used in the manufacture of final products, cleared on payment of duty and duly recorded in statutory records. The assessee produced the records before the investigating authority. During the investigation and in reply to show cause notice, the assessee categorically stated that some of the documents were seized by the officers of D.R.I and therefore they could not produce all the documents. He further submits that the show cause notice was issued and the adjudication order was passed on the presumption that imported inputs were diverted into the local market and the inputs shown in the factory at Silvasa appears to have been substituted by bazaar (local) non-duty paid scrap. He submits that the stocks of finished goods and inputs were tallied with the records and there is no single evidence of selling of duty paid inputs and purchase of local scraps. It is further submitted that the entire case was made out on the basis of the documents recovered from the possession of 3rd party (i.e. transporter) The statements of the third party are contradictory to each other, in so far as in the first statement, the transporter had not stated against the assessee, but, the subsequent statement was against the assessee. No cross examination was allowed. He submits that it is well settled by various decisions of the Tribunal and High Court that the allegation of diversion of the inputs cannot be sustained on the basis of the statements and documents of third party. He further submits that in the same investigation, another proceeding was initiated against their sister concern. The Tribunal in the case of the sister concern M/s Sunlands Alloys, Pravin Kumar A Ranka, Shivraj Singhal Vs CCE&ST, Vapi by Order No 11137-11139/2015 dtd 23.7.2015 allowed the appeals of the appellants with consequential relief. The Ld Advocate filed compilation of case laws.
5. On the other hand, the Ld Authorised Representative on behalf of the Revenue reiterates the findings of the Adjudicating Authority. He submits that the assessee failed to produce any transport documents in support of receipt of the inputs in their factory. He submits that the investigating authority collected the evidence from the transporters and the statements of the employee of M/s PSTC, transporter and CHA, engaged by the assessee, had stated the diversion of the inputs. He drew the attention of the Bench the relevant portion of the Adjudication order.
6. After hearing both the sides and on perusal of the records, we find that the officers of DGCEI gathered information from M/s PSTC, who was engaged by the assessee for the clearance of the imported goods from the port of import and also transporter for transport of the said inputs from the port of import to their work/factory at Silvasa. It has also gathered information that certain quantities of inputs imported in containers were unloaded midway in the godown situated at Bhiwandi and from there, the same was sold to different buyers in cash. On 27.11.2006, the Central Excise Officers of DGCEI visited the various premises of M/s PSTC and seized various records and documents. As follow up action, on 1.12.2006 search was also carried out at the factory premise of the assessee and seized the records viz., import files from April to November 2006 RG23, Part I and Part II Register etc. The said officers also recorded the statements of Shri Ashokendu Kumar Gupta, General Manager cum Authorised Signatory of the assessee and others, where they stated that they had received the imported goods at their factory and used in the manufacture of final product. The Central Excise Officers during the investigation directed the assessee to produce the transport documents in respect of receipt of inputs at their factory. It is seen from the show cause notice that the assessee vide letter dtd 29.8.2009 during investigation stated that the documents requisitioned by DGCEI NZU were lying with Directorate of Revenue Intelligence (DRI) since 26.4.2006 and furnished copies of Panchnama dtd 25.4.2006 and another one dtd 25.4.2006 at the factory premises of the assessee at Silvasa. The assessee in their reply to show cause notice also stated in detail, as under:
(i) It is alleged that our firm diverted some imported scrap consignments into the local market and took credit of CVD paid on these goods in our CENVAT account without actually receiving them in our factory. I deny these allegations made against us. The conclusion of non-receipt of these goods into our factory has been arrived at based on some records of the transported, M/s Pankaj Shipping and Transport Co., Mumbai and the statements of the transporter companys proprietor and their other employees. The records of the transported were maintained by them for their purposes and conclusions regarding our functioning cannot be derived from those records. It is an admitted fact that we had paid full charges to the transporter to transport the impugned goods to our factory premises in Silvassa.
ii) Statement of our Manager, Shri Ashokendu Kumar Gupta was also recorded wherein he has categorically stated that the firm took credit of CVD only after receipt of the impugned goods in the factory premises. The records maintained by us also show that the impugned imported goods were received in our factory premises and final products were manufactured from these inputs.
iii) The show cause notice has not identified a single party to whom the impugned goods were allegedly diverted and sold. The show cause notice has not produced any direct evidence in support of the allegation that the goods were sold to local parties and credit of duty was taken without receipt of goods in the factory. This corroborative evidence was absolutely necessary to prove that the impugned goods were diverted and In this respect the case law pertaining to C.M. Re-rollers & Fabricators [2004 (168) ELT 506(Tri-Del) referred to in para B) below is mutandis equally applicable. Also, in the case of Hiren Aluminium Ltd. Reported in 2009 (245) ELT 386 (Tri-Ahmd.) the Honble CESTAT has observed that the (Adjudicating authority) has further observed that an inference can be drawn in view of the documentary evidence that the inputs in question might have been diverted in open market by all the 4 dealers in connivance with Hiren for which no documentary evidence has been produced by them, otherwise the same could have been recovered by the search party during the search operation. No party who indulged in such illicit transactions keeps the records which may go against them. Here also, we note that the above observations made by the adjudicating authority are assumptive and presumptive and not on the basis of any evidence on record. Thus it will be seen that without hard evidence it cannot be concluded that inputs were not received in our factory.
iv) The officers of DGCEI who conducted the investigation in this case were informed by us that the records for the period March, 2004 to 11.05.2006 were seized earlier by the officers of DRI, Surat Regional Unit. Non-submission of these records by us to the officers of DGCEI cannot lead to a conclusion that the impugned goods were not received in our factory. They ought to have obtained the records from DRI in order to clarify their doubts in the matter.
v) The so called evidence relied upon in the SCN is not admissible for arriving at a conclusion that the impugned goods were diverted into the local market and not received in our factory premises. I do not know as to why the transporter was maintaining his records in the manner in which he was maintaining them, That is not our concern. I submit that we cannot be charged on the basis of the statements of some other parties.
vi) Our firm has always been taking credit of CVD paid on imported scrap only on the basis of duty paying document viz the Bill of Entry and along with it the delivery challan issued by the transporter is also available. Before taking credit of CVD we stamp the Bill of Entry for having taken the credit. Besides the 8 impugned consignments of scrap we have imported numerous other consignments of scrap and followed the same procedure fore taking credit of CVD; the Central excise authorities have had no objection in respect of the same. Therefore we cannot be faulted for maintaining our records in the same manner in respect of the impugned 8 consignments also.
vii) I reiterate that the impugned goods were received in our factory premises for which appropriate entries have been made in our Central Excise records. The records maintained by us indicate the manner in which the impugned goods were utilized in the manufacture of the end products in our factory. There is no charge that the quantity of end products does not correspond to the inputs used in their manufacture. Therefore we submit that the allegation that we diverted the impugned imported goods into the local market and took credit of C.V.D. without actually receiving them in our factory is not correct and is not proved.
7. It has been alleged in the show cause notice that the imported inputs so diverted to local markets appears to have been sold in cash to the persons, who did not need Central Excise invoices and no record has been kept by the assessee regarding such transactions. The buyers of such unaccounted raw materials appear to have used it for unaccounted production and clearance of articles of non-ferrous metal. And the input shown have been receipt in the factory at Silvasa by the assessee appears to have been substituted by bazaar (local) non-duty paid scraps. We find that the said allegation is totally on the basis of assumption and presumption. There is no iota evidence on record of the selling of imported material and purchase of bazaar scrap and therefore, such allegations cannot be sustained. The Ld Authorised Representative submitted that the assessee could not place the documents. It is revealed from statements of the assessee before the investigating officer and reply to show cause notice as quoted above that the assessee submitted copy of panchnama to substantiate that the documents were seized by D.R.I. This fact was not disputed by the Adjudicating Authority. So, the denial of credit on this ground is not justified.
8. It is noticed that the Central Excise Officers recovered Daily Loading Reports (DLRs) during the course of search from the premises of M/s PSTC. The DLRs had been prepared by the loading Supervisor of the transporter M/s PSTC. It has also prepared Monthly Loading Report (MLR) by the drivers of the trucks, which were submitted by them to their employer M/s PSTC. The entire case was made out on the basis of the DLRs and MLRs recovered from the premises of the transporter. The Adjudicating Authority proceeded on the basis of the said records as supported by the statements of the employees of the transporter viz., Shri Dilip Namdeo Aher, Dock Clerk and Shri Rajeshwar Prasasd R Dubey, Proprietor of M/s PSTC. We find that the proprietor of M/s PSTC in his initial statement had not stated the diversion of the goods. Subsequently, it has stated the diversion of goods in midway, but, it was not disclosed to whom the goods were delivered by them. The subsequent statements of the proprietor of M/s PSTC are contradictory to the initial statement. The other statements of employees of M/s PSTC had not disclosed any material to whom the goods were delivered. Hence, it is difficult to rely upon such statements, which are un-corroborative nature. It is well settled that the duty cannot be levied on the basis of the statements of third party and the evidence recovered from the third party, unless it is corroborative with the materials of the assessee. There is no material available on record that statements are corroborative with the documents of the assessee. We find in the present case, the employees and the partner of the assessee had categorically stated in their statements that they availed cenvat credit on the inputs after receipt in their factory and duly recorded in the statutory records. Hence, the demand of duty alongwith interest and penalty on the assessee and imposition of penalty on the partner of the assessee cannot be sustained.
9. The other aspect of this matter is that on the basis of the same investigation another proceeding was initiated by the officers of the DGCEI against M/s Sunland Alloys and others (sister concern of the present assessee). In that case, the entire case was made out based on the DLRs, MLRs and statement of the Shri Rajeshwar Prasasd R Dubey, Proprietor of M/s PSTC. We find that the facts and circumstance of the present case are similar to the case of M/s Sunland Alloys. The Tribunal in the case of M/s Sunland Alloys (supra) after detailed discussions allowed the appeal of the assessee. It has also discussed the various case laws on this issue. For the proper appreciation of the case, we reproduce below the findings of the Tribunal in the case of M/s Sunland Alloys (supra), as under:
Heard both sides to these appeals and perused the case records. The case is made against the main appellant M/s Sunland Alloys for clandestinely taking Cenvat Credit on imported scrap of copper without receipt of inputs in appellants factory. It is the case of the Revenue that copper scrap imported under the bills of entry have been diverted at Bhiwandi as per the statements of Shri Rajeshwar Prasad R Dubey, Proprietor writer of PSTC. Further Revenue has relied upon certain letters written by M/s J.N. Baxi and M/s NYK Link (I. Ltd.), who are the container providers in which imported scrap was transported from the port of import. As per the date of containers received back by the container provider, as reported by container provider, containers have returned back in certain cases before taking of credit. It is observed that the first statement dated 11/09/2007 of Shri Rajeshwar Prasad R Dubey states, inter alia, that imported scrap is first taken to the godowns in Bhiwandi and unloading of the imported Cargo from the container is done for the further transportation. That at Bhiwandi godown the imported goods were not only unloaded from the container but also stacked in there godown till further transportation were made. In the subsequent statement dated 19/12/2008, after three months Shri Rajeshwar Prasad R Dubey gives a different version that the hired transporter never transported any imported goods after they were unloaded at Bhiwandi or New Bombay after their reciet from JNPT. On the other hand questions were put by the investigation to Shri Pravin Kumar A Ranka, the partner of the main appellant as of how the goods reached from Bhivandi to appellants factory. Shri Pravin Kumar could not produce any documentary evidence except the freight payment document of PSTC . It was also stated by Shri Ahok Kumar that the matter was very old and numerous documents have been taken over during searches but it was confirmed that Cenvat Credit was taken by the main appellant after goods were received at their factory. In these circumstances when the same person Shri Rajeshwar Prasad R Dubey was giving contradictory statements regarding transportation of imported goods from Bhivandi to appellants factory, it was necessary to grant Cross Examination of this person who was a third party witnesses. This was more so required when the importer and user of inputs has never confessed to have not received the inputs and that only documents were received. On the issue of granting of Cross Examination CESTAT, in the case of Debu Saha Vs. Commissioner of Custom 1990 (48) E.L.T. 302 Tri., held that no doubt Cross Examination may not be granted in all cases but need for extending Cross Examination will depend on the circumstances of each case. Delhi High Court in the case of Basudev Garg Vs. CC [2013 (194) E.L.T. 353 (Tri-Delhi)], by relying upon the judgement in the case of J & K Cigarettes Ltd. Vs. [2009 (242) E.L.T. 189 (Tri.-Del)], held that statement against the assessee connot be used without giving them an opportunity of Cross Examination. Honble Delhi High Court made following observations in para-10 and 14:
10. Insofar as the general propositions are concerned, there can be no denying that when any statement is used against the assessee, an opportunity of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd.(supra) and Laxman Exports Limited (supra). Apart from this, the decision of this court in J&K Cigarettes Ltd.(supra) clinches the issue in favour of the appellant. In that case, the validity of Section 9D of the Central Excise Act, 1944 reads as under:-
9D. Relevancy of statement under certain circumstances.-
(1) A statement made and signed by a person before any Central Excise Officer of a gazette rank during the course of any inquiry or proceedings under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains:-
(a) When the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or
(b) When the person who made the statement is examined as a witness in the case before tha Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.
(2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under this Act other than a proceeding before a Court, as they apply in relation to a proceeding before a Court.
14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D, of the Central Excise Act, 1994. The circumstances referred to in Section 9D, as also in Section 138 B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exist, the Noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi judicial proceedings. The Division Bench also observed as under:-
29. Thus, when we examine the provision as to whether the provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact tat the statement of such a person can be treated as relevant only when the specified ground is, it is obvious that there has to be objective for4mat5ion of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject ot judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted.
5. The same view was taken by us in the case of Sakeen Alloys Pvt Ltd. Vs. CCE Ahd,[2013 (296) E.L.T. 392(Tri-Ahmd.)]. Revenue did not accept this order and filed appeal in the jurisdictional High Court Honble Gujarat High Court in this case held that confessional statements solely, in the absence of any other corroborative evidence, cannot make the foundation for levying excise duty. Appeal filed by the department against this order of Gujarat High Court has also been dismissed by Supreme Court as reported in [2015(A 118) E.L.T. 319] in the present case there is not even a confessional statement from the main appellant that inputs were not received in their factory and Cenvat Credit was taken only on the basis of Bills of entry. Shri Rajeshwar Prasad R Dubey has given contradictory statements and being third party witness his cross-examination was must. On the issue of taking of Cenvat Credit on an allegation that inputs were not received by an asessee Gujarat High Court in the case of Commissioner Vs. Motabhai Iron and Steel Industries 2015(316) E.L.T. 374 (Guj.) made following observations in para-15, 17 and 19:-
15) Thus, the demand of Rs. 3,26,188/- was based upon the fact that the vehicles which were shown to have transported the goods were not capable of carrying such goods. However, the Tribunal upon appreciation of the evidence on record has found as a matter of fact that the goods were duly found to have been recorded in the assessees factory and were consumed in production. Moreover, payment was made through banking channels and no investigation had been made at the consignorend in this regard. Under the circumstances, no error can be found in the findings recorded by the Tribunal so as to warrant interference.
(17) Thus, from the evidence on record, it appears that all the goods supplied by M/s. Motabhai Iron & Steel had nowhere admitted that the assessee was issued only invoices and that there was no delivery of goods to the assessee. Besides, all the payments that were made to M/s. Motabhai Iron & Steel were made through bank drafts. The Tribunal has also noted that, in all, demand was made in respect of 44 consignments. However, it was only in respect of two transporters, who had transported merely three consignments that the alleged discrepancy had been pointed out, whereas, in case of other transporters, no discrepancy has been found. In the light of the aforesaid findings recorded by the Tribunal, it cannot be said that there is any error in the conclusion arrived at by the Tribunal while deleting the demand of Rs. 13,62,301/-.
(19) From the findings recorded by the Tribunal, it is apparent that payment to M/s. Vasmin Corporation in respect of purchases was made through banking channels. Under the circumstances, the Tribunal has lightly held that demand cannot be confirmed against the assessee. The Tribunal has further found that it is an undisputed fact that all the purchases were duly recorded the statutory books of the assessee and the goods were also found to be entered in its statutory records. That the Department had not made any investigation of the unit of the assessee, which could have supported the findings of the adjudicating authority. None of the consignors of the goods have denied the clearance of goods to the assessee. There was no evidence on records to show that the records maintained by the assessee were not correct. The Tribunal, was according of the view that on the basis of statements of some transporters which were not corroborated by any material on record, a huge credit could not be disallowed is under these circumstances that the Tribunal has set aside the demands and the penalties imposed upon the assessee and the co-noticees.
6. Similarly in the case of Commissioner of Central Excise, Ludhiana Vs. P.J. International Ltd. [2010/ (255) E.L.T. 418 (Tri-Del), it was held by CESTAT-Delhi that once statutory records are maintained by an appellant, which is not doubted by the department, then by mear tallying numbers and dates of LRs and GRs in a statement, cannot be made a conclusive and satisfactory basis for diversion of inputs. In present case there is no evidence that diversion of imported goods took place. In case imported goods were diverted by the main appellant then what was the source of alternate raw materials procured by the main appellant for manufacturing finished goods. There is also no indication in the case records that raw materials in the stock of the main appellant showed any variations.
7. Learned Authorised Representative relied upon the case of CESTAT Mumbai in the case of Ahmednagar Rolling Hills Pvt. Ltd. Vs. CCE Aurangabad [2014 (300) E.L.T. 119 (Tri-Mumbai)]. It is observed from the facts of this case that suppliers of scrap raw materials in this case admitted receiving consideration in case without proper document. Further charge of clandestine production and removal was established by duty payment of Rs. 60,00000/- towards such duty evaded. It is in these Factual Matrix of the case where CESTAT held that cross-examination of the witnesses was not necessary. In the case of Shalini Steels Pvt. Ltd., Hyderabad Vs. CC Hyderabad [2010 (258) E.L.T. 545 (Tri-Bang)] also the supervisor of the appellant in that case gave the confessional statement which was also accepted by the Managing Director of the appellant. It was held by CESTAT that an employ of the appellant cannot be considered as a third party witness and cross examination was not necessary. Similarly in the case of Gopal Industry Ltd. Vs. CCE Indore [2007 (214) E.L.T. 19 (Tri-LB)] Larger Bench held as follows in para 18.1:-
18.1 The Daily report tin factory note-book contained details of production and issue of tin containers by the appellant, which did not reflect in the statutory record. The details of production and clearance of tin containers were also shown in the note-book Daily production report separately in respect of the appellant firm which tallied with the figures shown in the Daily report tin factory which contained figures both for the new tin factory as well in the name of the appellant. In this context, it will be noticed that the managing partner Shri Yogesh Garg confirmed in his statement recorded on 29-9-1998 that the documents recovered under the panchnama on 1-9-1998 were pertaining to production and clearance of tin containers by their factory. He stated that these documents consisted of daily production reports written in note-books, delivery challans, stock record of tins etc. The documents recovered pertained to production and clearance of tin containers. He also stated that amongst other supervisors, even Awadesh Kumar Saxena, Electronics Engineer looked after the production and clearance of the goods of the factory. The authorized signatory of the appellant Girijesh Kumar Rai, confirmed in his statement recorded on 28-9-1998 that the records shown to him were withdrawn from the factory of the appellant in his presence and that he had put his signatures on the said documents at the time of withdrawal on 1-9-1998. The Electronics Engineer, Shri Awadesh Kumar Saxena in his statement dated 28-9-1998 admitted that the portion of daily production reports note-book pertaining to the appellants was prepared by him and that challans and daily production reports which bear his signatures, were prepared by him and they were of the appellant firm. According to him, the daily production report depicted the number of tin containers produced/ manufactured on a specific day. Whenever, he prepared the daily production report/challan he submitted the original copy to the Managing Director. The facts revealed by the Managing Director, Shri Yogesh Garg, the authorized signatory, Shri Girijesh Rai and Shri Awadesh Kumar Saxena make it clear that the said private documents recovered from the appellant premises on 1-9-1998 were maintained by the appellant and that the record, namely, the daily production reports, challans etc. were pertaining to the clandestine production and removal of tin containers without payment of duty. We have perused copies of these two note-books containing the private record and we find that there were signatures of Awadesh Kumar Saxena, Electronics Engineer at various places. The daily report showed particulars of the opening stock, production and the closing stock of the said excisable goods. Admittedly, the production of the tin containers, which was recorded in these daily record books and which were removed, did not appear in the statutory record i.e. RG. 1 register of the appellant. This not a case where mere private record without anything more is relied upon. The private record was recovered from the factory of the appellant, and it is established beyond doubt and not even disputed that it was so recovered and that it belonged to the appellant. The nature of particulars contained in this private record clearly go to show their intrinsic authenticity about the clandestine production and removal of the excisable goods by the appellants who had obtained the excise registration for the manufacture of such goods in the firm name. There cannot be more authentic evidence than recovery of the said private record from the appellants factory which admittedly was prepared and bears the signatures of the supervisors of the appellant, and which is proved to have been maintained in the factory, from the statements of the partner Shri Yogesh Garg, the Electronics Engineer, Shri Awadesh Kumar Saxena who has made several daily reports in the said book, and the authorized signatory, Shri Girijesh Rai in whose presence the note-books were recovered under a panchnama. In answer to question No. 18, Shri Awadesh Kumar Saxena who was shown the Daily production reports, stated in his statement dated 29-9-1998 that all these pertained to the appellants who manufactured the tin containers and that these contained information regarding production and clearance. He also stated in reply to question No. 19 that all challans were prepared by Shri Rajeev Agarwal and others whose signatures he recognized. The authenticity of the recovered documents was admitted by the partner Yogesh Garg [noticee No. (2)] and noticee No. (6) (Girijesh Rai) who also admitted that the record pertained to unaccounted for production and clearance of the tin containers by the appellant. Any subsequent retraction by Shri Awadesh Kumar Saxena has been rightly held to be an afterthought to protect the noticees. This is not a case where any defence was taken up about less consumption of electricity that would have impelled the Revenue Officers to examine consumption of electricity. When production and removal of excisable goods in a clandestine manner is established by such positive documentary evidence and the oral evidence of the managing partner and the supervisor, it cannot be said that the Commissioner committed any error in holding that the appellant had manufactured and cleared tin containers in a clandestine manner. The quantum of liability which is worked out, has not been disputed before us. We find ourselves in complete agreement with the reasoning and findings of the learned Commissioner in holding that the charge of clandestine removal of tin containers by the appellants was established beyond doubt. No further corroboration was required in view of the clinching nature of the oral and documentary evidence establishing clandestine production and removal of tin containers by the appellant. It is evident that Shri Yogesh Garg, noticee No. (2), partner of the appellant, was in charge of the unit and was having overall control of the affairs of the unit. It was, therefore, rightly held that he was aware that the goods clandestinely manufactured and removed in the name of his partnership firm were liable to be confiscated.
7. In view of the above facts involved in this case larger bench held that oral evidence made by the Managing Director of the appellant and the positive documentary evidence recovered from the factory were of clinching nature. However as already mentioned in the present proceedings there is no confessional statement regarding diversion of inputs by the main appellant. The statements of Shri Rajeshwar Prasad R Dubey, proprietor of PSTC, recorded at different times are contradictory, and cannot be relied upon as evidence in the absence of any cross-examination and corroboration.
10. The purpose of narration of the case of M/s Sunland Alloy (supra) in detail to show that the facts of the present case are squarely covered by the said decision. In addition to, we observe that the non-receipt of inputs and non-use of the same in final product are based upon the statements and the records of transporter. But, the assessee during investigation categorically stated that they paid charges to the transporter, inputs were used in the manufacture of final product, duly recorded in their statutory records. The investigating officers had not verified the records of the assessee and merely proceeded on the basis of statement of third party. The inference of non-receipt of inputs and denial of Cenvat Credit on the basis of the statements of third party, who had failed to disclose the details of supply of inputs in mid-way, cannot lead any conclusion, the assessee in their statements stated the receipt of the inputs and used in the manufacture of final product and duly recorded in the statutory records, which cannot be discarded by mere assumption and presumption. In fact, the investigating officers did not carry out the detailed investigation with the relevant aspects of the case. The assessee categorically stated that documents were seized by DRI, and produced Panchnama, but, no verification was conducted. Further, statements of the employees of the transporters were recorded, but it was not disclosed to whom the goods were delivered in mid-way and such statements cannot be relied upon. Furthermore, search was conducted at the premises of appellants, but, not a single evidence was found of purchase of bazaar scrap by the appellant as alleged in the show cause notice. Hence, we agree with the findings of the Tribunal in the case of M/s Sunland Alloy (Supra).
11. In view of the above discussions, the demand of Cenvat Credit alongwith interest and penalty on the assessee and the penalty on the Appellant No 2 cannot be sustained. The appeals filed by the appellants are allowed with consequential relief, if any.
(Dictated and pronounced in the Court) (P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial) swami ??
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