Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Nashik vs Rps/17-19/Nsk/2013 Dated 21.01.2013 ... on 27 April, 2015
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. IV APPEAL NO. APPELLANT RESPONDENT IMPUGNED ORDER E/86760/13 M/s Tulsi Extrusion Ltd. Commissioner of Central Excise, Nashik RPS/20-22/NSK/2013 dated 21.01.2013 passed by the CCE & Customs (Appeals), Nashik. E/86761/13 M/s Tulsi Extrusion Ltd. Commissioner of Central Excise, Nashik RPS/17-19/NSK/2013 dated 21.01.2013 passed by the CCE & Customs (Appeals), Nashik. E/86966/13 Mr. Mukesh Sangla Commissioner of Central Excise, Nashik RPS/17-19/NSK/2013 dated 21.01.2013 passed by the CCE & Customs (Appeals), Nashik. For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) =====================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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Appearance
Shri J.C. Patel, Advocate with
Shri B.B. Kadam, Advocate
: For Appellants
Shri Rakesh Goyal, Addl. Commr. (A.R.)
: For Respondent
CORAM:
HONBLE SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL)
Date of Hearing : 27.04.2015 Date of Decision: 30.07.2015
ORDER NO.......................................................
Per: Anil Choudhary:
The appellants (i) M/s Tulsi Extrusions Ltd -Unit No. 1 is the appellant in appeal number E/86761/13 and (ii) Tulsi extrusions Ltd - Unit No.2 (TEL) is the appellant in appeal No. E/86760/13, have preferred the present appeals against Order-in-Appeal No. RPS/17-19/NSK/2013 dated 21.01.2013 and RPS/20-22/NSK/2013 dated 21.01.2013 respectively. The appellant Shri Mukesh Sangla has filed appeal No. E/86966/2013 against Order-in-Appeal No. RPS/17-19/NSK/2013 dated 21.01.2013 passed by the Commissioner (Appeals), Nasik. As all the appeals herein have common issue, arisen out of common investigation, relating to similar set of transactions, are being disposed of by a common order for convenience. The issue involved in these appeals is-whether the appellant-manufacturer have availed CENVAT credit on inputs without actually receiving the inputs.
2. The brief facts of the case are that M/s Tulsi Extrusions Ltd. (Unit No.- I) and Tulsi Extrusions Ltd. (Unit No. II) commonly known as TEL are engaged in the manufacture of PVC Pipes, fittings. They are availing CENVAT credit of inputs used in manufacture of their finished goods. Shri Khiwanmal Lohiya is Authorised Signatory of both the Units. Shri Mukesh Sangla is director of M/s Signet Overseas Ltd. (SOL) which is a registered dealer of different Plastic Polymer manufacturing companies and is supplying goods to M/s TEL.
3. M/s TEL (Unit No.1) and (Unit No.2) were issued separate show-cause notices dated 24.11.2009 alleging that during searches conducted by the officers of DGCEI, Indore at office and godown premises of M/s Signet Overseas Ltd.(SOL for short) and its associate concerns, residence of Shri Mukesh Sangla, residence of employees of M/s SOL, namely- Shri Kirti Kala, Cashier of M/s SOL, Shri Paras Patidar, Marketing Manager of M/s SOL and Shri Ravindra Pingle, godown incharge of M/s SOL, the Revenue officers seized various documents, unaccounted currency valued to Rs. 35 lakhs from residential premises of Shri Mukesh Sangla, three lap-top computers and several hand written slips at residential premises of Shri Kirti Maheshchandra Kala. Also records and documents were seized from residence of Shri Ravindra Pingle and Shri Paras Patidar.
4. It is further relevant to state that M/s.SOL had obtained registration from Central Excise Department for its depots at Indore, Daman and Mumbai. The managing director of SOL Mr. Mukesh Sangla is also director/other signatory for M/s.Kamdeep marketing Private Ltd., Indore (KMPL for short) and Swan petrochemicals Private Ltd., indore( SPET for short). M/s. SOL have manufacturing facility at Indore in the name and style of M/s logic poly products. That Shri Kirti Kala in his statement dated 06.12.2007 stated that the slips bearing details of cash transactions had been prepared by himself or by Shri C.K. Joshi, an employee of M/s. SOL. That slips show cash collection and disbursements personally done by him at the instructions of Shri Mukesh Sangla. Shri Mukesh Sangla in his statement dated 06.12.2007 stated that M/s SOL had been purchasing plastic polymers from different manufacturing companies. That M/s. SOL is registered as a 'first stage dealer' with the Central Excise Department and had been selling these polymers to various industrial users. That cash transactions in aforementioned handwritten papers denote cash receipts and cash payments made by M/s. SOL which were not reflected in their official books of accounts. The cash transaction appearing in laptop ledger of Shri Kirti Kala pertains to cash receipts on account of sale of plastic articles and polymers to different parties. That the payments made in cash appearing vide entries is on account of payment to parties to whom the sale invoices were issued without actual supply of goods. That all such parties were giving cheques for the invoice amount and they were returning the amount in cash. It was alleged by Revenue that the documents seized from the residence of Shri Pingle contained evidences regarding procurement of duty paid inputs and buyers to whom the duty paid inputs were actually sold. These documents indicated that M/s. SOL and its other associates had sold the duty paid polymers to different buyers without issuing any invoice.
5. It is further alleged in the show-cause notice, That scrutiny of ledgers on laptop of Sri Kala in respect of transactions pertaining to M/s Tulsi Extrusion Ltd. Unit No. 1 and Unit No.2 revealed that the transactions collectively covered the elements viz. (i) payment in cash (ii) receipt by cheques & (iii) VAT. Shri Kirti Kala in his statement dated 18.02.2009 stated that in respect of entries pertaining to M/s TEL showing cash deposit in Punjab National Bank account at Pune of M/s TEL, only Shri Mukesh Sangla could reply as he is not having any details in this regard. Shri Mukesh Sangla in his statement dated 26.02.2009 stated that the amount deposited in bank account of M/s TEL has got nothing to do with the transaction of M/s Signet Overseas as it was amount of M/s TEL only and M/s SOL has just provided assistance to M/s TEL in depositing such amount in their accounts. It was contended in show-cause notice that one of the files seized from office premises of Shri Mukesh Sangla contained a letter written by Shri Dilip Shirke of M/s SOL, Pune to M/s TEL, Jalgaon wherein he had informed M/s TEL that an amount of Rs. 23,50,000/- has been deposited by him in Punjab National Bank account of M/s TEL. In order to verify the contents of the letter, statement of Dilip Shirke was recorded on 28.04.2009 wherein he stated that the said money was given to him by some employee of M/s TEL and he had deposited the said amount in the bank account of M/s TEL, as requested. That he had received message from his Indore office to help the employee of M/s TEL in depositing the said amount in bank account of M/s TEL. That as per his knowledge the said amount has got no connection with business transaction between M/s SOL and M/s TEL., he had provided only assistance and that he does not know Shri Lohiya of M/s TEL.
6. The show-cause notices were issued on the basis of documents seized and statements of employees related to M/s SOL, buyers of some of the polymers in cash and documents seized from various places and premises. It was alleged that the transactions on Shri Kirti Kalas laptop indicated that cash payment made to M/s TEL were not reflected in the statutory ledgers of M/s SOL and associates. It was alleged that in respect of M/s TEL all the sales have been shown from Mumbai depot/office of M/s SOL & associates, while the cash transactions have been dealt with from Indore and also in a few cases through Hawala agents. That in respect of bogus invoices issued by M/s SOL from Indore office, it was alleged that M/s SOL has been arranging fake/bogus transportation documents to all such customers to whom bogus invoice has been issued, as admitted by Shri Paras Patidar, Marketing Manager of M/s SOL. That although in case of TEL, all the transportation of polymers have been shown from Mumbai, it is on record that M/s SOL has been issuing bogus invoices to their customers for enabling them to avail CENVAT credit on such bogus invoices. From scrutiny of records seized from both the units of M/s TEL it appeared that the credit was availed on the basis of invoices of polymers (inputs) issued by M/s DCW, Shahpuram through M/s SOL. While many consignments had been transported directly from M/s DCW to M/s TEL, it was also found that M/s SOL has also issued cenvatable invoices from their depot situated in Mumbai which were accompanied with copies of LRs of different transport companies. The enquiry was taken up with all such transport company. One of the transport company viz. M/s Shree Ganesh Transport had issued many LRs and on verification of the address, it was found that no such transport company ever functioned or even existed at the given address. Summons were also issued to Shri Khiwanmal Lohiya, authorized signatory of M/s TEL who refused to comment upon the ledger entries appearing in laptop of Shri Kirti Kala in respect of M/s TEL and stated that all the material/inputs on which credit has been availed by them were received in their factory. Shri Lohiya during his statement dated 21.04.2009 produced the bank statement and freight ledger showing freight payment made by M/s TEL to M/s Shree Ganesh Transport. He also stated that the transport from Mumbai was arranged by M/s SOL, and they only made payment to the transporter. He also stated that in case of Pune, they do not have any staff and therefore in case of sales made at Pune, the staff of M/s SOL collects the payment on their behalf and deposited in our (TEL) bank account. He also stated that they never received any cash amount from M/s SOL and cannot comment upon the entries in ledger maintained by Shri Kirti Kala in his laptop. The show-cause notice further alleged that M/s TEL has availed credit of duty paid on invoices issued by M/s SOL, whereas no goods were actually consigned by M/s SOL to M/s TEL.
7. Based on above investigation both the units of M/s TEL were issued separate show-cause notices dated 24.11.2009 wherein demand of Cenvat of Rs. 49,85,889/-(on unit No. 1) and Rs. 22,55,284/-(unit No.II) was proposed against them in terms of Rule 14 of the CCR, 2004 read with Section 11A of the Central Excise Act. 1944. It was also proposed to impose penalty under Section 11AC and interest under section 11AB. Shri Lohiya and Shri Mukesh Sangla were also called upon to show-cause as to why personal penalty under Rule 26 or 27 be not imposed upon them.
8. The appellants contested the show-cause notice and filed reply to show-cause notices on merits. M/s TEL also requested the adjudicating authority to grant cross examination of employees of M/s SOL, i.e Shri Kirti Kala, Shri Ravindra Pingle, Shri Paras Patidar as well as Shri Mukesh Sangla (Director). They also requested to grant cross examination of some other persons/purchasers of goods from M/s SOL in cash as well as persons whose statements were relied upon in the show-cause notice. The appellant- M/s TEL pleaded that even from the statement of employees of M/s SOL and Shri Mukesh Sangla, it nowhere appears that the allegation made against them are correct, rather the statements are self contradictory. The request for cross examination was denied without any cogent reason. The appellant reserved its right to contest the denial of opportunity to cross-examine. It was further contended, that the goods/inputs consigned by M/s SOL has been received and consumed by them. They also produced the cost accountant certificate certifying the consumption. That Shri Kirti Kala or Shri Mukesh Sangla have not named any person to whom the cash was delivered by them and hence the statement cannot be relied upon. That the record maintained by them (TEL) was not questioned. Further the statement given by Mr. R. Pingle being contradicted on the facts, hence it was necessary to verify the validity of the statement by way of cross examination. Attention was drawn to the statement of Mr. Sangla recorded on 26/2/09 wherein in answer to question number 23, it was stated that the cash transactions with respect to TEL are in respect of assistance and have no connection with the purchase transactions between them. Further reliance was placed on the statement of Mr. Dilip Shirke (employee of SOL) wherein he clearly mentioned that the amount deposited by him in the bank did not have any connection of business transaction between the assessee-appellant and M/s. SOL. Mr. Dilip had categorically stated that he had provided necessary assistance to the employee of the appellant in depositing the money in the bank. It was further contended that in view of the fact that Mr. Kirti Kala have stated that he does not know or recognise any person of the appellant to whom the alleged cash was given and further stated that such transactions can be explained only by the Dir Mr. Mukesh Sangla. Thus the statement of Mr. Kala is unreliable in absence of cross examination. It was further urged that the show-cause notice covers invoices where the goods have been transported by Ganesh Transport Company, in spite of the fact that different transporters were engaged for transport of inputs consigned by SOL to the appellant-TEL. Further the appellant have been purchasing raw materials from SOL since 2002, but only some purchase invoices for the period April 2006 to September 2007 are alleged to be bogus. Further investigation failed to verify the lorry Numbers or details of the owners. Further investigation have not found any errors or anything suspicious in their accounts and records maintained by the appellant in the normal course of business. The appellants maintain proper records of receipt, consumption and utilisation of inputs in the production. The investigation have also failed to consider the input-output norms applicable to the products of the appellant. No verification of physical stock have been done. Further no reconciliation have been attempted by the investigation as regards the alleged cash deposit with respect to cheques issued by TEL. Further total quantity of resin comes to 7,09,000 kg, allegedly purchased against bogus invoices. That there is no allegation as to bogus clearance of the inputs, as such, and/or any error in the production records. Further the explanation given by the appellant since the beginning as regards assistance provided by staff of SOL in depositing, in bank, the money belonging to the appellant have not been found untrue and hence the whole allegation in the show-cause notice is vitiated. Further reliance was placed on the certificate of the cost accountant, which did not indicate any abnormal or high consumption of raw materials resin, in the manufacturer of pipes. Reliance was also placed on the standard input-output norms which provides that for the manufacture of one KG of rigid PVC pipe, PVC resin required is 0.966 KG. As per the certificate of cost accountant the consumption of appellant for the production of one KG pipe is 0.94 to 0.98 KG resin.
The appellant Shri Mukesh Sangla also filed reply to the show-cause notice stating therein that they've actually supplied the inputs (resin) to the appellantTEL. Further substantial quantity of resin was dispatched directly to TEL from DCW, the payment of which was collected by SOL.
Further from the pattern of bank transactions it is evident that there is no one-to-one correlation between the cheques received from TEL and withdrawls made in cash. It is also a matter of record that the investigation officers during investigation, retrieved voluminous records from the office of TEL and also recorded statements of the various persons/staff. However the investigation did not come across any instance/document on record to support the allegation of Revenue, that the appellantTEL have received only the invoices without the corresponding goods.
9. The adjudicating authority after declining the request for cross examination, proceeded with the adjudication proceedings, and vide Order-in-Original Nos. 83/Addl./Adj/2010 dated 31.12.2010 and 84/Addl./Adj/2010 dated 31.12.2010 confirmed the proposed demand with equal amount of penalty under Section 11AC of the Act read with Rule 15 of CCR's along with interest under Section 11AB against M/s TEL (Unit No. 1) and Unit No.2. Personal penalties were also imposed upon Shri Khiwanmal Lohiya and Shri Mukesh Sangla.
10. Being aggrieved the appellants herein and Mr. Lohia as well as Mr. Sangla filed appeals before Commissioner (Appeals) who ordered to pre-deposit the amount of tax in dispute. Since the pre-deposit was not made, the appeals were dismissed on grounds of non compliance. The appellants filed appeal before this Tribunal. Vide Order dated 10.04.2012 this Tribunal remanded the case back to the Commissioner (Appeals) after ordering pre-deposit of Rs. 5 lakhs by the appellant-manufacturer.
11. The Commissioner (Appeals) pursuant to remand, vide Order-in-Appeal No. RPS/17-19/NSK/2013 dated 21.01.2013 and RPS/20-22/NSK/2013 dated 21.01.2013 rejected the appeal of manufacturer-TEL and modified the adjudication orders to the extent that in case of appeal against Orderin-Original No. 84/Addl./Adj./2010 dated 31.03.2011 the penalty upon Shri Lohiya and Shri Mukesh Sangla was set aside whereas in case of appeals against Order-in-Original No. 83/Addl./Adj./2010 dated 31.03.2011 dated 31.01.2011 the penalty on Shri Lohiya was set aside and penalty upon Shri Mukesh Sangla was reduced to Rs. 5,04,839/-.
12. Aggrieved with the aforesaid Orders-in-Appeal both the units of M/s TEL and Shri Mukesh Sangla has filed the present appeals.
13. Learned Counsel for the Appellant-M/s TEL has raised the following grounds:-
(i) The hand written slips retrieved from Shri Kirti Kala has got no evidentiary value. That the ledger maintained in the laptop computer of Shri Kirti Kala was not made in the ordinary course of business and hence not reliable.
(ii) That there is no admission of return of cash either by Shri Mukesh Sangla or Shri Lohiya from M/s SOL to M/s TEL, against the invoices issued by M/s SOL as may be seen from their statements. That even Shri Kirti Kala did not state that he has disbursed any cash to M/s TEL.
(iii) That the computer printouts of laptop cannot be relied upon as it has got no evidentiary value in terms of Section 36B of Central Excise Act.
(iv) That the adjudicating authority has erred in refusing cross examination of the persons, associated with M/s SOL and their alleged buyers of goods in cash, on the ground that since cash was deposited in the bank account of M/s TEL, the cross examination is not required. The adjudicating authority ought to have observed that M/s TEL had produced the details of their sales invoices, against which the cash received was deposited in their bank accounts and hence the same cannot be said to have been received from M/s SOL. The cross examination was necessary to prove that the cash deposited in bank account originated from M/s SOL. He also submits that the cross examination was necessary as all the evidences and statements relied upon were of third party. He relies upon the judgment in Basudev Garg Vs. CCU 2013 (294) ELT 353 (DEL) and Charminar Bottling Co. Pvt. Ltd. Vs. CCE 2005 (192) ELT 1057.
(v) That the statement relied upon are by way of general statement in respect of other parties, which are not applicable in present appellants case. That even though the employee from M/s. SOL has stated that in some cases Cenvatable invoices were issued without actual supply of goods, but it can be seen that the name of M/s TEL does not appear in their statement. That Shri Mukesh Sangla, director of M/s SOL nowhere in his statements has stated that M/s SOL has issued invoices to M/s TEL without delivery of goods. That even Mr. Dilip Shirke, employee of M/s SOL has stated that the amount which was deposited in bank account of M/s TEL, belonged to M/s TEL and he had only assisted in deposit.
(vi) That the money deposited in bank account of M/s TEL was collected by the employees of M/s TEL from the Farmers/Dealers and the same was apparent from the ledger of M/s TEL. The lower authorities have not found the contention untrue. The Ld. Commissioner (Appeals) ought to have appreciated that cross examination was demanded by the appellant wherein it was clearly stated that cross examination was must so as to find out the correct facts in respect of alleged cash transaction, which was not allowed. More so, the copy of entries on the laptop were not furnished to the Appellant. The letter of Shri Dilip Shirke relied upon by the Commissioner (Appeals) was neither relied upon in the show-cause notice nor a copy given to the appellant, therefore such finding are based on assumption and presumption.
(vii) That the demand has been confirmed only on the ground that the office of Shree Ganesh Transport one of the transporter who had transported goods from Mumbai Depot of M/s SOL to M/s TEL was not found. However the same cannot be the basis for confirming demand, as the registration numbers of vehicles were available on record, which was not investigated. The investigating officers did not verify the fact from the owners/ truck drivers of such vehicles. Hence demand is erroneous.
(viii) That M/s TEL had produced copies of invoices, material reconciliation giving input-output norms, records of money receipt, entries of freight payments, which conclusively proves that the goods consigned by M/s SOL were received and consumed by M/s TEL. That none of the employee of SOL stated name of the appellant with regard to supply of invoices without material, therefore findings are wrong and contradictory to the factual position.
(ix) Mr. Kirti Kala stated in his statement that he does not know or recognize any person of the appellant to whom allegedly cash was given and such cash transactions can only be explained by Mr. Mukesh Sangla. That it has to be appreciated that the huge amount of cash given to the extent of Rs. 3.8 crores to some person, whose identity is not recognized by the Accountant of M/s. SOL, is absolutely unbelievable.
(x) That no discrepancy was found in the statutory and excise records of M/s TEL which conclusively proves that the goods were received and consumed in their factory.
(xi) There are no evidences that the invoices were supplied without physical receipt of the goods. No allegation can be confirmed against them, only based on some probability as held in the case of CCE Vs. Brims Products 2011 (271) E.LT. 184 (Pat.), where it was held by Hon'ble High Court that since the charge is regarding clandestine manufacture and removal of finished product for evading excise duty, the same cannot be held to be proved on the basis of principle of preponderance of probabilities and the Revenue has to prove the same beyond doubt.
(xii) The Ld. Counsel further relies upon the judgment of this Tribunal in case of CCE Vs. Peejay Int. 2010 (255) ELT 418 (TRI DEL), CCE Vs. Shakti Roll Cold Strip 2008 (229) ELT 661, Arvind Enterprises Vs. CCE, Delhi 2013 (296) ELT 253, Monarch Metal Vs. CCE, Ahmedabad 2010 (261) ELT 508, CCE Vs. Parmatma Singh 2011 (266) ELT 67 to enforce his submission.
14. The Ld. A.R. while arguing for the Revenue places reliance upon the statement of employees of M/s SOL. He submits that Shri Kirti Kala, Cashier of M/s SOL has admitted maintaining lap top entries and hand written paper slips, showing the receipt and disposal of cash by him. That Shri Paras Patidar, Marketing Manager of M/s SOL had admitted the purchase of LRs from transporters on payment of cash of Rs.100/- per LR. That Shri Mukesh Sangla, Director of M/s SOL at initial stage of investigation admitted that handwritten paper slips shows cash receipts against cheques received on account of invoices issued without any corresponding goods. That he also accepted that in some cases of sales, M/s SOL issued cenvatable invoices without delivery of goods and that the cash receipts are not reflected in their accounts. That the persons connected with M/s SOL also accepted having arranged bogus transport documents and LRS. That Mr. Dilip Shirke, Marketing Officer, SOL who admitted to depositing cash of Rs. 23,50,000/- in bank account of TEL, at Pune. He further submits that in case of Appeal No. E/86760/13, the show-cause notice shows the deposit of cash of Rs. 3.85 crore in account of M/s TEL. That the statements of sales shown by M/s TEL against which cash was shown to have been received by M/s TEL, they did not show the details of goods sold against the cash deposited. That M/s. Ganesh Transport Co. is not in existence and hence it shows that the LRs shown to have been issued by said concern are bogus LRs and there has been no transportation of goods. The Ld. A.R. also relies upon the judgment in Collector of Customs, Madras and Others Vs. D. Bhoormull 1983 (13) E.L.T. 1546 (S.C.). He says that the cross examination of employees of M/s SOL and other persons are not necessary. He relies upon the judgment of Shalini Steels Pvt. Ltd. Vs. CCU & C. EX., Hyderabad 2011 (269) E.L.T. 485 (A.P.), Ahmednagar Rolling Mills Pvt. Ltd. Vs. CCE., Aurangabad 2014 (300) E.L.T. 119 (Tri. - Mumbai), Fortune Impex Vs. CCU, Calcutta 2001 (138) E.L.T. 556 (Tri. - Kolkata) and Kanungo & Co. CCU, Calcutta 1983 (13) ELT 1486 (SC).
15. Having considered the rival submissions, I find that the demands have arisen as a result of investigation carried out by the officers at residential premises of Shri Kirti Kala and other employees, director of M/s SOL Shri Mukesh Sangla, office and godown of M/s SOL and its associate concerns. The hand written slips and lap top seized from the residence of Shri Kala, contained details of purported cash transactions by M/s SOL. Shri Kirti Kala and Shri Mukesh Sangla stated that the entries pertains to cash received on account of sale of polymers without issue of invoices and cash payments which included the payments made in lieu of cheques to the parties who purchased bogus invoices without delivery of goods. Reliance has also been placed upon the statement of Ravindra Pingle the godown Incharge at Indore and Paras Patidar, Marketing Manager of M/s SOL. The officers also investigated one of the transporter Shree Ganesh Transport who had transported goods from Mumbai godown of M/s SOL to M/s TEL but the same was found to be non existing. Further reliance is placed upon the letter written by employee of M/s SOL, Mr. Dilip Shirke informing M/s TEL of deposit of Rs. 23.5 lakhs.
15.1 I find that although the impugned orders places reliance upon statement dated 06.12.2007 of Shri Kirti Kala and statement dated 06.12.2007 of Shri Mukesh Sangla wherein he stated that the entries in the laptop pertain to sale of polymers and receipt of cash against bogus invoices. However I find that in his statement dated 18.02.2009 Shri Kiti Kala stated to have knowledge about the cash details appearing in his laptop but in respect of M/s TEL he stated that only Shri Mukesh Sangla can explain such entries. Shri Mukesh Sangla in his statement dated 26.02.2009 has stated that the cash amount deposited in bank accounts of M/s TEL has got no connection with M/s SOL, as the same pertain to M/s TEL and they provided assistance in depositing such amount in bank. Further I find that Shri Lohiya, authorized signatory of M/s TEL in his statement had clearly stated that the cash deposited in bank account of M/s TEL was on account of their sale proceeds of finished goods and in absence of any employee at Pune, M/s SOL helped them in depositing such amount in bank.
15.2 Further, I find that neither the statement of Shri Ravindra Pingle, the godown Incharge nor the statement of Shri Paras Patidar points out any modus operandi in respect of M/s TEL having been issued duty paid invoices by M/s SOL, without actual delivery of goods. M/s TEL had produced the documents towards deposit of cash showing the receipt of the same from buyers/dealers of finished goods. These documents remained undisputed, as not found untrue, by the adjudicating authority, which shows that the contention made by M/s TEL is correct.
15.3 I find that M/s TEL had sought cross examination of the employees of M/s SOL and other persons whose statements were relied upon. The adjudicating authority refused permission on the ground that the investigation shows that the cash was deposited by M/s SOL and the statements supported the allegation, hence cross examination cannot be granted. This finding of the adjudicating authority was upheld by the Appellate Commissioner. I find that the refusal to grant cross examination is not legal in the given circumstances. As except the entries found in laptop of Shri Kirti Kala which was not the regular record maintained in ordinary course of business by M/s SOL, there are no other evidence to support the allegation of the revenue. Being third party record and that too not the regular records, M/s TEL had right to determine and test the veracity of such entries by cross examining the persons who maintained the records and whose statements were recorded, which led to the implication of M/s TEL. The cross examination was much necessary in the facts of the case, when the statements of Shri Kirti Kala or Shri Mukesh Sangla or any other employee did not mention M/s TEL as having received the bogus invoice or the amount deposited in bank account of M/s TEL as pertaining to M/s SOL. I thus find that the statements recorded during course of investigation do not support the allegations made against M/s TEL. In reaching to such a conclusion I take support of the judgment of the Honble High Court of Delhi in the case of Basudev Garg Vs. CCU 2013 (294) ELT 353 (Del.) and Tribunal judgment in case of Charminar Bottling Co. Pvt. Ltd. Vs. CCE 2005 (192) ELT 1057. It is held that, by denial of cross examination, opportunity of hearing is denied. Thus the findings of the courts below are vitiated.
15.4 Further the investigation were mainly conducted at Indore and except visit to place of transporter - Shri Ganesh Transport, no investigation has been conducted at Mumbai godown of M/s SOL from where the invoices were issued to M/s TEL. Some consignments were also received from M/s DCW (directly) through account of M/s SOL. No investigation has been conducted at Mumbai godown nor the records of said premises has been relied upon to show that the goods were not dispatched from the Mumbai Godown of M/s SOL and if dispatched having been diverted elsewhere. In case of goods received from M/s DCW, there is no investigation as to whether the goods were diverted elsewhere and not received by M/s TEL. The investigation is silent upon all these issues. Further it is not appearing on record that if the goods were not received by the Units of M/s TEL in that case what was the alternate source from where M/s TEL procured the goods. When the goods (inputs) were found to have been entered in records of M/s TEL and were shown to have been consumed in the production, which remains undisputed, I hold that looking to all these aspects the demand is not sustainable.
15.5 The Cenvat demand is also based on the premise that the transporter - Shri Ganesh Transport was not found at the given address and it did not exist at the address given in the LR. The counsel for M/s TEL has urged that only on the basis that the transporter was not found to be existing at the stage of enquiry, it cannot be said that no goods were transported from Mumbai godown of M/s SOL to M/s TEL. The Revenue did not ascertain the facts from the vehicle owners or the drivers in spite of the fact that vehicles registration numbers were appearing in LR. That it can be seen that Shri Lohiya had produced the relevant record i.e freight ledger showing payment of freight to the transporter and other records showing the receipt of goods which is not disputed. I accept the contention of the appellants and I hold that Cenvat demand cannot be made on the ground that the transporter was found to be non existent, at the later stage of investigation.
15.6 The Revenue has relied upon the documentary evidences seized from residential premises of the employees of M s. SOL, data retrieved from lap top of employee of M/s. SOL and statements of different persons. However I find that none of the statements supports the allegation of the Revenue. Further the records maintained by M/s TEL showing the receipt of goods at their factory, its consumption and production of finished goods, remains uncontroverted. The staff or any employee of M/s TEL maintaining these records has nowhere stated anything contrary to the above facts. I therefore do not find any evidences/instances or statements which doubted the authenticity of the said records. There is no evidence on record which proves that M/s TEL had not maintained proper account of receipt, and consumption of raw materials and manufacture & clearance of finished goods. The transport Bilties (LRs) and transport slips showing the receipt of goods at factory of M/s TEL is on record. There is no positive evidence that any goods/raw material were diverted elsewhere. The findings in the impugned order are contrary to the fact, as all the goods shown in the invoices issued in favour of M/s TEL, by M/s. SOL, were duly recorded in statutory records of both the units of M/s TEL. In such a case the demand cannot be upheld. It have been held by this Tribunal in the case of Commissioner of CCE Ludhiana V/s. Pee Jay International Ltd. 2010 (255) ELT. 418 (Tri Del) wherein it is held by the Tribunal that-
Undoubtedly, statements of certain persons like Shri R.M. Bhute of M/s. DCL Polyester Ltd., Nagpur, Shri Jaya Nandgopal Pillai V.P. Marketing (Yarn), Shri Waman B. Wankhade, Clerk of M/s. New Golden Transport Co. and Shri Ashok Kumar, Accountant of M/s. Bhawana/Ashish Enterprises, Ludhiana make reference to documents like LRs with specific numbers and dates, GRs with specific numbers and dates, and the facts like dispatch of inputs in the name of the respondents, delivery thereof and receipt by M/s. Ashish Enterprises or M/s. Bhawana Enterprises, transportation of inputs from the manufacturer to those dealers of the respondents etc. The test report also discloses that some of the final product did not disclose presence of PFY as one of the elements having been utilized in the manufacture of such final product. As against this, it is equally true that the stock verification records maintained by the respondents did not disclose any infirmity which could reveal non receipt of any part of such inputs which were allegedly diverted to other parties. Undisputedly, the records do not disclose infirmity of any sort inspite of the fact that some of the final products revealed absence of PFY element therein, nor the records disclosed any discrepancy which could reveal and/or co-relate to the inputs allegedly diverted to other parties. In fact, as rightly observed by the Commissioner, there appears to be no attempt made at any point of time in the course of investigation to establish such co-relation between the inputs alleged to have been diverted and the final product which was found without the presence of the PFY element. In fact, it was purely elementary which the investigation agency ought to have known in order to establish the charge of clandestine disposal of the inputs without utilization thereof in the manufacture of the final product. This aspect should have been clearly established by the investigation machinery. In this regard, neither there was any proper investigation nor appropriate efforts on the part of the department to bring on the record the appropriate and cogent evidence.
14.?Merely because the numbers and dates of LRs and GRs in the statement of the representatives of the manufacturer of the inputs and the representative of the dealers as well as of the transporters from the manufacturer of inputs to the dealers tally, that by itself, will not be a conclusive and satisfactory evidence about diversion of the inputs by the respondent in the open market, in the facts and circumstances of the case. It is not in dispute that the dealers as well as the respondents both are having their establishment in the District of Ludhiana. It is not in dispute that the statutory records maintained by the respondents do not disclose absence of receipt of such inputs by the respondent in their factory. It is not in dispute that the records maintained by the respondents were never doubted by the department. On the contrary, the same were verified and confirmed. In these circumstances, in the absence of cogent evidence about the clandestine disposal of the inputs without utilization thereof in the manufacture of the final product by the respondent, we fail to understand as to how the demand in relation to the amount over and above Rs. 44,09,228/- can be sustained. 15.7 Further in case of B.M.A. Zinc Pvt. Ltd. Vs. Commissioner of Central Excise, Jaipur 2005 (191) E.L.T. 792 (Tri. - Del.), the Tribunal held that We have considered the submissions of both the sides. The factual position which emerges from the records is that the Appellants had taken Modvat credit of Rs. 5,00,987/- on Copper scrap weighing 52.208 MT. They have also dispatched copper ingots weighing 53.325 MT after payment of Central Excise duty amounting to Rs. 7,01,838/-. The fact of clearing the copper ingots on payment of duty which is more than the amount of credit availed of by the appellants has not been disputed by the Revenue. If the Revenues case is that inputs were not received by the Appellants is accepted, the question remains as to how the Appellants have dispatched copper ingots, that too on payment of duty of more than Rs. 2 lakhs than the amount of credit availed by them. This aspect of the matter has not been considered at all. In view of the fact that the Appellants have shown clearance of copper ingots and paid duty goes to show that they have received the scrap and used the same in the manufacture of copper ingots. We, therefore, set aside the order and allow the Appeal. 15.8 In case of Hiren Aluminium Ltd. Vs. CCE, Valsad 2009 (245) E.L.T. 386 (Tri. - Ahmd.) it was held that-
15.?At this stage we may discuss the various decisions relied upon by the ld. Advocate. Tribunal in the case of M/s. Tejwal Dyestuff Industries [2007 (216) E.L.T. 310 (Tri.-Ahmd.)], by majority decision it was held that if it is not disputed that the inputs were used for the final product and statutory returns were filed, the lethargy of the Revenue officers in not verifying the relevant statutory records and invoices, as to what exact quantity of raw materials was used in the final product and that in how many final products such inputs could have been used, altogether create a doubt as to the correctness of the contents of the statements. The preponderance of probabilities in the context of all other evidences vis-a-vis the confessional statements do not lead to the conclusion of inadmissibility of Modvat/Cenvat credit, as reached by the Commissioner. In the present case also, as we have already discussed, the entire case of the Revenue is based only on wrong mentioning of vehicle numbers in the invoices issued by the dealers, which stand duly explained by the appellant and there being no other effective evidence to show that such inputs were not used in the manufacture of the final product, the denial of Modvat credit would not be justified. Similarly in the case of CCE, Jalandhar v. Bhawani Shanakar Castings Ltd. [2006 (200) E.L.T. 540 (Tri. - Del.)], it was held that merely because wrong vehicle numbers were given in the invoices, the same cannot be held to be fake and non-receipt of inputs under the cover of the same cannot be upheld. Further, we find that the Tribunal in the case of CCE, Chandigarh v. Shakti Roll Cold Strips Pvt. Ltd. [2007 (80) RLT 267 (CESTAT-Del.), by taking note of the earlier decisions of the Tribunal, has held that the credit cannot be denied only on the ground that vehicle numbers given in the invoices were not of the trucks, when payment for goods was made by cheque/draft and inputs were used in the manufacture of final product which were cleared on payment of duty, RT-12 returns were assessed and there was no evidence of use of alternative inputs. Accordingly, Tribunal rejected the appeal filed by the Revenue. The matter was taken up by the Revenue before the Honble High Court of Punjab & Haryana, who vide their judgment as reported in 2008 (229) E.L.T. 661 (P&H) = 2008 (87) RLT 793 (P&H) rejected the same. Similarly in the case of M/s. Steel Tubes of India Ltd. v. CCE, Indore [2008 (87) RLT 630 (CESTAT-Del.)], it was held that merely because vehicle numbers mentioned in some of the invoices are not of transport vehicles, the same is not sufficient to deny the credit, when there is evidence of receipt and utilization of inputs and no evidence of diversion is available.
16.?The law as declared in the above referred judgment, when applied to the peculiar facts of the present case leads to only one inevitable conclusion that the inputs were actually received by the appellant, though in some of the cases fresh invoices were raised by the dealers, in between with a sole purpose of availing sales tax benefit, credit cannot be denied on that ground.. As such, we find no justification to uphold the impugned order of Commissioner denying the Modvat credit to M/s. Hiren Aluminium Ltd. and imposing penalties upon them as also upon other appellants. Accordingly, we allow all the appeals with consequential relief to the appellants. 15.9 Further I also find that the similar analogy has been adopted by the Tribunal in the case of M/s Motherson Sumi Electric Wires Vs. CCE, Noida 2009 (246) ELT 651 (TRI), CCE, Mumbai Vs. Nimesh Engineering Pvt. Ltd. 2009 (237) ELT 726 (TRI) and Tejwal Dyetuff Ind. Vs. CCE, Ahmedabad 2007 (216) ELT 310.
15.10 In case of CCE, Ludhiana Vs. Parmatma Singh Jatinder Singh Alloys Pvt. Ltd. 2011 (266) E.L.T. 67 (Tri. - Del.), the Tribunal held that-
The Revenue has reiterated the same very reasoning adopted by the original adjudicating authority for denial of credit. It is seen that apart from the wrong vehicle numbers, there is virtually no other evidence available on record to reflect upon the fact that the inputs were not actually received by the respondent and were diverted to the other SSI units. The observation of the original adjudicating authority as regards diversion of the inputs is based on conjectures and surmises inasmuch as there is virtually no evidence on record showing such diversion. Further, the appellants have also entered the said inputs in their RG-23A Part-I records and have shown the consumption of the same for manufacture of the final product. The said plea of the appellant does not stand rebutted by the revenue. If that be so, the allegation as regards diversion cannot be upheld. Once the assessee takes the modvat credit on the inputs, he is under legal obligation to simultaneously enter the inputs in their stock record and to show the utilisation of the same in the manufacture of the final product. It is not the revenue case that credit was availed without entering the inputs in the records. If the inputs have also been entered and used in the final product, which stand cleared, on payment of duty, the denial of credit on the sole ground that the vehicle numbers were not found to be genuine cannot be made the basis for arriving at a finding against the assessee. The assessees explanation that such use of fake number plate by the transporter who are operating one or two trucks is something which is not uncommon and such use is very frequent, has some force.
Similarly, the respondents contention that the consideration for the goods was paid through cheques, freight payments were made by vouchers and there is no other evidence on record, have to be held as tilting the weight of evidence in their favour. Further, the reliance on the various decisions of the Tribunal is appropriate inasmuch as in identical circumstances it was held that wrong vehicle numbers cannot be made the basis for denial of credit where the payments for the inputs have been made by cheque, inputs are entered in records used in the manufacture of the final product, which were cleared on payment of duty.
16. In view of above discussions and findings I hold that case of Revenue does not stand. The impugned Order-in-Appeals are set aside. The demand and penalty against M/s TEL Unit No.1 and Unit No.2 are not sustainable and therefore are set aside.
16.1 As the demands and penalties involved in instant appeals against M/s Tulsi Extrusions Ltd. Unit No.1 and Unit No.2 are set aside, consequentially the penalty upon Shri Mukesh Sangla is also set aside.
17. Thus, the appeals are allowed with consequential reliefs, if any.
(Pronounced in Court on 30.07.2015) (Anil Choudhary) Member (Judicial) Sp 26