Custom, Excise & Service Tax Tribunal
Daman vs Metal Gems on 5 October, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST ZONAL BENCH : AHMEDABAD
REGIONAL BENCH - COURT NO. 3
EXCISE Appeal No. 10984 of 2019-DB
[E/CROSS/10537/2019]
[Arising out of Order-in-Original/Appeal No DMN-EXCUS-000-COM-34-36-18-19 dated
31.01.2019 passed by Commissioner (Appeals) Commissioner of Central Excise, Customs
and Service Tax-DAMAN]
Commissioner of Central Excise & ST, Daman .... Appellant
3rd Floor, Adarsh Dham Building, Vapi-Daman Road,
Vapi Opp.Vapi Town Police Station,
Vapi, Gujarat - 396191
VERSUS
Metal Gems .... Respondent
Plot No 113-120 Panchal Udyog Nagar Bhimpore Nani Daman, DAMAN, DAMAN AND DIU-396210.
WITH EXCISE Appeal No. 10985 of 2019-DB [E/CROSS/10653/2019] [Arising out of Order-in-Original/Appeal No DMN-EXCUS-000-COM-34-36-18-19 dated 31.01.2019 passed by Commissioner (Appeals) Commissioner of Central Excise, Customs and Service Tax-DAMAN] Commissioner of Central Excise & ST, Daman .... Appellant 3rd Floor, Adarsh Dham Building, Vapi-Daman Road, Vapi Opp.Vapi Town Police Station, Vapi, Gujarat - 396191 VERSUS Met India .... Respondent Plot No 100-101 Panchal Udyog Nagar Bhimpore Nani Daman, DAMAN, DAMAN AND DIU-396210.
APPEARANCE :
Shri CK Tiwari, Joint Commissioner (AR) for the Appellant Shri Ankur Upadhyay, Advocate for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) DATE OF HEARING : 25.08.2023 DATE OF DECISION : 05.10.2023 2 Excise Appeal No. 10984-10985/2019-DB FINAL ORDER NO. 12204-12205/2023 RAMESH NAIR :
The present appeals are filed by the Revenue and are directed against the denovo order dated 31.01.2019 passed by the Pr. Commissioner, Central GST & Central Excise, Daman, whereby the proceeding of the show cause notice has been dropped.
2. In the beginning of the hearing, Shri CK Tiwari, learned Joint Commissioner appearing for the Revenue mentioned that there is a letter from concerned Commissionerate that they are in the process of filing 16 more appeals against other co-noticees, on which we are opined that since two appeals against the main noticees are sufficient and all the other co-
noticees names are appearing as co-respondents along with the appeal in annexure ‗C', there is no need to file additional appeals. These two appeals are sufficient even for other co-noticees. Accordingly, the appeals are taken up for disposal.
3. Brief facts of the case are that during the course of search of the factory premises of M/s Metal Gems (M/s MG) it was noticed that a quantity of 11,840.200 Kgs., of Copper Scrap and a quantity of 4,392/- Kgs. of Copper Cathode were found in excess than the recorded balance in statutory stock accounts. Similarly, comparison of the finished goods revealed that a quantity of 10,759.250 Kgs, of Copper Flats/ Strips were found in excess than the recorded balance in the statutory daily stock account maintained by M/s MG. Since the finished excisable goods viz., Copper Flats Strips weighing 10,759.250 Kg. manufactured by M/s MG found in excess were still lying within the factory premises, in ready to use condition, these goods were handed -over to the authorized representative with a direction to account for the same in their daily stock account before being cleared from factory premises. The raw material viz., the copper re-melting scrap weighing 11840.200 Kg. and 4,392/- Kgs. of Cathode which were found in excess of the balance recorded in the raw materials stock account, upon visual examination, appeared to be of the nature of local /kabadi scrap, and appeared to have been procured from local scrap merchants. The whole of such quantities of raw materials totally valued to the tune of Rs. 25,32,223/- were placed under seizure on 12.08.2005. During the course of the search 3 Excise Appeal No. 10984-10985/2019-DB carried out at the godown -cum-office premises of M/s Mex India, Mumbai and during the physical stock verification of the excisable goods lying in stock at such godown premises, it was noticed that there was a stock of 11046.240 Kgs. of finished goods of Copper & Copper Alloys. Shri Nishit S Morakhia, Proprietor of the firm, admitted that the said goods manufactured by M/s MG and M/s Mukesh Metal Pvt. Limited and cleared without payment of applicable Central Excise Duties. Therefore, the said detained excisable goods were subsequently placed under seizure on 22.11.2005. In respect of such seized excisable goods a Show Cause Notice dated 10.02.2006 was issued to the respondent proposing confiscation of goods and imposition of penalty under the provisions of Rule 25 of Central Excise Rules 2002.
4. After followed the search operations and investigation it appeared that M/s MG and M/s Met India (M/s MI) were engaged in wrong availment of Cenvat Credit of duty paid on raw materials, only on the basis of duty paying documents, without physical receipts or use in or in relation to manufacture of excisable goods and clandestine clearances of excisable goods without payment of duty and without accounting for in the statutory stock accounts. The detailed investigation indicated that none of the consignments of imported re-melted copper ingots/ wire bars, were physically received in the factory premises of M/s. MG & M/s MI but diverted in the open market in and around Delhi. It was alleged that Respondents have availed the Cenvat Credit only on the basis of duty paying documents and Lorry receipts which were issued by transporters to show the transportation of ‗imported Consignments' from Delhi to their factory premises at Daman. It was also alleged that in order to substitute the quantity of goods covered by such duty paying documents, M/s MG in collusion with others have procured required quantities of copper re-melting scrap from the local markets situated at Mumbai/ Bhiwandi and under the cover of the bills /invoices of traders. Such quantity of copper re-melting scrap were used for substitution of the quantities of re-melted copper ingots /wire bars, shown as having been received by respondents from Delhi. Thus it appeared that, in order to substitute the quantities of raw materials in respect of which M/s MG and M/s MI have availed the benefit of Cenvat Credit, they procured quantities of copper re-melting scrap from local markets, the receipts of which were not accounted for in any of the statutory or private records maintained in this regards. Accordingly upon the completion of investigation respondents were 4 Excise Appeal No. 10984-10985/2019-DB issued separate show cause notices both dated 24.04.2006 proposing disallowance of Cenvat Credit and demanding central excise duty. Out of the above said three Show cause notices, in respect of the first Show cause notice it was issued for the limited purpose of confiscation of seized goods and imposition of penalty, the same was decided by the Joint Commissioner, Central Excise & Customs, Daman vide OIO dated 31.12.2007; which was further carried in appeal before Commissioner (Appeals). The remaining two SCNs were also decided by the Commissioner, Central Excise & Customs, Daman vide both OIO dated 14.12.2007. Being aggrieved by the said Orders, the Respondents preferred appeal before the CESTAT. Vide Final Order dated 01.08.2008 CESTAT remanded back the matter for denovo adjudication. Being aggrieved by the above Order of CESTAT the department filed appeal before the Hon'ble Gujarat High Court and vide order dated 24.02.2010 the Hon'ble High Court remitted the case back to the Tribunal for fresh decision. While passing the fresh Orders in pursuance of the above Order of Hon'ble High Court of Gujarat, CESTAT vide Final Order dated 22.03.2011 once again remanded the matter to the Commissioner. Hence in pursuance thereof, the impugned Order -In-Original DMN-EXCUS-000-COM- 34 to 36-18-19 dated 31.01.2019 has been passed by the Principal Commissioner. The Ld. Principal Commissioner through the impugned order dropped the proceedings initiated under the above three show cause notices. Aggrieved by the said order Revenue is before this Tribunal.
5. Shri C.K. Tiwari Learned Joint Commissioner (AR) for the Revenue reiterated the grounds of appeals and submits that the impugned order passed by the Ld. Commissioner is not sustainable in law as the same has been passed without properly appreciating the facts and the evidence on record.
6. He submits that contradiction appearing in statutory, vis-à-vis, the private documents maintained by respondents substantiate that the imported copper ingots were not physically received in the factory premises of the respondents. The transporter i.e M/s Time and Space Haulers (TASH), had admitted to have issued only the lorry receipts for the transportation of the cenvatable goods/ imported goods from Delhi to Daman without carrying out the physical transportation of the same on commission basis. There were no entries of the transportation from Delhi to Daman in the regular booking 5 Excise Appeal No. 10984-10985/2019-DB registers or any other records maintained by the transporter for their day- to-day business operations. During the investigation from the owners of the vehicles shown used for transportation from Delhi to Daman, the vehicle owners in their respective statements stated that they have not transported any goods from Delhi to Daman. The examination report obtained from the RTO & Commercial Tax Department of the States of Rajasthan & Gujarat in respect of Check-posts manned by their officers/staff on routes taken by the transporters for movement of goods from Delhi to Daman in respect of the vehicles shown used, vis-à-vis, the quantity shown to have been transported through these vehicles revealed that none of the vehicles had crossed /passed through any of the Check-posts maintained by them. While in some cases, the vehicles were not of the type of vehicles used for transportation of goods as they were either passenger vehicles; and in few others the vehicles were not capable to transport such heavy quantity as their loading capacity is much less then the quantity shown transported by such vehicles. During the investigation, it is revealed that the containers of imported goods cleared from ICD, Tuglagabad, were returned back within one or two days after de- stuffing to their shipyards. This clearly suggests that the consignment from ICD, Tuglagabad had not travelled upto and reached M/s MG and M/s MI. The investigation carried out from the transporter of vehicles used for transportation of local scrap traders, revealed that such transporter/ vehicle owner have transported the goods i.e. copper re-melting Scraps , from various places in and around Mumbai to M/s MG & M/s MI during various times, which indicated that M/s MG & M/s MI were procuring copper remelting scrap from local scrap traders illicitly to substitute the non-receipts quantity of invoiced/imported goods.
7. He further submits that in the present matter retractions were nothing more than afterthought, made with a deliberate intent of derailing the investigations, and under the active influence of none other than Shri Rikhab V Mehta, Partner of M/s MG himself. It is settled law that the weight of material /documentary evidences is much more than any other evidence, and the adjudicating authority has grossly erred in brushing aside such documentary evidences. He placed reliance on the Judgment in the case of Mohamed Tahir Arif Bakaswala vs. State of Gujarat in Criminal Appeal No. 1899/2005 & other.
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8. He also argued that Ld. Commissioner has clearly erred in placing reliance on the decision of the Hon'ble Tribunal in the case of Motabhai Iron & Steel Industries and M/s Bajrang Castings Pvt. Ltd., which was delivered under totally different/ distinguishable facts of the case. The Ld. Adjudicating authority has not analysed the factual position discussed in the show cause notices in details and has merely relied upon the decision by making reference to the decisions which is not correct. He placed reliance on the para 5 of decision in the case of Commissioner of Central Excise Vs. Srikumar Agencies - 2008 (232) ELT 577 (SC).
9. He also submits that the Adjudicating authority has failed to note the fact that, by way of statement of Shri Keshav Singh Tomar recorded on 21.10.2005, it has been sought to ascertain the factual matrix as to how the consignments of ‗imported copper re-melted ingots' that were cleared from ICD Tughlaqabad destined to M/s MG/ M/s MI were brought to their warehouse at Ghaziabad and handled; and further transported from Delhi to Daman as per the lorry receipts prepared and issued by them. The facts as narrated by Shri Keshav Singh Tomar was recorded by way of his own version. However, the facts so stated by him in his statement dated 21.10.2005 are proved entirely false, imaginary, and also contradictory on the basis of tangible and concrete documentary evidences brought-out in the investigation. The documentary evidences seized from the possession of Shri Keshav Singh Tomar during the search of the UP Border Branch office of M/s Time & Space Haulers have clearly emerges that such documents maintained by them on day to day basis for recording business transaction in normal course of M/s. Time & Space Haulers did not carry any records of transportation of imported consignments either to M/s MG or M/s MI at Daman, thereby giving weight behind the theory that only lorry receipts were arranged by the transporter, but no actual transportation was carried out. Had the transporter carried any actual transportation of imported consignments to M/s MG and M/s MI, the relevant details would have been recorded in such daily report register/ documentary evidences seized from the transporter. Thus the abundance of documentary evidences seized from the possession of Shri Keshav Singh Tomar at UP Border Branch office; and also from Delhi main office to M/s. Time & Space Haulers in which he is an employee, clearly proves that Shri Keshav Singh Tomar was under immense influence of the key operators of the scam who are also co-noticees to mis-
7Excise Appeal No. 10984-10985/2019-DB lead the investigation. What was stated by him in his statement was found to be false and imaginery; and none of the facts declared by him were found supported by any of the documentary evidence. Therefore, the finding arrived by the Adjudicating authority in this matter is erroneous and unsubstantiated.
10. He also submits that the adjudicating authority has cast a serious doubt about the genuineness and authority of the verification reports given by the RTO Check-post authorities. Such verification reports being one given by Govt. authorities /officers based on their statutory records maintained on day-to -day basis, no efforts whatsoever has been made by the adjudicating authority in ascertaining its genuineness or about the records maintained in this regard by such Govt. authorities /officers before discarding the reports given by them as unreliable, which is grossly erroneous and hence not legal and proper.
11. He further submits that Ld. Commissioner in impugned order referring to Exhibit-Y annexed to the show cause notice wherein the Cenvat credit was alleged to be deniable on the grounds that owners of the vehicle mentioned therein have denied the transportation, the Adjudicating authority has erroneously emphasized that ‗the owner seldom travel by the vehicles and it is the drivers who are in-charge of a vehicle and their statement is sine-qua- non as per the settled law.' Accordingly, it has been sought to hold by the adjudicating authority that credit on the goods purportedly transported through vehicles appearing in Exhibit Y cannot be denied. The insistence of the adjudicating authority on recording the statement of Drivers is illogical and impractical, and hence not acceptable at all. From the investigation, the version of facts stated by the owners of the vehicles has force, in as much as, on the dates in which the vehicles were found used for transportation of imported goods from Delhi to Daman was not available at Delhi. Further, few vehicles were found not to possess requisite Road permits during the relevant times to ply between Delhi and Daman. Therefore on this ground also, the findings of the adjudicating authority are not legal and proper.
12. He also submits that the finding recorded in Para 4.4 (iii)(d) of the impugned order, referring to Exhibit -Z annexed to the show cause notices wherein the Cenvat Credit was alleged to be deniable on the grounds of the 8 Excise Appeal No. 10984-10985/2019-DB vehicles mentioned in the relevant Lorry Receipts, upon verification with the RTO authorities were found to be incapable of such transport, relying on the decision of Hon'ble Tribunal in case of Motabhai Iron & Steel Industries / AVM Brothers & Others & M/s Manish Industries etc., the adjudicating authority has erroneously observed that ‗--incorrect noting of numbers and in this case data has been produced of fake and incorrect numbered vehicle entering Daman.' Accordingly, it has been sought to hold by the adjudicating authority that credit taken on vehicles mentioned in Exhibit Z is to be allowed. All such vehicle numbers were as per the numbers mentioned on the relevant lorry receipts /bilty issued by the transporter accompanying the duty paid documents on which the credit has been taken.
13. He also argued that in terms of the statutory provision contained in Cenvat Credit Rules, 2004, the burden of maintaining proper records of receipt, disposal, consumption, and inventory of inputs and also proving admissibility of Cenvat Credit has been squarely placed on the person taking such credit. While the allegation raised in the subject matter have been made on the basis of evidence all of which were available before the adjudicating authority, instead of weighing the allegations on the basis of such material evidences, the adjudicating authority appears to have erroneously assumed that subject consignments were indeed transported to the respondents for which no evidence, whatsoever, is available on records.
14. He also submits that the unwarranted emphasis of the adjudicating authority on the investigation from other Check posts for entry in to Daman via Maharashtra and NH-8 routes on the basis of Toll Tax Booths and High ways near to Daman is totally misplaced and untenable for the reason that there cannot be any authenticity to those untenable for the reason that there cannot be any authenticity to those evidence submitted by the respondents without examining the period to which such Toll receipts are made available; and whether they were for the same time period, on the face of evidence obtained from statutory authorities such a Commercial Tax/ RTO Check-posts which were admittedly for the time period of investigation. Therefore, such state excise check post authorities are in no way concerned or accountable for the Entry and Exist of any consignment of goods other than liquor. Therefore, the adjudicating authority's findings in this regard are highly misplaced, without logic and understanding about the duties and 9 Excise Appeal No. 10984-10985/2019-DB responsibilities of different arms of Govt. department; and lacking reasoning and hence cannot be accepted.
15. He further submits that in impugned order the adjudicating authority has observed that ‗the seizure of imported Copper Cathode in the factory of M/s MG on 12.08.2005 would be a direct evidence of the said goods being received in the factory premises as it has been received on 11.08.2005 and part of the consignment of 10,164 Kg of Copper Cathode entered and issued on 11.08.2005 at Srl. No. 143 of RG 23A Part-I of M/s MG and was lying for cutting near the cutting machine for use in the melting furnace which could not accept the entire Cathode Plates'. In this regards, it is pertinent to note that the adjudicating authority has utterly failed to learn from the impugned show cause notices that which is alleged to have not been received, but in respect of which only Cenvat Credit remained availed by M/s MG and M/s MI, was in respect of ‗imported re-melted copper ingots'. Availability of ‗Copper Cathode' in the factory on 12.08.2005, in no way could indicate or substantiate receipts of ‗imported re-melted copper ingots' in respect of which the whole case has been made-out.
16. He also submits that the impugned order with regard to allegations that local kabadi Scrap procured from Bhiwandi/Mumbai and transported on the Invoices of M/s Metal Best and M/s Metro Metal by the vehicles of Jogibhai Patel brought to the factories of M/s MG and M/s MI for substitution the same in lieu of imported Copper Cathode, Wire Bars etc., the adjudicating authority has observed that ‗there is no invoice relied qua-Metro Metal or other documents of this firms.' In this regard, the adjudicating authority has lost sight of the documentary evidences that have been relied upon for the purposes issuing the show cause notices. In the seized file, few blank invoices of M/s Metro Metal and M/s Metal Best, as well as, few invoices for supply of copper scrap issued by these firms were found available.
17. As regard the observation of the adjudicating authority regarding proposal to confiscate certain goods namely Brass Rods, Copper Tubes etc. seized in the premises of M/s. Mex India of Mumbai on 12.08.2005 he submits that the adjudicating authority has clearly lost sight of the allegation 10 Excise Appeal No. 10984-10985/2019-DB contained in impugned show cause notice dated 10.02.2006 wherein it has been clearly brought that due to the reason that the authorized signatory present during the course of search being unable to produce licit documents for procurement of such goods, the goods were initially placed under detention. It was only after detailed investigation in to the source of such excisable goods being admittedly from M/s Metal Gems and M/s Mukesh Metal Pvt. Ltd., as admitted by the none other than Shri Nishit S Morakhia, Proprietor of the firm, that such goods were subsequently placed under seizure on 22.11.2005. Therefore the adjudicating authority's findings in the regards have to be outrightly rejected, being incorrect and contrary to the facts of the case, as well as, her own observations/ findings. Therefore such seized goods were correctly alleged in the show cause notice to be liable to confiscation, which ought to have been upheld by the adjudicating authority.
18. He further submits that the impugned order, after referring to the statement of Shri Jogibhai Patel and the evidences gathered from him, it has been observed and concluded by the adjudicating authority that neither the allegation of procurement of Kabadi Scrap to substitute the quantities of imported inputs can be upheld, nor such a theory can be established. These findings of the adjudicating authority are perverse and contrary to the material evidences available on records.
19. In support of above arguments he placed reliance on the following decisions.
(i) Deputy Director of Enforcement vs. A.M. Ceaser - 1999 (113) ELT 804 (Mad.)
(ii) Decision of Supreme Court in the case of K.I. Pavunnv vs. Asstt.
Collector (HQ). C.Ex. Collectorate, Cochin.
(iii) Collector of Customs, Madras and Others vs. D. Bhoormull -1983 (13) ELT 1546 (SC).
20. He also submits that the adjudicating authority has erred in holding that the department has not made any efforts to locate the suppliers of raw materials alleged to be procured from the local market. The said defense arguments is completely irrelevant and is an attempt to obfuscate the material issue. Investigation was not required to locate the actual sellers or buyers in such circumstance. The burden on the department was to adduce 11 Excise Appeal No. 10984-10985/2019-DB credible material to demonstrate that the impugned goods were not transported from Delhi to Daman and not received in Daman Factory where Cenvat credit was availed. The documentary evidences seized from the transporters, Statements of transporters, verification reports from public authorities like RTOs, Transport Commissioner and Commercial Tax Department demonstrate and establish that the claimed goods were not transported from Delhi in the given vehicles and the same did not reach the factory of M/s MG and M/s MI situated at Daman.
21. Accordingly, the appellant Revenue prays for allowing its appeals by setting aside the impugned Order-In-Original.
22. Shri Ankur Upadhyay Advocate appearing on behalf of respondents reiterated the finding of the Ld. Commissioner and submits that adjudicating authority in the impugned order has meticulously dealt with all the issues in hand and has given detailed findings in this regards in the impugned order, hence, the appeal filed by the appellant is liable to be set aside.
23. He also submits that department has not disputed the eligibility of duty in BOEs nor its eligibility as ‗input' as questioned and revenue's allegation is based upon assumption and presumption that the inputs after clearances from ICD Tughlaqabad, Delhi has been diverted and sold in and around Delhi in cash as said allegation is not corroborated with any evidence from which it can be said the goods were diverted and sold in local market. Hence the contention made by appellant for denying credit is without any basis and does not hold any water.
24. He argued that no investigation was made from the drivers of the vehicles who made the trips and allegedly diverted and sold the inputs around Delhi as enquiries with such drivers could determine the real status of the actual unloading in any other premises. Thus inquiry made by the department is incomplete and the inputs has been actually received by the Respondents in their factory premises and details of the said inputs has duly mentioned in the statutory records of the Respondents. Hence , appeal of the revenue is liable to be rejected. He also placed reliance on the Circular No. 1063/2/2018-CX dated 16.02.2018 issued by Central Board and Excise & Customs, New Delhi.
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25. He placed reliance on the following judgments/ decisions.
(i) Commissioner Vs. Motabhai Iron & Steel Industries - 2015(316)ELT 374 (Guj.)
(ii) Motabhai Iron & Steel Industries Vs. CCE, Ahmedabad -II - 2014(302)ELT 69 (Tri. Ahm.)
(iii) M/s AVM Brothers & Others Vs. CCE, Bhopal - Final Order No. A/58354-58358/2017 dated 13.12.2017.
(iv) Gujarat Victory Forging Pvt. Ltd. Vs. CCE, Vadodara-II, -Final Order No. A/11031-11032/2019 dated 28.06.2019.
(v) Monarch Metals Pvt. Ltd. Vs. CCE, Ahmedabad - 2010(261)ELT 508 (Tri. Ahmd.)
(vi) Commissioner Vs. Dhanlaxmi Tubes & Metal Industries - 2012(282)ELT 206 (Guj.)
26. He also argued that letter from Additional Commissioner, Commercial Taxes Department, Rajasthan, Jaipur Ref. 1357 dated 20.10.2005 to the Additional Director, DGCEI, Ahmedabad on the verification sought by them vide replies as follows:
"As desired by you, the computer generated record available in this office is being provided to you in the form of Hard & Soft copy. The records available on the database is from April 2005. It may be clarified that this department owes no legal responsibility with regard to imparting this data." (emphasis supplied)"
From the above fact it is clear that the data on the movement of vehicles into Rajasthan and out of Rajasthan cannot be established prior to April 2005 in any case and after April 2005 its reliability and authenticity cannot be used in any legal proceedings. Therefore in this case all the vehicles prior to April 2005 from 05.04.2004 to 31.03.3005 and thereafter cannot be disproved to have travelled through Rajasthan on their way to respondents' factory at Daman.
27. He further argued that on perusal of RUD relied upon in the SCN, as statement of Shri Keshav Singh Tomar, Branch Manager of TASH, at UP Border, it would be very clear and evident he has inter-alia disclosed to have prepared the Crossing Pass (Baheti), required under the State Enactments of 13 Excise Appeal No. 10984-10985/2019-DB Rajasthan, Gujarat and Madhya Pradesh as mentioned in the SCN to State and handover the same to the Drivers of the Vehicles loaded under his supervisions with respondents goods from his Godown for transport to Daman. The Drivers of the said vehicles have not been identified. They could have explained as to what route they took to reach Daman and why the LRs of TSH do not bear the Entry and Exit Stamps as alleged in impugned matter. These drivers could have disclosed the diversion of the goods to an another location than the consignee mentioned on the documents at Daman. Therefore the investigation in the present matter is an incomplete exercise to prove non- transportation from UP Border goodown of TASH to Factory premises of respondents.
28. He also argued that the enquiries made from various check posts and replies obtained from the lower functionaries of the state manning these Check Posts are not reliable, as such voluminous record of the vehicular transport from such Check Posts cannot be replied in the short period of one day. Replies from the most of the Check Posts are common, in English and give almost instantly on the same date. How they could examine the entire data over a period of 15 months, the time period of the impugned matter when thousand of vehicles must have passed the said Check Post? This cause a doubt on the ‗verification reports' relied by the revenue which appears to be motivated and induced by the officers of DGCEI. There is no enquires made with Check Posts almost next to Dadra, Daman Territories, Gujarat and Maharashtra from where vehicles are coming to Gujarat and Daman, to avoid greater scrutiny and vigilance on the NH8 route. This route on NH 3 is used by doubtful vehicles plying on incorrect number plates, RTO Registration/ permissions. He placed reliance on the enquiries made by the respondents from Daman Check Posts of State Excise Department, where vehicles entering Daman are being recorded. As per the Check Post of State Excise Department, Trucks have crossed into Daman.
29. He also submits that the drivers of all the vehicles making the trips on the relevant day have not been identified and questioned by the investigating authority to arrive at the allegation that no transportation to Daman took place on the disputed vehicles. This questioning was also required to find out which exact route was taken or not taken.
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30. He further argued that the revenue has not investigated all the route and RTO Check Posts on Road Transportation from Delhi via Rajasthan, Gujarat to Daman. As also from Delhi, UP, Madhya Pradesh, Maharashtra to Daman. In the present matter M/s TASH has submitted the Toll receipts Challans and Weigh Bridge Data as evidence before the adjudicating authority that the vehicles have reached Toll stations near Daman on the NH 8 and near RTO Check Post on Nasik -Vapi (Gujarat) and Daman High Way.
31. He also argued that the statements of all the Transporters and other person relied in the impugned matter, who have cleared the imported goods at ICD Tughlakabad would indicate that the said inputs owned by Respondent have been transported from ICD to UP Border of TASH and received there by the employee of TASH for further transportation to Daman Factory as admitted by the Branch Manager of TASH at UP Delhi Border. There is no evidence brought in present matter that the said goods were transported to a place other than what Mr. Tomar has stated. It was for the department to establish beyond all reasonable doubts where the diversion took place. It is an assumption made by the revenue in the present case that it is diverted to in and around Delhi. How it diverted to in and around Delhi is not clarified in the present matter.
32. As regard the alleged procurement of Kabadi Scrap being transported by the two vehicles of Shri Jogibhai as investigated and relied by revenue he submits that no statement of the actual drivers of the vehicle identified on records to substantiate the huge quantity of kabadi Scrap said to be transported from Mumbai and Bhiwandi area to Daman factory. No such scrap dealers have been identified and questioned, nor Shri Jogibhai has been questioned to reveal the actual place of loading of the Bazaar Scrap for being transported to the factory. The imported inputs are copper of high purity Ingots, Wirebars and other forms. The final products made from such inputs is required by customers who are Defence, Railways and others. Bazaar Scrap purities are not the standards from which respondents can make their high purity final products. There is no material in the show cause notice that the factory is capable of refining such kabadi scrap to use as raw materials for final products. Further the allegation of substitution by kabadi scrap of imported copper as raw materials in lieu of non- receipt of imported 15 Excise Appeal No. 10984-10985/2019-DB copper, has not been examined from the economic and financial angle by the investigators.
33. We have heard both the sides and carefully gone through the records, grounds of appeals and submissions of parties and finding of the impugned order and various case laws cited by both the parties. We find that the respondents are engaged in the manufacture of copper pipes/copper flats/copper tubes falling under Chapter 74 of the Central Excise Tariff Act, 1985. During the relevant period, the respondents imported re-melting copper ingots, Cathodes and wire bars after purchasing the same on high sea sale basis, paid countervailing duty (CVD) leviable thereon and availed the Cenvat credit accordingly. The dispute in the present appeals relates to the availment of credit of countervailing duty paid by the respondents on the allegations that the said inputs were actually not received by the respondents in their factories and they 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 of the revenue are that the said imported inputs stand diverted by the respondents in the open market around Delhi 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. For arriving at the above allegations, the revenue has mainly relied upon the fact that during the transportation of the raw materials cleared from ICD Tughlaqabad, 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 UP 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 respondents in support of the allegation that imported raw material were neither received by them nor consumed inasmuch as during the days when such raw material were received, melting furnaces records indicate that furnaces were shut down/slowed down due to 16 Excise Appeal No. 10984-10985/2019-DB unavailability of raw materials. Further the statements of various persons stand relied upon. We find that contrary to this evidences the fact that the respondents have recorded the receipt of the imported goods in their cenvat account and raw material receipts accounts and the purchase of the goods under the BOEs in question were booked in books of account. The payment against the said import were made through cheque, even the payment of transportation was also made by banking channel. The Revenue could not bring any corroborative evidence that the disputed imported goods were diverted to any other place. It is not the Revenue's case that respondents' production of final product is not proportionate to the receipt of the imported inputs. The Revenue has also not shown that if the respondents have not received the imported inputs, where the same have gone. In the absence of any evidence to show the disposal of such imported inputs to any other person, the denial of credit merely on the RTO check post reports and transporter records is not justified.
34. We also find that in the present matter incorrect vehicles numbers were recorded on the transportation documents and on that basis revenue alleged that said vehicles are not transport vehicles / incapable of carrying the consignments. In this regard we are of the view that merely because wrong vehicle number mentioned on the duty paying documents that itself does not prove that the goods have not been transported. It has been observed in various cases that it is common that the wrong vehicles number is mentioned in the documents due to clerical error or due to wrong presentation of vehicle number by the truck drivers. This issue has been considered in various judgments which are discussed below. At this stage, we may discuss the various decisions of Tribunal, in the case of CCE, Jalandbar v. Bhawani Shanakar Castings Limited [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. Limited [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 17 Excise Appeal No. 10984-10985/2019-DB 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 Hon'ble 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 Limited 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.
Further in the case of CCE Ludhiana vs. Parmata Singh Jatinder Singh Alloys Pvt. Limited - 2011 (266) ELT 67 the Tribunal held that : -
Cenvat/Modvat - Documents for availing credit - Fake number on vehicle on which inputs were transported to assessee - No other evidence on record of diversion of inputs, which were entered in statutory records and their use in manufacture of final products shown - Payment for inputs made through cheque and for their freight through vouchers - Assessee could not be denied credit for such inputs - Rules 3 and 9 of Cenvat Credit Rules, 2004. [para 11] Similarly in the case of Stelco Strips Limited vs. Commissioner of Central Excise, Ludhiana -2017(358) ELT 481 (Tri.) held that :
Cenvat credit - Denial of - Non-receipt of inputs - Evidence - Benefit of doubt - Entire case based on statement of dealer and averment that vehicle numbers mentioned not capable of transportation of goods - No investigations conducted from owner of said vehicles - No statement of any driver recorded - Police complaint and newspaper reports establishing that fake number plates were being used by transporters in transporting goods - In view of this appellant discharging their burden that inputs received in factory and used in manufacture of finished goods cleared on duty payment - Giving them benefit of doubt, credit allowed - Impugned order set aside - Rule 3 of Cenvat Credit Rules, 2004. [para 9]
35. 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 respondents, credit cannot be denied on the ground that vehicle number was found wrong in the lorry receipts.
36. We also find that though the reports from the transport or commercial department check posts states that the goods did not cross the border posts, 18 Excise Appeal No. 10984-10985/2019-DB but for this reason, it cannot be concluded that the goods did not pass through the transit state. We find that the ample materials which, inter alia includes weighment slips of trucks with inputs at Daman, acknowledgements of LRs, 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. Respondent on this dispute have also placed evidence on record that such reports are not reliable and even in admitted cases of transportation, the entries were not made. Respondent has also pointed out to an alternative route of transportation through via MP, Rajasthan and Maharashtra border. Further Central Government's report was also relied upon to show that several transport vehicles run on fake/duplicate ―registration numbers‖ and ―permits‖ to avoid any fine and penalty and also to avoid the mandatory ―passing‖ by RTO authorities. Further third party records cannot be made a basis for alleging contravention by the respondents. In a plethora of cases relied upon by the respondent, it has been held that the statements of transporters /vehicle owners being evidence of third party /co-accused cannot be solely relied upon to confirm serious charges and merely because the said check -post records do not show movement of vehicles from its records. It is common practice that some of the truck drivers in order not to pay local tax or/ toll tax or check post charges or for some other reasons, take their vehicle through alternate routes. In such case, only on the basis of border Check posts report, it cannot be concluded that the vehicles did not transport the goods to respondents' factory. The Check Post report has not given a clear picture of movement of trucks in respect of the consignments. In the facts of the present case, Check Posts report cannot be sole basis for denial of Cenvat credit. The entire transactions were duly recorded in statutory records of the respondents. Hence, we do not find any reason or tangible evidence to say that inputs in question were not received by the respondents.
37. We also find that in the whole matter department has relied upon third party records and statements. The Cenvat demand alleging fraudulent availment of Cenvat credit on strength of Bills of entry without receiving imported inputs cannot be sustainable solely based on statements of third party and their records. So long Shri Keshav Singh Tomar, Branch Manager of the transport TASH in his statement admitted that they had transported the goods from UP Border office for Respondents at Daman; the goods were 19 Excise Appeal No. 10984-10985/2019-DB received from ICD Tughlakabad under sealed containers through M/s D.V. Bhaskhi and M/s J.M. Baxi who were Customs House Agents. This statements also established that all the imported goods on the BoEs for which credit have been taken by the Respondents in the factories in Daman have been received from ICD Tughlakabad. Further respondents also produced documentary evidences in respect of receipt of imported inputs, use thereof in manufacture of final product, statutory records showing manufacture and clearance of final product on payment of duty, the receipt of imported inputs cannot be doubted. Since the Revenue failed to prove diversion of imported goods with corroborative evidence and also any money flow back related to the said diversion from any other manufacturer/dealers, it cannot be said that they had not received the inputs especially when statements relied upon by the Revenue are contrary to the documentary evidence on record produced by the Respondents. Therefore, the finding of the Adjudicating authority on this issue has to be accepted. We also noticed that in the present case the reliance of third party documents /statements while conforming demand against present respondents are also observed to be unjustified and unreasonable. It is settled principle of law that in case, if the Revenue wants to rely upon the entries of the third party, the burden lies upon the Revenue Authority to prove the genuineness and authenticity of the said entry and to connect the said entry with the respondents, in case, if the respondents deny to have any connection with such entry. Therefore the charge of non receipt of non receipt of input is not maintainable only on the basis of third party records and data. It is necessary to check the evidentiary value of the third party evidence. On this issue the relevant case law in the case of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal v. CCE, Raipur in Appeal Nos. E/52062 & 52066/2018, held as follows.
"9. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Reference can be made to Hon'ble Allahabad High Court decision in the cases of Continental Cement Company v. Union of India - 2014 (309) E.L.T. 411 (All.) as also Tribunal's decision in the case of Raipur Forging Pvt. Ltd. v. CCE, Raipur- I - 2016 (335) E.L.T. 297 (Tri. - Del.), CCE & ST, Raipur v. P.D. Industries Pvt. Ltd. - 2016 (340) E.L.T. 249 (Tri. - Del.) and CCE & ST, Ludhiana v. Anand Founders & Engineers -
2016 (331) E.L.T. 340 (P & H). It stand held in all these judgments that the findings of 20 Excise Appeal No. 10984-10985/2019-DB clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods.
In the matter of Commissioner of C. Ex., Indore v. Parag Pentachem Pvt. Ltd. Reported in 2018 (360) E.L.T. 1025 (Tri. - Del.) the Tribunal observed as under:
Cenvat credit - Bogus transactions - Invoice only received without goods - Evidence - Third party evidence - Revenue, inter alia, relying on written slops/entries of laptop seized from residence of cashier of dealer issuing invoices, alleging that these contain details of cash transaction in respect of goods not of business - The seized records therefore are third party records - Settled law in catena of decisions including that of Apex Court in 1998 AIR SC 1406 that third party records alone cannot be relied upon as admissible piece of evidence - Further, even in these records there is no identification of person to whom said alleged cash transaction belong - Said entries having not been corroborated by any independent evidence, not reliable - On same facts and investigations, credit allowed in respect of another party and no appeal filed against such order - Denial or credit on the basis of these entries not sustainable - Rule 3 of Cenvat Credit Rules, 2004. [paras 21, 22, 23, 24, 26].
38. From the above judgments, it has been consistently held that demands of whatever nature cannot be confirmed solely on the basis of third party evidence/record. In view of the above discussion, we find that the Cenvat demand cannot be confirmed. We hold that the respondents have satisfied the requirement of receipt of imported raw materials along with cenvatable documents and accordingly, the Cenvat credit taken by them is in accordance with the scheme of the Act read with Cenvat Credit Rules.
39. We also find that the decisions relied upon by the Ld. Adjudicating authority in the case of Motabhai Iron & Steel Industries (Supra), M/s Bajrang Castings Pvt. Ltd. (Supra) and M/s AVM Brothers & Others Vs. CCE, Bhopal (supra) and other decisions/ judgments squarely applicable in the present disputed matter and Ld. Adjudicating authority has not committed any error in placing reliance on the said decisions.
40. We further find that allegation of the revenue based on theory of local kabadi scrap procured from Bhiwandi/ Mumbai and transported on the invoices of M/s Metal Best and M/s Metro Metal by the vehicle of Jogibhai Patel brought to the factories of Respondent for substitution the same in lieu of imported raw materials not being physically received is examined by the Learned Adjudicating authority in details and found that there is no invoice 21 Excise Appeal No. 10984-10985/2019-DB relied qua-metro Metal or other documents of this firm. The alleged quantity of such Kabadi scrap which does not meet the quality requirement of the final end products required by using imported raw materials will be 28,42,570 Kg. in case of M/s MG and 38,91,067 Kg. in case of M/s MI for substitution purpose. As also additional quantities of kabadi scrap would be required to manufacture non-duty paid unaccounted clandestinely removed goods from the factories of MG and MI at Daman and elsewhere. This transporter has one truck and one tempo with one driver only to ferry such huge quantities from Bombay/ Bhiwandi to Daman. The capacity even if overloading is considered assuming use of both the vehicles of Jogibhai Patel, they could not have been made/transported from Bhiwandi /Mumbai to Daman which route take for a single one way trips approximately 10 to 12 hours. The single Driver could not have achieved this herculean transportation. The procurement of Kabadi Scrap to substitute the quantities of imported inputs could not be proved beyond doubt by the investigators. The Ld. Commissioner also found that the Jogibhai's Driver has not been questioned which was otherwise necessarily required to establish the transportation of clandestine removed finished goods to Mumbai from the factories and bring back Kabadi Scrap to the Daman Factories. No other transporter has been found by the investigators who could have assisted such efforts of transportation of Kabadi Scrap and alleged clandestine manufactured goods. It is pertinent also to note that there is no material in the present matter as to from whom and where in Bhiwandi and Bombay such huge quantities of Kabadi Scrap was procured from. The statements of alleged confession have been retracted and there is no corroboration in the seizure of M/s Metal Best invoices of the vehicle of Jogibhai at the Factory of MG which is alleged to be kept blank to be filled in and used if and when transportation of non-duty paid goods being removed from Daman factories to Bombay or kabadi Scrap being transported from Bombay/Bhiwandi are intercepted by the any agency. Therefore the theory of substitution of unaccounted Kabadi Scrap also utilization in manufacture of clandestine removal of goods without payment of duty due thereon from factory cannot be established.
41. Further, the Cenvat demand is solely based upon the statement of third parties and the assumed interpretation of the same is not sustainable. The charge against the respondents are required to be arrived at on the 22 Excise Appeal No. 10984-10985/2019-DB basis of positive and tangible evidences including the evidences relating to procurement of raw-materials, conversion of the same to final products, clearances of the same and identification of the buyers and receipt of unaccounted cash etc. It has been the ratio of various judgments of the Hon'ble Tribunal and High Courts that mere entries in the private records of third party and their statement, do not, ipso facto, lead to the allegation of clandestine removal unless there is corroborative evidence to that effect from independents sources. Testing on the said touch stone, it is very clear that the revenue has not been able to produce sufficient evidence so as to hold against the respondents. There is no evidence of procurement of such a huge quantum of raw material from any kabadi; no evidence of any discrepancy in the quantum of raw material or final product at any place; no evidence of transports of either the raw material or the final products; no statement of the suppliers of kabadi scrap deposing against the assessee who state that he supply kabadi scrap ; no evidence of the cash payment to any kabadi by the respondents in respect of such a huge quantum of purchase of Kabadi Scrap; no statement of any supplier of kabadi indicating the removal of scrap to Respondents, no recovery of any cash amount from the kabadi or cash payments to the input suppliers. It is well settled that the charges of alleged violation are required to be established on the basis of positive and tangible evidence, the same being quasi- criminal in nature. The Revenue has miserably failed to produce corroborative evidence on records so as to substantiate the charges of non- receipts of imported goods and substitution of the same with kabadi scrap and availment of the wrong Cenvat Credit. If the revenue alleged that imported goods are diverted and for manufacturing of final products, Bazar Scrap / kabadi scrap in such large scale clandestinely procured by the respondents, the investigating officers could have easily identified the said Kabadi suppliers and buyers of imported goods. It is beyond one's comprehension that not even a single supplier of the alleged bazaar scrap could be identified or interrogated. Not only that, no buyer of alleged diverted imported goods could be identified. In that circumstances, we do not find any merits in the revenue appeals.
42. We also observed that the Learned Commissioner has recorded in the present order the true and full facts coming out from the cross-examinations and retractions of the witnesses, statutory records maintained by the 23 Excise Appeal No. 10984-10985/2019-DB respondents. From the detailed analysis of evidence made by the Learned Commissioner and specific and clear finding recorded by him in the adjudicating order, it stands proved that the respondent herein has received imported duty paid raw materials at their factories and were duly recorded in statutory records and Cenvat credit register. In the light of the concurrent findings of fact recorded by Learned Commissioner and the elaborate order made by the Learned Commissioner, no infirmity was found in the impugned order of the Learned Commissioner so as to warrant interference and we are of the view that the respondent is eligible for the benefit of Cenvat Credit in question.
43. As regard the seizure and confiscation of the goods, we find that the Learned Commissioner has given categorical findings which does not require any interference. The relevant findings of the learned Commissioner is reproduced below :
"4.4 (V) The seizure of imported copper Cathods in the factory of MG on 12.08.2005 would be a direct evidence of the said goods being received in the factory premises as it has been received on 11.08.05 and parts of the consignment of 10,164 Kgs, of Copper Cathods entered and issued on 11.08.2005 at Sl No. 143 of RG 23A Pt. I of MG and was laying for cutting near the cutting machine for use in the melting furnace which could not accept the entire Cathode Plates. This parts of the inputs, entered in RG23A, and issued for manufacture cannot be held to be liable for seizure or confiscation under any provisions of the Central Excise Law as proposed in SCN-1.
4.5 (iii) (a) At the time of the seizure itself in the premises of Mex India, the godown keeper available of the firm Shri Kamlesh Shah, before the panchas explained the goods found there to be unsold stock purchased from the local market at Bombay and this say was recorded in the panchanama itself.
(b) there is a proposal in the SCN -1,to confiscate certain goods namely Brass Rods, Copper Tubes etc., seized in the premises of Mex India of Mumbai on 12.08.05 for the reasons, as recorded in the Panchnama, that they are similar to the goods being manufactured by MG. This reasons to believe itself to seize goods lying in Bombay has to be rejected, as there is no material on record that the officers seizing such goods at Bombay would be aware of what exact similar goods were being manufactured at the factory premises of Daman which was being simultaneously searched on the same day.
(c) There is no material in the SCN also, as a result of the investigation also, that the seized goods at Bombay in the premises of M/s Mex India were similar to the goods being manufactured at the factory of MG.
(d) In view of the above the conversion of detention into seizure of the goods found in premises of M/s Mex India cannot be accepted. There is nothing in the SCN -1 issued to bring in a liability to seizure and confiscation of the said goods on alleged confessional statements recorded from Shri Nishit Morakhia Proprietor and others, which have been retracted.'' 24 Excise Appeal No. 10984-10985/2019-DB
44. As regard the central excise duty demand of Rs. 6,05,245/-, we find that officers while searching the factory of M/s MI found certain chits bearing pre-printed Sr. Nos. 53 which appeared to them to contain the details of clearances of 39 pcs. Of Copper articles and another chit with pre-printed Sr. No. 50 appears to contain details of clearances of copper on 11.08.05. In this chit against the quantity of 4400.00 Kgs and 55 pcs words ―by jeep‖ is written, which is alleged in the SCN to indicate the material was transported by a jeep. Further on the same page there is mention of 175 pcs of weighing 11349.00 Kgs of copper articles. Therefore as per the revenue these chits are alleged to contain details of clearances of copper articles of 230 pcs weighing 15749 Kgs, in all. These quantities are further alleged in Annexure B to the SCN issued to MI to be 18269 Kgs of Copper bar of EC grade on which a demand of duty of Rs. 6,05,245/- was proposed by the revenue. However in the present matter nature and carrying capacity of a ‗Jeep' has not been established nor any person in the MI factory has been questioned as to how the said goods and on which vehicle they were removed without accounting. Clearly, therefore the allegation of clandestine removal on chits is not established by the revenue in the present matter.
45. We also find that demand of Central Excise duty on the quantity of finished excisable goods seized from the godown premises of M/s Mex India and mentioned in the documents in the forms of ‗chits' recovered from the office premises of M/s. MG at Mumbai also not sustainable. Examining these evidences it is found that witnesses retracted their statements. Further the Chits found by the revenue in premises of both the respondents may create doubt but it cannot take place of evidence. It is observed that the allegation of suppression of production and clandestine removal is a serious allegation and it has to be established by the investigation by affirmative and cogent evidence. CESTAT in the case of Sober Plastic Pvt. Limited v. CCE [2002 (139) E.L.T. 562 (T)] has held that demand based on weighment slips, slips recovered from Dharamkanta etc. relied upon for raising demand were not verified with reference to transactions, is not sustainable. Further, it is settled position of law that proof and evidence of purchase of raw materials and sale of final product clandestinely is necessary to establish the allegation of suppression of production and clandestine removal of goods and that the allegation are to be proved with affirmative evidences. CEGAT in case of 25 Excise Appeal No. 10984-10985/2019-DB Emmtex Synthetics Limited v. CCE [2003 (151) E.L.T. 170 (Tri.) has held that the charge of clandestine removal has to be established by the revenue by adducing tangible, convincing and cogent evidences, CESTAT in the case of Esvee Polymers (P) Ltd. v. CCE [2004 (165) E.L.T. 291 (Tri.)] dealt with a case of alleged clandestine production and clandestine removal. The case was based on some private slips. The CESTAT observed that the mere slips or statement are not sufficient for confirmation of demand and allegation of clandestine removal. Evidence in the form of receipt of raw material, shortages thereof excess use of electricity excess/shortage of inputs in stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods etc. is necessary. CESTAT in the case of CCE v. Supreme Fire Works factory [2004 (163) E.L.T. 510 (Tri.) dealt with the allegation of clandestine manufacture and removal and observed that mere suspicion cannot take place of proof. Proof and evidences of purchase of raw materials, sale of final goods clandestinely is necessary. The allegations are not sustainable in absence of evidences. CESTAT in case of CCE v. Shree Narottam Udyog (P) Limited [2004 (158) E.L.T. 40 (Tri.)] has dealt with the allegation of clandestine manufacture and removal of goods and held that settled law is that the charge of clandestine removal being a serious charge required to be proved beyond doubt on the basis of affirmative evidences. CESTAT in case of Jagatpal Premchand Limited v. CCE [2004 (178) E.L.T. 792 (Tri.) held that it is settled law whenever charge of clandestine removal is made revenue has to prove that assessee procured all raw materials necessary for manufacture of final product. The allegations are not sustainable if no investigation conducted by the revenue in respect of raw material essential for production of final goods and no evidence regarding removal of such final product brought on record by revenue. Similar view has been taken by the CEGAT in several other cases such as Jangra Engg. Works v. CCE [2004 (177) E.L.T. 364 (Tri.)], Premium Moulding & Pressing Pvt. Ltd. v. CCE [2004 (177) E.L.T. 904 (Tri.)], Vakharia Traders v. CCE [2004 (173) E.L.T. 287 (Tri.)], Nutech Polymers Ltd. v. CCE, Jaipur [2004 (173) E.L.T. 385 (Tri.)], CCE v. Sumangla Steels [2004 (175) E.L.T. 634 (Tri.)], CCE v. Sangamitra Cotton Mills [2004 (163) E.L.T. 472 (Tri.)], CCE v. Velavan Spinning Mills [2004 (167) E.L.T. 91 (Tri.)]. The ratio of these decisions is applicable in the instant case. Since the investigation has failed to adduce any corroborative evidences to establish clandestine removal of the goods as discussed above and failed to discharge the onus to prove the 26 Excise Appeal No. 10984-10985/2019-DB allegations, the allegations are not sustainable. In view of the above discussions, the allegation of clandestine removal of finished goods is not established.
46. We also observed that the learned Commissioner as regard the disputed matter has very consciously considered the facts of the case, allegation of the Revenue and evidences on records and came to the conclusion that the allegation of clandestine removal of the goods and non receipt of inputs, on which credit was availed, are not established by the Revenue. Hence he rightly dropped the proceedings of the show cause notice.
47. In view of the above discussion and taking into consideration the facts and circumstances of the case, we are of the view that there is no infirmity in the order of the learned Commissioner and the same does not require any interference. Therefore the impugned order is upheld.
48. Revenue's appeals are dismissed. Cross-Objection filed by the respondents are also disposed of accordingly.
(Pronounced in the open court on 05.10.2023) (Ramesh Nair) Member (Judicial) (C L Mahar) Member (Technical) KL