Custom, Excise & Service Tax Tribunal
Cce, Indore vs M/S.Prag Pentachempvt.Ltd on 17 June, 2015
CUSTOMS, EXCISE & SERVICE TAXAPPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. SINGLE MEMBER BENCH Appeal No.E/50825-50827/2014-EX(SM) With E/CROSS/52304-52305/2014 [Arising out of the OIA No.IND-CEX-000-APP-150-152-2013 dt.30.10.13 passed by the CCE (Appeals), Indore) Date of Hearing: 05.5.2015 Date of Order:17.06.2015 For Approval &signature: Honble Mr.Ashok Jindal, Member (Judicial) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? Yes CCE, Indore Appellant Vs. M/s.Prag PentachemPvt.Ltd. Respondent No.1
Shri Karni Singh, Director of the company Respondent No.2 Shri Mukesh Sangla Respondent No.3 Appeal No.E/51365-51367/2014(SM) With E/CROSS/52954-52955/2014 [Arising out of the OIA No.IND-CEX-000-APP-173-175-2013 dt.26.11.13 passed by the CCE (Appeals), Indore) CCE, Indore Appellant Vs. M/s.Rajshri Plastwood Respondent No.1 Shri Ravi Barjatya Respondent No.2 ShriMukeshSangla Respondent No.3 Appearance Shri Devender Singh, AR for the appellant Ms.Ranjana Jha, AR for the appellant Shri Alok Bharthwal, Advocate for the respondents CORAM: HonbleMr.Ashok Jindal, Member (Judicial) FINAL ORDER NO.51910-51915/2015 Per Ashok Jindal :
Appeal No.E/51365-51367/2014(SM) The Revenue is in appeals against the impugned order dropping the demand of Central Excise duty alongwith interest against M/s.Rajshri Plastwood and dropping of penalty against the respondents.
2. The facts of the case are as under:-
2.1 The Respondent No.1 having Central Excise Registration No.AABCP220919GXM001 are engaged in the manufacture of PVC Stabilizers & Metallic Stearates etc. falling under Chapter heading No.39 of the Schedule to the Central Excise Tariff Act, 1985. The Respondent No.2 is working as Director of the Respondent No.1 and Respondent No.3 is the Managing Director of a different manufacturing unit/company namely M/s.Signet Overseas Ltd., Indore. The Respondent No.1 is also availing the facility of cenvat credit o duty paid on inputs & Capital goods as per the provisions of Cenvat Credit Rules, 2004.
2.2 The officers of DGCEI, Regional Unit, Indore acting upon an intelligence that a number of manufacturing units/company namely, M/s.Signet Overseas Ltd., M/s.Kamdeep Marketing Pvt.Ltd., and M/s.Saurabh Marketing Agency [M/s.SOL,M/s.KMPL& M/s.SMA respectively, for act of brevity] & others had been issuing bogus cenvatable invoices of various plastic polymers to various manufacturers of plastic products, while selling plastic polymers in cash to other buyers without issuing any invoices, thereby enabling several manufacturers of plastic products to fraudulently availed cenvat credit on the strength of only invoices without receipt of duty paid inputs, conducted searches on 06.12.2007 at the following premises:-
1. Office premises of M/s SOL and its associate companies namely M/s KMPL M/s SMA, M/s SPET & M/s LPP. All office premises are situated at Indore;
2. Factory and godown premises of M/s LPP.
3. Residential premises of Shri MukeshSangla (Appellant No. 3), Managing Director of M/s SOL and the authorized signatory or the proprietor of associate companies viz. M/s KMPL, M/s SMA, M/s SPET & M/s LPP;
4. Residential premises of Shri Kirti Mahesh chandra Kala, Cashier of M/s SOL & aforesaid associate companies;
5. Residential premises of Shri Ravindra Pingle, godown keeper of M/s SOL & aforesaid associate companies;
6. Residential premises of Shri Paras Patidar, Marketing manager of M/s SOL & aforesaid associate companies.
2.3 During the course of search at above mentioned premises, various incriminating documents, unaccounted currency valued to Rs. 35 lakhs at residential premises of Shri Mukesh Sangla (Appellant No. 3), three lap-top computers at residential premises of Shri Kirti Maheshchandra Kala were seized by the DGCEI Officers, RU, Indore. At residential premises of ShriKirti Kala, the departmental officers recovered and seized a file marked A/3 containing several handwritten slips indicating details of transactions on a given date. In his statement recorded by the Officers on the spot, he revealed that the said file contains slips bearing details of case transactions which had been prepared by himself or by Shri C.K. Joshi, an employee of M/s SOL. On being interrogated, he further disclosed that slips show cash collection in lieu of sale of goods to various clients and also entries appearing on left hand side of the same as cash received from their various clients. He explained about various entries which he disclosed pertained to cash transactions which were not being made in their official books of accounts. In his further statement recorded on 01.02.08, Shri Kala also stated that in the Intex lap-top seized from his residence, he had maintained all the cash accounts in the same in the accounting Software namely Tally, for the period October, 2005 to December, 2007, as per instructions of the Respondent No. 3.
2.4 The transactions pertaining to receipts and payments made in cash, as appearing in the ledgers, maintained on the laptop of Shri Kala were compared with the hand written entries on slips seized from the residence of Shri Kala. The date on lap-top was found to be tallying with the entries on the hand written slips. The handwritten seized slip dated 26.08.06 has indicated that amount of Rs.20,00,000/- depicted on the right side of the slip was paid in cash to the Appellant No. 1. The transaction in the aforesaid lap-top also indicated cash payment of Rs.20,00,000/- made to Respondent No. 1. The documents seized from the residence of Shri Pingle contained evidences regarding procurement of duty paid inputs and buyers of 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.
2.5 In his statement dated 6.12.07 recorded by the DGCEI Officers, the Respondent No. 3 had stated- that M/s SOL had been purchasing plastic polymers i.e. HDPE/LDPE/LLDPE granules etc. from M/s Haldia Petochemicals Ltd. Kolkata, M/s DCW Ltd. Shahaupuram and M/s South Asia Petrochemicals Ltd. Haldia. He stated that M/s SOL, registered as a first stage dealer with the Central Excise Department, had been selling these polymers to various industrial users. He further disclosed that the case transactions in above referred handwritten papers denote case receipts and cash payments made by M/s SOL which were not reflected in their official books of accounts. Scrutiny of ledgers on Shri Kalas Laptop in respect of transactions pertaining to the Respondent no. 1 had revealed that the transactions collectively covered the elements viz. (i) payment in case (ii) receipt by cheques & (iii) VAT, in his statement dated 18.02.09 of Shri Kirti Kala recorded by the DGCEI Officer, Shri Kala had stated that they supplied invoices of polymers to the Respondent No. 1 without actually supplying the goods as mentioned in these invoices. Accordingly, payment received from the Respondent No. 1 through cheques against such fraudulent invoices was returned in case to them. Further, Statement dated 20.02.09 of Shri Paras Patidar, revealed that M/s SOL had purchased the subject bogus invoices from M/s Bombay Goods Frieght Cargo and M/s Blue Bird Transport Company at the rate of Rs.100/- per L.R. The transactions on Shri Kalas ledgers during the period from 01.10.05 to 05.12.07 had indicated that case payment of Rs.2,55,33,550- were made to Respondent No. 1 whereas payment received by M/s SOL by cheques from Appellant No. 1 were Rs. 11,04,33,998/-. The cash transactions were not reflected in the statutory ledgers of M/s SOL and associates which indicated that the entire amount which has been received by M/s SOL and its Associates by cheque was in respect of bogus or fake invoices issued by them to the Respondent No. 1.
2.6 The difference in value of sales as per details in the ledger on Kalas laptop and in the statutory ledgers indicates the extent of bogus invoices provided by M/s.SOL and associates to the Respondent No.1 during 1.10.05 to 5.12.07. In all 114 invoices out of 154 invoices issued by M/s.SOL during the said period had been identified by the departmental officers as genuine and remaining ones as bogus. Besides, 4 invoices manifested as direct sales from M/s.DCW were identified as genuine by the departmental officers.
2.7 Further, enquiry from the owners of some of the vehicles (statements recorded by the departmental officers) shown to have been sued for transportation of goods from M/s.SOL and associates to the Respondent No. 1 revealed that they had never transported any goods from M/s.SOL to the appellant No.1 and vehicles were never attached to Blue Bird Transport Corporation/ Bombay Goods Freight Cargo. Further, Statement of the Respondent No. 2 was recorded on 13.3.09 wherein he stated that they had been purchasing material from M/s SOL. He stated that the payment to transporter is made either by them or trough suppliers. On being shown the statement of owners of vehicles shown to have been used in transportation of PVC resigns under invoices issued by m/s.SOL to the Respondent No.1, he refused to comment and simply stated that they have received material against the said invoices. He also refused to comment on being shown the printout taken from laptop from the premises of M/s.SOL and its employees which has been confirmed by the appellant no.3 as being correct and true. To sum up, cenvat credit of Rs.43,02,028/- (including cess) was found by the departmental officers to be wrongly availed by the appellant No.1 without receipt of the goods in their factory. This act of the Appellant no.1 with support of appellant No.2 and No.3 appeared to be tantamount as wilful suppression of facts, mis-declaration and contravention of the relevant provisions of Central Excise Act, 1944, Central Excise Rules, 2002 and Cenvat Credit Rules, 2004 with sole intent to evade payment of Central Excise duty. As such, all the three appellants were appeared to render themselves liable for appropriate punishment by the concerned tax department of Govt.of India.
3. A show cause notice was issued to all the respondents and the same was adjudicated by the adjudicating authority confirming demand of duty from the respondent No.1 alongwith interest and imposed penalty on all the respondents. On appeal before the Commissioner (Appeals), filed by the respondents, the Commissioner (Appeals), who appreciated the facts and relevant case law dropped the charge against the main respondent of availing cenvat credit without physically receiving the input and also dropped the penalty on all the respondents. Aggrieved with the said orders, the Revenue is in appeals before me.
4. Ms.Ranjana jha, learned AR submits that the allegation against M/s.Rajshri Plastwood is that they have availed cenvat credit on the strength of invoices issued by M/s.KMPL and M/s.SMA without actually receiving the goods. To support this allegation, she submits that the following main evidences are in favour of the Revenue:-
(i) Recovery of hand written slips and one lap-top from the residence of Shri Kirti Kala containing details of cash transactions by M/s Signet Overseas Ltd (also referred to as M/s SOL)
(ii) Statement of Shri Kirti Kala explaining the entries.
(iii) Statement dt.6.12.2007 of Shri Mukesh Sangla admitting the modus operandi and the fact that the case transaction mentioned in the laptop were not reflected in their books of accounts.
(iv) Statement of Shri Pankaj Kalani, Chartered Accountant, admitting receipt of cash from Respondent No. 2 i.e. Shri Ravi Barjatya, CEO of M/s.Rajshri Plastwood, Plot No.100/100A, Sector-II, Pithampur (respondent No.1) and exchanging it for cheques from non-Banking financial companies.
(v) Recovery of Goods Receipts Slips, dispatch challans and sheets containing day wise list of dispatches etc from the Godown of M/s SOL from the residence of Shri Ravindra Pingle, Godown in charge.
(vi) Statement of Shri Paras Patidar, Marketing Manager of M/s SOL admitting that he used to buy L.R. from M/s Bombay Goods Freight Charges (BGFC) and M/s Blue Bird Transport Company (BBTC) at the rate of Rs.100/- Per L.R. without supplying the goods.
(vii) Statement of proprietor of BGFC and M/s.BBTC in which he admitted that he had provided LR @ 100/- per LR without providing for any truck for transportation to M/s.SOL and m/s.KMPL.
(viii) Statements of some of the owners of vehicles (shown to have been used for transportation of goods form M/s.SOL and associates to respondent No.1, in which they denied to have transported any goods from M/s.SOL to the premises of respondent No.1.
(viii) Statement of the respondent No.2 the managing director of the respondent No.1 wherein he denied to have purchased or received any material from M/s.SOL.
5. She further submits that the Commissioner (Appeals) has not appreciated the fact that the investigation revealed that the respondent No.1 took the credit without receipt of goods. It is also revealed that from the investigation that the supplier of the goods did not supply the goods to the respondent No.1. From the evidence, it is proved that goods have not been received by the respondent No.1 and the respondent No.1 made entries only in the accounts to show receipt of goods. She further submits that making entry in the statutory records does not prove that teh goods were received in the premises of the respondent no.1 when documents recovered by the department from the premises of Shri Ravindra Pingle and Shri Kirti Kala clearly show that out of 154 invoices issued by M/s.SOL to the respondent No.1, 114 were genuine and remaining invoices were bogus. It is also admitted that Shri Kirti Kala has admitted that slips were showing cash transactions undertaken by them and cash was sent by the respondent to M/s.SOL against the invoices issued in the name of respondent No.1. The Commissioner (Appeals) failed to consider the statement of transporter who has categorically denied of having even transported the goods to the respondents No.1. Shri Mukesh Sangla, respondent No.3 has accepted and confirmed the cash transactions reflected in hand written slips by his employees Shri Kirti Kala, cashier and explained that these papers were debit/credit account of cash transactions of M/s.SOL and M/s.LLP. He explained that the goods were not physically delivered to the respondent No.1, no amount was payable by the respondent No.1 to M/s.SOL/M/s.LLP. Further, the payment by the respondent to M/s.SOL through cheques was delivered reimbursed subsequently in cash. All the facts lead to conclusion that the respondent No.1 have availed the credit on the invoices against which no goods have been received by them physically. Therefore, the impugned order requires to be set aside. Consequently, the demand of duty alongwith interest to be confirmed against the respondent no.1 and penalty are requires to be imposed on all the respondents.
Appeal No.E/50825-50827/2014-EX(SM
6. The Revenue is in appeals against the impugned order dropping the demand of central excise duty alongwith interest against M/s.Parag Pentachem Pvt.Ltd. and dropping of penalty against all the respondents.
7. The facts of the case are as under:-
7.1 The respondent No.1 having Central Excise Registration No.AABCP220919GXM001 are engaged in the manufacture of PVC Stabilizers & Metallic Stearates etc. falling under Chapter heading No.39 of the Schedule to the Central Excise Tariff Act, 1985. The respondent No.2 is working as Director of the respondent No.1 and respondent No.3 is the Managing Director of a different manufacturing unit/company namely M/s.Signet Overseas Ltd., Indore. The respondent No.1 is also availing the facility of cenvat credit of duty paid on inputs & Capital goods as per the provisions of Cenvat Credit Rules, 2004.
7.2 The officers of DGCEI, Regional Unit, Indore acting upon an intelligence that a number of manufacturing units/company namely, M/s.Signet Overseas Ltd., M/s.Kamdeep Marketing Pvt.Ltd., and M/s.Saurabh Marketing Agency [M/s.SOL,M/s.KMPL& M/s.SMA respectively, for act of brevity] & others had been issuing bogus cenvatable invoices of various plastic polymers to various manufacturers of plastic products, while selling plastic polymers in cash to other buyers without issuing any invoices, thereby enabling several manufacturers of plastic products to fraudulently availed cenvat credit on the strength of only invoices without receipt of duty paid inputs, conducted searches on 06.12.2007 at the following premises:-
7. Office premises of M/s SOL and its associate companies namely M/s KMPL M/s SMA, M/s SPET & M/s LPP. All office premises are situated at Indore;
8. Factory and godown premises of M/s LPP.
9. Residential premises of Shri Mukesh Sangla (Appellant No. 3), Managing Director of M/s SOL and the authorized signatory or the proprietor of associate companies viz. M/s KMPL, M/s SMA, M/s SPET & M/s LPP;
10. Residential premises of Shri Kirti Mahesh chandra Kala, Cashier of M/s SOL & aforesaid associate companies;
11. Residential premises of Shri Ravindra Pingle, godown keeper of M/s SOL & aforesaid associate companies;
12. Residential premises of Shri Paras Patidar, Marketing manager of M/s SOL & aforesaid associate companies.
7.3 During the course of search at above mentioned premises, various incriminating documents, unaccounted currency valued to Rs. 35 lakhs at residential premises of Shri Mukesh Sangla (Respondent No. 3), three lap-top computers at residential premises of Shri Kirti Maheshchandra Kala were seized by the DGCEI Officers, RU, Indore. At residential premises of Shri Kirti Kala, the departmental officers recovered and seized a file marked A/3 containing several handwritten slips indicating details of transactions on a given date. In his statement recorded by the Officers on the spot, he revealed that the said file contains slips bearing details of case transactions which had been prepared by himself or by Shri C.K. Joshi, an employee of M/s SOL. On being interrogated, he further disclosed that slips show cash collection in lieu of sale of goods to various clients and also entries appearing on left hand side of the same as cash received from their various clients. He explained about various entries which he disclosed pertained to cash transactions which were not being made in their official books of accounts. In his further statement recorded on 01.02.08, Shri Kala also stated that in the Intex lap-top seized from his residence, he had maintained all the cash accounts in the same in the accounting Software namely Tally, for the period October, 2005 to December, 2007, as per instructions of the Appellant No. 3.
7.4 The transactions pertaining to receipts and payments made in cash, as appearing in the ledgers, maintained on the laptop of Shri Kala were compared with the hand written entries on slips seized from the residence of Shri Kala. The date on lap-top was found to be tallying with the entries on the hand written slips. The handwritten seized slip dated 12.12.06 has indicated that amount of Rs.15,00,000/- depicted on the right side of the slip was paid in cash to the respondent No. 1. The transaction in the aforesaid lap-top also indicated cash payment of Rs.15,00,000/- made to respondent No. 1. The documents seized from the residence of Shri Pingle contained evidences regarding procurement of duty paid inputs and buyers of 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.
7.5 In his statement dated 6.12.07 recorded by the DGCEI Officers, the respondent No. 3 had stated- that M/s SOL had been purchasing plastic polymers i.e. HDPE/LDPE/LLDPE granules etc. from M/s Haldia Petochemicals Ltd. Kolkata, M/s DCW Ltd. Shahaupuram and M/s South Asia Petrochemicals Ltd. Haldia. He stated that M/s SOL, registered as a first stage dealer with the Central Excise Department, had been selling these polymers to various industrial users. He further disclosed that the case transactions in above referred handwritten papers denote case receipts and cash payments made by M/s SOL which were not reflected in their official books of accounts. Scrutiny of ledgers on Shri Kalas Laptop in respect of transactions pertaining to the respodnent no. 1 had revealed that the transactions collectively covered the elements viz. (i) payment in case (ii) receipt by cheques & (iii) VAT, in his statement dated 18.02.09 of Shri Kirti Kala recorded by the DGCEI Officer, Shri Kala had stated that they supplied invoices of polymers to the respondent No. 1 without actually supplying the goods as mentioned in these invoices. Accordingly, payment received from the respondent No. 1 through cheques against such fraudulent invoices was returned in case to them. Further, Statement dated 20.02.09 of Shri Paras Patidar, revealed that M/s SOL had purchased the subject bogus invoices from M/s Bombay Goods Freight Cargo and M/s Blue Bird Transport Company at the rate of Rs.100/- per L.R. 7.6 The transactions on Shri Kalas ledgers during the period from 01.10.05 to 05.12.07 had indicated that case payment of Rs.2,74,20,003/- were made to Respondent No. 1 whereas payment received by M/s SOL by cheques from Respondent No. 1 were Rs. 2,77,11,928/-. The cash transactions were not reflected in the statutory ledgers of M/s SOL and associates which indicated that the entire amount which has been received by M/s SOL and its Associates by cheque was in respect of bogus or fake invoices issued by them to the Resonde No. 1. Besides, scrutiny of consignment-wise record of dispatches maintained by staff at Godown of M/s SOL and its Associates revealed that no dispatches of polymers were made from these places to the Respondent No. 1 during the period from 1.10.05 to 5.12.07. Further, it came to know by the DGCEI Officers that large number of consignments cleared under invoices issued by M/s DCW and consigned to the respondent No. 1 had been diverted by them to godown of M/s SOL and its Associates.
7.7 During the search conducted on 15.12.07 at the factory premises of the Respondent No. 1, it was found that 7 invoices manifest as direct sales from M/s DCW to them in their records whereas in Mr. Kalas lap-top, said 7 invoices were shown to be as sale return which shows that these were purchased and utilized by M/s SOL while the Respondent No. 1 had availed cenvat credit on these invoices without actually receiving the corresponding goods. Besides, it was found that the Resondent No. 1 had manifested receipt of polymers under 25 invoices issued by M/s SOL whereas Mr. Kalas laptop did not contain any entry representing sales from M/s SOL and associates to the Respondent No. 1 during the relevant period. Therefore, all such invoices were identified as bogus in terms of Shri Kalas ledger. Further, enquiry from the owners of some of the vehicles (statements recorded by officers) shown to have been used for transportation of goods from M/s SOL & associates to the Respondent No. 1 revealed that they had never transported any goods from M/s SOL to the Respondent No. 1 and such vehicles were never attached to Blue Bird Transport Corporation / Bombay Goods Freight Cargo. Further, Statement of the Respondent No. 2 was recorded on 15.12.07 wherein he stated that they had never purchased / received any quantity of PVC resin or any other material from M/s SOL and they only procured certain invoices from them for which they had made payment by cheques to them and taken back equal amount of cash from the Appellant No. 3. On the strength of such bogus of fake invoices they had availed cenvat credit. The Respondent No. 1 had cleared excisable goods manufactured by them after payment of duty from inadmissible credit, thus such goods were cleared by them without payment of appropriate duty. In such a way, the cenvat credit amounting to Rs.35,51,805/- was wrongly availed by the Respondent No. 1 without receipt of goods in their factory. This act of the Appellant No. 1 with support of the Respondent No. 2 & 3 appeared to be tantamount as willful suppression of facts, mis-declaration and contravention of the relevant provisions of Central Excise Act, 1944, Central Excise Rules, 2002 &Cenvat Credit Rules, 2004 with sole intent to evade the payment of Central Excise Duty. As such, all the three respondents were appeared to render themselves liable for appropriate punishment by the concerned tax department of Govt. of India.
8. A show cause notice was issued to all the respondents and the same was adjudicated by the adjudicating authority demanding duty from the respondent No.1 alongwith interest and imposed penalty on all the respondents. On appeal before the Commissioner (Appeals), filed by the respondents, the Commissioner (Appeals) without going into the factual matrix of the case dropped the charge of availing cenvat credit without physically receiving the inputs against the main respondent and also dropped the penalty on all the respondents. Aggrieved with the said orders, the Revenue is in appeals before me.
9. Learned AR submits that the following evidences are in favour of the Revenue:-
(i) Recovery of hand written slips and one INTEX lap-top from the residence of Shri Kirti Kala containing details of cash transactions by M/s Signet Overseas Ltd (also referred to as M/s SOL)
(ii) Statement 6.12.2007, 1.2.08 and 18.2.2009 of Shri Kirti Kala explaining the entries.
(iii) Statement dt.6.12.2007 of Shri Mukesh Sangla admitting the modus operandi and the fact that the case transaction mentioned in the laptop were not reflected in their books of accounts.
(iv) Statement of Shri Pankaj Kalani, Chartered Accountant, admitting receipt of cash from Respondent No. 2 i.e. Shri Mukesh Sangla, Director of M/s SOL and exchanging it for cheques from non-Banking financial companies.
(v) Corroboration of data entered in the laptop data with the seized slips.
(vi) Recovery of Goods Receipts Slips, dispatch challans and sheets containing day wise list of dispatches etc from the Godown of M/s SOL from the residence of Shri Ravindra Pingle, Godown in charge.
(vii) Statement of Ravindra Pingle.
(viii) Documents seized from Sh.Paras Patidar, Marketing Manager of M/s.SOL including original delivery challans after receipt of goods by buyers.
(ix) Statement of Shri Paras Patidar, Marketing Manager of M/s SOL admitting that he used to buy L.R. from M/s Bombay Goods Freight Charges (BGFC) and M/s Blue Bird Transport Company (BBTC) at the rate of Rs.100/- Per L.R. without supplying the goods.
(x) Statement dt.18.2.09 of Sh. Kirti Kala, cashier of SOL about retaining VAT amount.
(xi) Statement dt.26.2.2009 of Shri Mukesh Sangla clarifying why sale not mentioned in ledger of M/s.Parag Pentachem.
(xii) Transactions pertaining to M/s.Parag Pentachem on Kalas ledgers during the period 1.10.05 to 5.12.2007.
(xiii) Evidence relating to consignments invoiced by manufacturer to M/s.Parag Petrochem but received at Indore depot of M/s.SOL and associates.
(xiv) Search of factory of M/s.Parag Petrochem, recovery of 25 invoices showing receipt of goods but goods dispatch/sale not corroborated in the ledgers in laptop of Kala an depot records.
(xv) Statement of some of the owners of vehicles (shown to have used for transportation of goods from M/s SOL & associates to Appellant No. 1, in which they denied to have transported any goods from M/s SOL to premises of Respondent No. 1.
(xvi) Statement of Proprietor of M/s BGFC and M/s BBTC in which he admitted that he had provided bogus L.R. @ 100/- per L.R. without providing for any truck for transportation to M/s SOL and M/s KMPL.
(xvii) Statement of the Respondent No. 2 the Managing Director of the Respondent No. 1 wherein he denied to have ever purchased or received any material from M/s SOL and admitted procurement of only invoices to avail and utilize credit fraudulently.
(xviii) Entry of transaction of Rs.15,00,000/- in the Kalas laptop and handwritten slip said to be pertaining to the cash transactions.
(xix) Based on the comparison of invoices, shown in the records of M/s.Parag Pentachem and the godown register of M/s.SOL a certain number of invoices (7 nos.) issued by M/s.DCW were said to have been diverted to Godowns of M/s.SOL and its associates. Besides, 25 nos. invoices shown in the records of M/s.Parag Pentachem as received from M/s.SOL were not found reflected in the Kalas laptop.
10. He further submits that from the investigation it is evident that the suppliers of the goods did not supply the goods. Therefore, there was no possibility of receipt of goods by the respondent No.1. From the circumstantial evidence it has been proved that the goods have not been received by the respondent No.1 and they have made entries in the accounts to show the receipt of the goods. Non receipt of the goods have also been admitted and accepted by the director of respondent No.1.
11. Further, making entries in the statutory records does not mean that the goods have actually been received in the premises of the respondent No.1. On the contrary, there was several evidences which proved that the respondent no.1 have not physically received the goods. The Commissioner (Appeals) failed to prove that the findings of the adjudicating authority which clearly show that the goods sent through seven invoices of M/s.DCW has been received there at depot of M/s.SOL and the same has been utilized by M/s.SOL whereas credit has been availed by the respondent No.1. Further, respondent No.2 who works as the Director of the respondent No.1, in his statement dated 15.12.07 has categorically accepted that they have purchased the goods from the local market of Delhi and arranged the invoices from M/s. SOL for the purpose of availing the cenvat credit. He also admitted that they have never purchased received any material from m/s.SOL only procured invoices for which they have made payment through cheques and the same received back equal amount from Shri Mukesh Sangla, the respondent No.3, the manager of respondent No.2. Retraction of statement by respondent No.2 is nothing but an afterthought to avail illegal benefit and to mislead the department.
12. He further submits that as per the decision of the Tribunal in the case of CCE, Mumbai-IV vs. Champion Confectionary-2010 (262) ELT 865 (Tri.-Mum.) wherein it has been held that retraction of any statement should be made to authority before whom statements were given, thus, it is between the giver of the statement and person before whom the statement was given. He also relied on the decision of the Tribunal in the case of Mahesh Kumar Goyel vs. CCE, Calcutta-II-2004 (177) ELT 561 ((Tri-Kolkata) to say that merely retraction without any evidence of duress or coercion do not deflect from evidentiary value of statements, especially if facts stated therein are corroborated by other evidence.
13. He submits that the appellant authority failed to take into account the hand written slips and entries made in the laptop of Shri Kala showing the receipt of payment in cheques and same being returned in cash to the respondent No.1. He further submits that the owners of the vehicle have also denied to have provided any vehicle for transport of the goods from the premises of M/s.SOL to the respondent No.1. They have also denied the fact that their vehicle has ever been attached to the transporters namely, M/s.Bombay Goods Freight Cargo (BGFC) and M/s.Blue Bird Transport Company (BBTC). Shri Vishal Agarwal representing the main transporters i.e. BGFC and BBTC has confessed that though no trucks were provided by them to m/s.SOL, they have charged Rs.100 to ShriPatidar for providing the LRs. Shri Paras Patidar, Marketing Manager of M/s.SOL in his statement dated 20.2.2009 has accepted that the purchase of LRs from M/s. BGFC and M/s. BBTC for Rs.100/- each. It is clear that physically goods were not received by the respondent no.1 whereas they have made entries in the books of accounts and have taken credit only on the basis of invoices received by them. The case law relied on by the Commissioner (Appeals) relating to the receipt of goods. Further, records recovered from the possession of Shri Kala, the investigating officers have produced corroborative tangible, cogent and convincing evidences to reveal the wrong methodology adopted by the respondents. Therefore, he submits that the impugned orders may be set aside and the adjudication order be restored.
Grounds on behalf of the all the respondents.
14. On the other hand, learned Counsel appeared on behalf of all the respondent opposed the argument advanced by the learned AR and submits that the case has been made out against the respondent is based on the written slips and laptop seized from the residence of Shri Kirti Kala, cashier of M/s.SOL and on the basis of the statement of Shri Kirti Kala and Shri Mukesh Sangla, director of M/s.SOL. The statement of Shri Paras Patidar, Marketing Manager of M/s.SOL was considered wherein he has admitted has accepted that the purchase of LRs from M/s. BGFC and M/s. BBTC for Rs.100/- each. The owners of the vehicle have also denied to have provided any vehicle for transport of the goods from the premises of M/s.SOL to the respondent No.1. The statements of the transporters of the goods also relied upon who refused the transportation of the goods. The statement of Shri Karni Singh Kothari, director of respondent No.1 is also relied upon who denied the receipt of the goods from M/s.SOL.
15. The contention of the learned Counsel is that documents relied upon by the Revenue was seized solely from the premises of third party i.e. Shri Kirti Kala who was not maintaining the record in the regular course of business but in personal capacity and were provided the documents have no connection with the respondent No.1. Third party document seized, does not show that to whom the cash amount was received and by whom the said amount was given. Shri Kirti Kala did not claim any person, therefore, reliance cannot be placed upon the documents/seized from the residential premises from Shri Kirti Kala, employee of M/s.SOL and the same has not been corroborated any tangible evidence. No incriminating documents/records were found in the premises of respondent No.1. It is further submits that evidence relied upon are recovered from the persons associated with M/s.SOL. Therefore, as per decision of Apex Court in the case of CBI vs. V.C.Shukla- AIR SC 1406, the demand cannot be sustained on the basis of these records.
16. He further submits that the same investigation was conducted against M/s.Narmada Extrusion Ltd. wherein the same set of evidences has been relied on and the Commissioner (Appeals) have set asdie the demand vide Order-in-Original No.IND/CEX/000/APP/80 & 81/2013 dt.21.2.2013 and the said order has been accepted by the Revenue. No appeal has been filed against the said order. The Revenue in this case is mainly distinguished their case from M/s.Narmada Extrusion Ltd. only on the ground that in this case there is admission by Shri Karni Singh Kothari that they have never received any goods from M/s.SOL. He further submits that Shri Karni Singh has retracted his statement but his retraction is not acceptable as his earlier statement is to be considered as whole wherein Shri Kothari stated that they are purchasing the goods from the Delhi market without any cover of invoice. He submits that this cannot be relied upon when the goods are available in the Indore against duty paid invoices and why the respondent no.1 take risk to purchase the goods from the Delhi marker without cover of invoice. Therefore, the said statement is not reliable piece of evidence. Therefore, the statement itself proves that the said statement was given under pressure and duress as there is no evidence that the respondent No.1 was using PVC resin manufactured by M/s.Reliance Industries only. Further, it is the statement of Shri Kothari that the goods have been purchased from the local market of Delhi. No enquiry was made to confirm that the goods were actually procured form the Delhi market and who were the dealers? How the purchases were made? How the goods were accounted and what is the mode of transportation. No evidence have been brought on record for such purchase made from the Delhi market. Therefore, he submits that the statement cannot accepted as held by Honble Allahabad High Court in the case of Vikram Cement Pvt.Ltd.2014 (303) ELT A82 (Alld.).
17. During the course of investigation, the officers resumed input invoices, RG-1 register, the raw material register, finished goods register RG23-A Part & and Part II. The goods were fully accounted and issued for production and no discrepancy in records were found and said record/documents Therefore, the same cannot be alleged fabricated or concocted when nothing was found wrong in the premises of the respondent no.1. Therefore, the demand cannot be confirmed as held by this Tribunal in Rinox Engg. Vs. CCE, Chandigarh-2014 9304) ELT 436 (Tri.-Del.) and CCE, Ludhiana vs. Pee Jay International Ltd.-2010 (255) ELT 418 (Tri.-Del.). The Revenue has placed relied upon the statement of Shri Vishal Agarwal, proprietor M/s. BGFC and authorised signatory of M/s. BBTC. He issued LRs to M/s.SOL by charging Rs.100 for each bilty and on the statement of 3 vehicle owners and out 32, who refused to have transported the goods. The said allegation is not sustainable. From his statement, it can be seen that he issued the bilties only when he talked to the driver of the vehicle for which he charged commissions of Rs.100/-. This clearly shows that the goods were transported from godown of M/s.SOL to the respondent No.1 and the statement has been deliberately misinterpreted by the Revenue. The Revenue has relied upon the statement of owners stating that they did not transport the goods. It can be seen that when the vehicles numbers are genuine and except the statement of the owners then the statements of the owners have no evidentiary value as the vehicles were driven by the drivers. To support this, he relied upon the decision of the Tribunal in the case of CCE, Ludhiana vs. Parmatma Jatinder Singh Alloys P.Ltd.-2011 (266) ELT 67 (Tri.) in the case of Monarch Metals Pvt.Ltd.-2010 (261) ELT 508 (Tri.-Ahmd.). There is no other documents or record to prove that the allegation of Revenue that the credit was availed without the receipt of the goods by the respondent No.1. There is no evidence that the goods from the factory were diverted elsewhere. He further submits that in case the goods consigned by DCW, the goods were consigned directly by DCW and there is no evidence how the goods have been diverted. There is no dispute that the inputs have been used in the manufacture of final products on which the duty has been paid. It is not the case of the Revenue that during the course of investigation, the officers found any other goods in place of goods to have been used in the manufacture of final products. There is no evidence on record that whether the goods have been diverted if not used by the respondent no.1 and no investigation has been conducted to that effect. Further neither M/s.SOL nor any person whose statement have been relied upon i.e. Shri Kirti Kala, cashier, Shri Ravindra Pingle, godown incharge and Shri Paras Patidar, Marketing Manager were made noticees. Even Shri Vishal Agarwal who alleged to have accepted the issue of bilty by charging Rs.100/- and without transportation of goods was made noticee which shows that the show cause notice was based on assumption/presumption. In these terms, the impugned orders are to be set aside.
18. Heard both sides, considered the submissions in detail and perused the records.
19. As the facts in the case of M/s.Prag Pentachem Pvt.Ltd. and M/s.Rajshri Plastwood are similar, therefore, the observations in both cases are similar and the same are recorded as under:-
20. The case of the Revenue for denial of credit is on the basis of written slips/laptop seized from the residence of Shri Kirti Kala, cashier of M/s.SOL, statement of Shri Kirti Kala, statement of Shri Mukesh Sangal, Director of M/s.SOL, statement of Shri Paras Patidar, Marketing Manager of M/s.SOL and the statement of transporters who stated that they have not transported the goods in question. In the case of M/s.Prag Pentachem Pvt.Ltd., the statement of Karni Singh Kothari, director was also relied upon by the revenue. Therefore, to deal with the cases, the evidence is to be examined as under:-
21. The documents received from the custody of Shri Kirti Kala and a laptop seized from him. Shri Kirti Kala was not maintaining the records in the regular course of business but these records were his personal records and it became third party evidence. Moreover, on examination of the documents, it is revealed that the amount of cash shown in those documents pertained to whom and to whom the cash payment was received and the said entries have not been corroborated by any independent tangible evidence. Therefore, the said evidence cannot be relied upon as admissible piece of evidence being third party record in view of the case of CBI vs.V.C.Shukla wherein the Apex court in para 34 and 39 has observed as under:-
34. The retionale behind admissibility of parties books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in a sufficient degree a probability of trustworthiness (Wigmore on evidence ? 1546). Since, however, an element of self interest and partisanship of the entrant to make a person behind whose back and without whose knowledge the entry is made liable cannot be rules out the additional safeguard of insistence upon other independent evidence to fasten him with such liability, has been provided for in Section 34 by incorporating the words such statements shall not alone be sufficient to charge any person with liability.
39. A conspectus of the above decisions makes it evident that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person. Keeping in view the above principles, even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the bother books and loose sheets (which we have already found to be not admissible in evidence under Section 34) are have already found to be not admissible in evidence under Section 34) are admissible under Section 9 of the Act to support an inference about the formers correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof. In that view of the matter we need not discuss, delve into or decide upon the contention raised by Mr. Altaf Ahmed in this regard. Suffice it to say that the statements of the four witnesses, who have admitted receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In other words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. According to the prosecution case itself his name finds place only in one of the loose sheets (Sheet No. 8) and not in MR 71/91. Resultantly, in view of our earlier discussion, Section 34 cannot at all be pressed into service against him.
22. Similar view was taken in the case of TGL Poshak Corporation vs. CCE, Hyderabad-2002 (140) ELT 187 (Tri.-Chennai) wherein this Tribunal in para 6 has observed as under:-
6.We have carefully considered the submission and? perused the impugned order. Insofar as the assessees appeal is concerned, we notice from the extracted portion of the Commissioners order that Revenue is solely relying on the exercise note books mainly balance steets. The Tribunal in large number of cases which have already been noted above in the tabulated list of citations furnished by the Counsel has held that unless there is clinching evidence on the nature of purchase of raw materials, use of electricity, sale, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of note books maintained by some workers. The facts in the case of Aswin Vanaspati Industries would be identical to the facts herein as in that case also the allegation was with regard to removal of Vanaspati based on the inputs maintained. The Tribunal went in great detail and have clearly laid down that unless department produces evidence, which should be clinching, in the nature of purchase of inputs and sale of the final product demands cannot be confirmed based on some note books. A similar view was expressed by the Tribunal in the other judgments noted supra. The citations placed would directly apply to the facts of this case. Hence, following the ratio of the cited judgments, the assessees appeal is allowed.
23. In the case of Rhino Rubbers Pvt.Ltd. (supra) again this Tribunal has held observed as under:
Goods not sufficient to prove clandestine manufacture and removal to have been purchased by one Mr.Augustin on behalf of the manufacturer - Such person not traced by the authorities nor his statement recorded - Manufacturer disowning the purchase of the raw material from the third party- Third partys records also showing names of the other purchasers but some of such purchasers of carbon black. HELD: It is not safe to rely only on the third partys records evidence when no direct links of the transaction established Other parameters like electricity consumption etc. should have been considered before demanding duty on the alleged clandestine manufacturer and removal of goods Order demanding duty and imposing penalty set aside and case remanded for de novo adjudication.
24. Therefore, third party evidence by way of documents/laptop printout seized recovered from the custody of ShriKirti Kala are not admissible piece of evidence to deny the credit. Further, I find that the statements of Shri Kirti Kala, Paras Patidar and Shri Mukesh Sangla were also relied upon but these statements have not been corroborated by any tangible evidence. I further find that during the course of investigation various statutory records resumed by the investigating team and the same have not been discarded by the authorities. Therefore, the said records are admissible evidence as per section 36A of the Central Excise Act, 1944 wherein it has been stated that any documents produced by any person or has been seized from the control of the said person under this Act or any other law. Unless contrary is proved by such person, it is presumed that the content of the said documents true. In this case, the Revenue has not been able to prove any contrary to the seized documents recovered from the custody of the respondent. Therefore, the same are admissible evidence in favour of the respondent as held by this Tribunal in the case of Rhino Rubber (Supra). Further, I find that the Revenue is heavily relied upon the statement of Shri Karni Singh Kothari, director of the respondent No.1 i.e. M/s.Prag Pentachem to say that he has admitted that they have not received any goods from M/s.SOL and procured the goods from open market in Delhi without any cover of invoice to cover those purchases they have obtained invoices from M/s.SOL.
25. On examination of that statement, although the statement retracted by Shri Karni Singh Kothri, this statement is required to be examined independently. On independent examination of the said statement, I find that the goods/inputs were not available in the Indore and the respondent have procured the inputs from the open market in Delhi without cover of invoices. No prudent manufacturer shall procure inputs from Delhi without cover of invoice to cover those purchases shall procure the invoices from Indore. Possibly, the Revenue has not made any enquiry from Delhi Market in respect of statement of Shri Karni Singh Kothari to ascertain the truth. Moreover, no statement has been recorded from the transporter in order to ascertain that the goods have been procured without cover of invoice from the Delhi market. The statement has not been supported with tangible evidence, the same cannot be relied upon in view of the decision of Honble Allahabad High Court in Vikram Cement Pvt.Ltd.. Another evidence relied upon by the Revenue is the statement of the transporter. Shri Vishal Agarwal, proprietor M/s. BGFC and authorised signatory of M/s. BBTC has stated that they have issued LRs to M/s.SOL by charging Rs.100 for each bilty and on the statement of 3 vehicle owners and out 32, who refused to have transported the goods. From the statement of Shri Vishal Agarwal, it is clear that he has issued bilty only when talked to the driver of vehicle for which he charged Rs.100/-. Therefore, the statement has been misinterpreted by the investigating authority to allege that the transporter of BGFC and BBTC. In fact no statement of the driver have been recorded to ascertain the truth whether the vehicle in question were involved in transporting the goods or not and no other evidence has been placed on record to ascertain the same. The Revenue has also not come with tangible evidence that the respondent have procured the goods in question from M/s.SOL and other associates. Further, the same investigation conducted in the case of M/s.Narmada Extrusion Ltd. wherein the same set of evidences has been relied on and the Commissioner (Appeals) have set aside the demand of duty and imposition of penalty vide Order-in-Original No.IND/CEX/000/APP/80 & 81/2013 dt.21.2.2013 holding that there are no sufficient ground to confirm the demand .and the said order has been accepted by the Revenue. No appeal has been filed against the said order.
26. In the case of Rajshri Plastwood, there is no incriminating statement by the respondent, therefore, this case is on better footing and the observations of the case of Prag Pentachem Pvt.Ltd. are squarely applicable to this case and are not repeated for the sake of brevity. In the circumstances, I am of the considered view that the Revenue has not concluded the proper investigation to ascertain the truth, moreover, have relied upon third party documents/evidence which cannot be an evidence to deny credit. Therefore, I hold that the respondent has correctly taken the credit and consequently, the respondents are not required to reverse cenvat credit and no penalty is imposable on the respondents.
27. To conclude, I do not find any infirmity in the impugned orders, the same are upheld and the appeals filed by the Revenue are dismissed.
( pronounced in the open court on 17.06.2015) (Ashok Jindal) Member (Judicial) mk 1