Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Metal Gems, M/S Mukesh Metal ... on 22 March, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT:
II
Appeal No.E/286-295, 302, 304-309/2008
(Application Nos.E/S/286-295, 302, 309-314/2008
Arising out of: OIO No.14/MP/Daman/07, dt.14.12.07
OIO No.15/MP/Daman/07, dt.14.12.07
Passed by: Commissioner of Central Excise & Customs,Daman
For approval and signature:
Mrs. Archana Wadhwa, Honble Member (Judicial)
Dr. P. Babu, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Metal Gems, M/s Mukesh Metal Pvt.Ltd., M/s Time & Space Haulers, M/s Met India, Shri R.V. Mehta, Shri N.S. Morakhia, Shri M.G. Pithambarwala, Shri J.G. Patel, Shri H.B.Agarwal, Shri P.B. Agarwal, Shri Prakash Seth,
Respondent:
CCE Daman Represented by:
Shri Hardik Modh, Adv.for Assessee. Shri J.S. Negi, SDR for the Revenue.
CORAM:
MRS. ARCHANA WADHWA, HONBLE MEMBER (JUDICIAL) DR. P. BABU, HONBLE MEMBER (TECHNICAL) Date of Hearing/Decision:22.03.11 ORDER No. /WZB/AHD/2011, dt.22.03.11 Per: Archana Wadhwa:
The present appeals are being decided afresh as the earlier order of the Tribunal being Order No.A/1485-1509/WZB/AHD/2008, dt.1.8.08 has been set aside and matter remanded back by Hon'ble High Court of Gujarat with the directions to hear the appeals afresh, inasmuch as the earlier order of the Tribunal had disposed off the appeal at the stage of stay itself and the Revenue was not put to notice for disposal of the appeals. We have, accordingly, listed the appeals afresh. We have heard Shri Hardik Modh, ld.Advocate appearing for the appellants and Shri J.S. Negi, ld.SDR appearing for the Revenue.
2. The two main appellants M/s Metal Gems, M/s Met India are engaged in the manufacture of copper pipes/copper flats/copper tubes falling under Chapter 74 of Customs Excise Tariff Act, 1985. During the relevant period, the appellants imported re-melting copper ingots and wire bars after purchasing the same on high sea sale basis, paid counterveiling duty (CVD) leviable thereon and availed the CENVAT Credit accordingly. The dispute in the present appeals relates to availment of credit of counterveiling duty paid by the appellant on the allegations and findings that the said inputs were actually not received by the appellants in their factories and the appellants have wrongly shown the receipt and consumption of the same in the manufacture of the final product, which was cleared on payment of duty. The allegations and findings are that the said imported ingots stand diverted by the appellants in the open market and instead they have purchased inferior quality goods from the market for replacing the imported inputs and used the same in the manufacture of their final product.
3. For arriving at the above finding, the adjudicating authority has mainly relied upon the fact that during the transportation of the ingots cleared from Delhi Customs to the factory premises located at Daman, the same has to be passed through various check posts. Enquiries conducted from the check posts have established that there is no stamp of any check post on the lorry receipts issued by the transporter M/s Time & Space Haulers, which was required to be affixed on such documents in respect of trucks passing through the check posts. The Revenue has also relied upon the fact that the records/documents maintained by the transporter at Delhi office as well as U.P. border branch, there is nothing mentioned regarding issuance of lorry receipts; indicating thereby that such lorry receipts issued by the transporter were not in the ordinary course of their business. Further, reliance has also been placed upon the records maintained by the appellants in support of the findings that imported copper ingots were neither received by them nor consumed inasmuch as during the days when such ingots were received, melting furnaces records indicate that furnaces were shut down/slowed down due to unavailability of raw materials. Further, the statements of various persons stand relied upon. Part of the demand also stands confirmed on the allegations and findings of clandestine manufacture of final product.
4. As against the above, appellants have strongly contended that the impugned order passed by Commissioner is based upon presumptions and assumptions inasmuch as the duty paid raw material stands received by them, recorded in their CENVAT account and duly utilized in the manufacture of their final product, which was cleared on payment of duty. The Revenue has relied upon flimsy evidences of non-stamping of LRs at the check posts, which enquiries are unreliable inasmuch as all entry points into Gujarat are not covered by such enquiry, there are alternative routes which might be taken by the transporters. They have further relied upon report of Department of Information Technology, Govt. of India, revealing rampant corruption at check posts and inherent unreliability of check post records; that even in cases of admitted transportation, the check post records do not reflect such passing through of the trucks; discrepancies between report of Jt. Director of Transport, Gujarat and Sales Tax Check Post officials etc. Further, it stands argued before use that apart from alleging that the imported ingots stand diverted by the appellant in the local market, there are no investigations as regards the alleged buyer of the said imported goods. There is also no evidence of receipt of any sale proceeds by the said appellants, there is no proof of transportation of imported goods to any other place, around Delhi border. There is no statement on record admitting that the goods have been sold in the local market. Further, the appellants have contended that admittedly they have manufactured the final product on which duty has been paid, thus indicating that the inputs in question were used by them. Further, the Departments suggestion that such inputs were procured from the local market as kabari scrap is also void of any merits inasmuch as the Department has not been able to establish, on record, any supplier of such kabari scrap or any evidence of purchase of the same or transportation of the same etc. As such, submits the ld.Advocate that the entire case of the Revenue is based upon mere presumptions and not on any concrete evidences on record. He also submits that import price of copper ingot and bars is almost equal to the market prices of copper scrap as such, appellants do not gain anything by substituting the copper ingots with the local material. Further, there is a specific ban on use of kabari scrap fixed vide consent order dt.12.1.98 by the Pollution Control Board authorities. The appellants final product require high grade raw material, which is meant for the Railways and delivery is effected only after inspection of the goods by the Railways Quality Control Department. They also produced on record the technical experts opinion indicating that the furnace was in good condition till date thus suggesting that good quality raw materials were used. Ld.Advocate also submits that the statements relied upon by the adjudicating authority do not inspire confidence in the Revenues case and in most of the cases and they were either retracted or were given by the persons who were not even having knowledge about the manufacturing activity at the factory and were looking marketing or other areas and were located at Ahmedabad. The statements of Shri R.V. Mehta, who according to the Department, master minded the entire fraud are exculpatory and he has nowhere admitted any diversion of imported ingots in the market and substitution of the same by scrap.
The appellants have made a strong grievance of the fact that they have requested for cross examination of the witnesses, whose statements were relied upon in the Show Cause Notice and have submitted before the adjudicating authority at the time of preliminary hearing that detailed submissions would be filed by them after completing the cross examination of witnesses and after supply of some of the documents. The impugned orders stand passed by the Commissioner by denying the opportunity of cross examination and without dealing with the submissions made by them vide their letter dt.18.12.07 inasmuch as the impugned order was passed on 14.12.07 i.e. before filing of written submissions. Ld.Advocate has submitted that vide their reply dt..18.12.07, which does not stand considered by the adjudicating authority, ample materials which, inter alia, includes reports received under RTI Act, recommendations in the Surveillance Audit Report issued by Shri Sudhir Patki, Lead Auditor, International Standards Certifications, concerning ISO 9001:2000 standards, Expert opinion of Chief Executive Officer of International Copper Promotion Council, Weighment slips of trucks with inputs at Daman, acknowledgements of LRs, orders placed by various reputed buyers stipulating the condition of usage of particular raw materials and taking delivery after inspection in factory, fairly showed that the goods were transported to Daman and used in the manufacture of finished goods. He also submits that in the said reply, they have also placed evidence on record in the shape of reports received under RTI Act form the check post authorities to buttress their arguments that such reports are not reliable and even in admitted cases of transportation, the entries were not made. He has also pointed out to an alternative route of transportation through NH3 via Maharashtra border. Further, Central Governments report also stands relied upon to show that several transport vehicles run on fake/duplicate registration numbers and permits to avoid any fine and penalty as also to avoid mandatory passing by RTO authorities. It also stands contended in the written submissions that reliance on the statement of Shri Praveen B. Agarwal, Head of Accounts department of the transporter at Ahmedabad, who was not connected with the transportation, was not justified.
5. Shri J.S. Negi, ld.SDR appearing for the Revenue has reiterated the reasonings adopted by the Commissioner in his impugned order for holding against the appellant. However, he fairly agrees that inasmuch as the impugned order was passed on 14.12.07, the written submissions filed by the appellant vide their letter dt.18.12.07 were not before Commissioner and as such, his views on the various pleas raised by the appellant as also evidences produced by them are not available.
6. After considering the submissions made by both sides, we find that the impugned order of the Commissioner stand passed in violation of principles of natural justice. The appellants, right from the beginning, have been making a prayer to allow cross examination of the witnesses, whose statements are being relied upon by the Revenue to support their allegations. The appellants also prayed for personal hearing and made a request to allow cross examination after which they would file a detailed reply. In our views, if Revenue seeks to rely upon the statements of various persons, it is necessary for them to offer the said deponents for cross examination so as to check the veracity of the same. Such statements of the transporters and other persons were being disputed by the appellant and having produced material evidence on record to doubt the truthfulness of the same, the Revenue was duty bound to offer the said witnesses for cross examination. It is also seen that the adjudicating authority has not taken into account those statements which are not inculpatory and do not admit any divergence of raw materials. Inasmuch as the Revenues case is based upon the non-entry of transportation truck at the check post, the evidences produced by the appellant in their reply dt.18.12.07, relating to the information received under RTI Act to support their stand that the records of check post cannot be held to be authenticated, were required to be considered by the adjudicating authority. As all the evidences in the shape of expert opinion, evidences showing alternative routes and information procured by the appellant under RTI Act, as placed before Commissioner vide their subsequent reply dt.18.12.07, does not stand considered by the adjudicating authority, we think it proper and just to set aside the impugned order and remand the matter to adjudicating authority for fresh decision.
7. At this stage, we also take note of another decision of the Tribunal in the case of CCE Vs. M/s Metal Gems as reported in 2009 (245) ELT 449 (Tri-Ahmd), vide which the order of Commissioner(Appeals) remanding the matter to adjudicating authority following the earlier order of the Tribunal vide which the matters were remanded, was challenged. The Tribunal, taking note of the fact that all other connected matters stand remanded to Commissioner, remanded the said matter also to Commissioner for decision along with the earlier remanded matters vide Tribunals Order No.A/1485-1509/WZB/AHD/2008, dt.1.8.08 (which now stand set aside by Hon'ble High Court of Gujarat and matter remanded for fresh decision). It is seen that the Tribunals order reported in 2009 (245) ELT 449 (Tri-Ahmd) was further appealed against by the Revenue before Hon'ble High Court of Gujarat in the case of CCE Vs. Rikhab Mehta as reported in 2010 (259) ELT 518 (Guj). The appeal filed by Revenue was rejected. It is further noted that while remanding the present matter, Hon'ble High Court has directed that the Tribunal may consider the subsequent order of this Court passed in Tax Appeal No.1554 of 2009 on 16.9.10 i.e. the decision reported in 2010 (259) ELT 518 (Guj). Foe better appreciation, we reproduce Para 6 of their judgment.
6. From the facts noted hereinabove, it is apparent that in the present case the adjudicating authority had denied the opportunity to cross-examine the witnesses to the respondent. A perusal of the order made by the adjudicating authority indicates that the respondent had disputed certain facts recorded in the panchnama and had also alleged suppression of the statement of Shri Pithamberwala recorded during the panchnama proceedings. Allegations regarding vehicles of Jogibhai having been used for transportation of scrap to the factory premises had also been disputed. It is in these circumstances that the respondent had sought for cross examination of the witnesses on whose statements the appellant wanted to rely against the respondent; as well as the panchas and officers who had drawn the panchnama and conducted the search proceedings. In the circumstances, the action of adjudicating authority in refusing to allow the respondent to cross-examine the said witnesses would seriously prejudice the defence of the respondent and as such is undoubtedly violative of the principles of natural justice. Moreover, a perusal of the grounds for denying the respondent the opportunity to cross examine the witnesses makes it apparent that the adjudicating authority has cursorily brushed aside the request on irrelevant grounds stating reasons which are neither any valid nor germane. In the circumstances, the Commissioner (Appeals) was justified in following the order made by the Tribunal in proceedings arising out of the parent show-cause notice and setting aside the order made by the adjudicating authority and remanding the matter for a fresh decision after affording the respondent an opportunity to cross-examine the witnesses, more so when the witnesses sought to be cross examined in both the proceedings were the same. The Tribunal, in the appeal preferred by the revenue has merely modified the order made by the Commissioner (Appeals) and remanded the matter to the Commissioner, Central Excise, Daman, so as to enable him to adjudicate both the matters together. 8, It may be noted here that the above remanded matter was as a consequence of Tribunals remand order, which has been set aside by Hon'ble High Court and matter remanded to us for fresh decision with direction to take the subsequent order of Hon'ble High Court of Gujarat in the case of Rikhab Mehta referred to supra, into consideration.
9. In view of the observation made by Hon'ble High Court and reproduced above as also the observations made by us in the preceding paragraphs as regards violation of principles of natural justice, we set aside the impugned order and remand the matter to Commissioner(Appeals). However, we make it clear that we have not expressed any opinion as on the merits of the case. Needless to say that the appellants would be given an opportunity to put forth their case with liberty to raise further pleas and submissions based upon the outcome of the cross examination.
10. All the appeals are, thus, allowed by way of remand.
(Pronounced in Court)
(Dr.P. Babu) (Archana Wadhwa)
Member (Technical) Member (Judicial)
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