Custom, Excise & Service Tax Tribunal
M/S Sunland Alloys, Pravin Kumar A Ranka vs C.C.E. & S.T.-Vapi on 23 July, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad ^^^ Appeal No. : E/94-96/2012-SM [ Arising out of OIA-SA/173-175/VAPI/2011 Dated 11/11/2011 Passed by Commissioners of Central Exise, Customs and Service Tax-VAPI] M/s Sunland Alloys, Pravin Kumar A Ranka: Appellant(s) Shivraj Singhal Vs. C.C.E. & S.T.-Vapi : Respondent (s)
Represented by :
Appellant(s) : Shri Alok Barathwal (Advocate) Respondent (s) : Shri L. Patra (Authorised Representative) For approval and signature :
Mr. H.K. Thakur, Hon'ble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. H.K. Thakur, Honble Member (Technical) Date of Hearing / Decision:23/07/2015 ORDER No. 11137-11139/2015 Dated 23/07/2015` Per : Mr. H.K. Thakur, These appeals have been filed by the appellants against OIA No. SA/173-175/VAPI/2011 dated 11/11/2011 passed by Commissioner (Appeals), VAPI under which OIO No. 08/JC/OA.VAPI/2011-2012 dated 18/08/2011 passed by Adjudicating Authority has been upheld by the first appellate authority. Under OIO dated 18/08/2011. Adjudicating Authority disallowed a credit of Rs. 16,35,297/- to the main appellant M/s Sunland Alloys works, Silvassa under Rule 14 of the Cenvat Credit Rules 2004 (CCR), along with interest, and equivalent penalty was also imposed. Other two appeals have been filed by Shri Pravin Kumar, Partner and Shri Shivraj Singhal, Authorised Representative and Excise-in-charge of the main appellant with respect to penalties imposed under Rule-26 of the Central Excise Rules 2002 and upheld by the first appellate authority.
2. Shri Alok Barthwal (Advocate) appearing on behalf of the appellants argued that main appellant is manufacturing Alluminium, Brass and Copper ingots from raw materials Scrap of Alluminium, Brass and Copper. That main appellant is importing scrap and availing Cenvat Credit of these inputs used in the manufacture of final products in its factory situated at silvassa. That a case was booked against the main appellant and others on the grounds that inputs imported in certain containers were diverted elsewhere instead of taking these inputs to their factory and only Cenvat Credit was taken on the basis of documents/ Bills of entry without receipt of inputs. That M/s Pankaj Shipping and Transport Co.Ltd.(PSTC) were engaged by the main appellant as their CHA and transporter with respect to consignments of scrap imported at JNPT and their transport to silvassa. Revenue has based their case on the basis of Daily Loading Report prepared by PSTCs Loading Supervisor and the monthly loading report prepared vehicle wise by the driver of the vehicle. The statements of employees of PSTC and Manager-cum-Authority Signatory of main appellant were recorded to suggest that imported scrap was only transported upto Bhivandi by PSTC and after there no transportation details were available with the main appellant or PSTC that how inputs were taken to the factory premises of the appellant. That Revenue has also made its case on the logic that Cenvat Credit on imported Scrap was taken on an earlier date at the factory from dates of containers reaching back in Mumbai.
2.1 It is the case of the main appellant that only a bald statement is made by the Revenue based on the Daily Loading Report/Monthly Loading Report and the statement of Shri Rajeshwar Prasad R Dubey Proprietor of PSTC. That no investigation has been done from the drivers of the vehicle as to how and where the imported goods were delivered/unloaded. That no cross examination of the witnesses, whose statements were relied upon has been made available and that in the absence of such denial of Cross Examination the evidentiary value of the statements is lost. That in statement dated 24/09/2009 of Shri Pravin Kumar A Ranka, Partner of the main appellant, has stated that imported goods were received, recorded in the statutory records and used in the manufacture of finished goods. It is the case of the appellant that Credit was taken on the basis of Bills of entry and there could be a difference in the date of receipt of goods and credit taken because sometimes duty paying document are received late. It was also argued by the Learned Advocate that no alternative procurement of raw materials by the main appellant has been brought on record. It was strongly argued by the Learned Advocate that a case cannot be made on the basis of few statements, especially when Cross Examination of the relied upon witnesses was not allowed. That no Seizure of diverted inputs or Seizure of any cash was affected in any of the premises searched.
2.2 Learned Advocate relied upon the following Case Laws in support ot his various arguments:-
(i) Commissioner Vs. Motabhai Iron and Steel Industries [2015(316) E.L.T. 374 (Guj.)]
(ii) Commissioner of Cental Excise, Ludhiana Vs. Peejay International Ltd. [2010(255) E.L.T. 418 (Tri-Del.)]
(iii) Commissioner of Central Excise, Chandigarh Vs. Neepaz Steels Ltd.-2008 (230) E.L.T. 218 (P&H)
(iv) Commissioner of Central Excise, Daman Vs. Dhakad Metal Corporation-2012 (285) E.L.T. 382 (Tri-Ahmd.)
(v) R.A. Castings Pvt. Ltd Vs. Commissioner of Central Excise, Meerut-I 2009 (237) E.L.T. 674 (Tri-Del.)
(vi) Rhino Rubbers Pvt. Ltd. Vs. Commissioner of Central Excise, Bangalore 996 (85) E.L.T. 260 (Tri)
(vii) Commissioner of Central Excise, Coimbatore Vs. Rajguru Spinning Mills-
2009 (243) E.L.T. 280 (Tri.-Chennai)
(viii) Sakeen Alloys Pvt. Ltd. Vs. Commissioner of Central Excise, Ahmedabad-
2013 (296) E.L.T. 392 (Tri.-Ahmd)
(ix) Emmtex Synthetics Ltd. Vs. Commissioner of Central Excise, New Delhi-
2002(147)E.L.T. 649 (Tri-Del)
(x) TGL Poshak Corporation Vs. Commissioner of Central Excise, Hyderabad 2002 (140) E.L.T. 187 (Tri.)
(xi) Basudev Garg Vs. Commissioner of Customs-2013 (294) E.L.T. (353) Del.
(xii) Johnson Matthey Chem. India Pvt. Ltd. Vs. Commissioner of Central Excise, Belapur-2009 (240) E.L.T. 673
(xiii) Coromandal Fertilizer Ltd. Vs. Commissioner of Central Excise, Visakhapatnam-IV-2009 (239) E.L.T. 99(Tri.)
(xiv) Commissioner of Central Excise, Chandigarh Vs. Ashoka Steel Corporation-2014 (306) E.L.T. 666 (Tri.-Del.)
3. Shri L. Patra (Authorised Representative) appearing on behalf of the Revenue argued that Proprietor of PSTC has clearly stated that imported goods have not reached the factory of the main appellant. That no documentary evidence has been made available to the department as to how inputs have reached appellants factory. Learned Authorised Representative made the bench to go through para-9.11 (ii) of OIO dated 18/08/2011 to support his argument. Learned Authorised Representative also made the bench to go through para-9.6 of the OIO to highlight that containers provided by M/s J.M. Baxi and M/s NYK Link have been confirmed to have received empty containers after unloading of imported scrap and that the date of returned to Mumbai prior to the taking Cenvat Credit by the main appellant. Learned Authorised Representative, therefore, strongly defended the orders passed by the lower authorities. He relied upon the following Case Laws in Support of his arguments:-
(i) Ahmednagar Rolling Mills Pvt. Ltd. Vs. CCE, Aurangabad [2014 (300) E.L.T. 199 (Tri-Mumbai)]
(ii) Shalini Steels Pvt. Ltd. Vs. CCE, Hyderabad [2010 (258) E.L.T. 545 (Tri-Bangalore)]
(iii) Debu Saha Vs. Collector of Customs [1990 (48) E.L.T. 302 (Tribunal)]
4. Heard both sides to these appeals and perused the case records. The case is made against the main appellant M/s Sunland Alloys for clandestinely taking Cenvat Credit on imported scrap of copper without receipt of inputs in appellants factory. It is the case of the Revenue that copper scrap imported under the bills of entry have been diverted at Bhiwandi as per the statements of Shri Rajeshwar Prasad R Dubey, Proprietor writer of PSTC. Further Revenue has relied upon certain letters written by M/s J.N. Baxi and M/s NYK Link (I. Ltd.), who are the container providers in which imported scrap was transported from the port of import. As per the date of containers received back by the container provider, as reported by container provider, containers have returned back in certain cases before taking of credit. It is observed that the first statement dated 11/09/2007 of Shri Rajeshwar Prasad R Dubey states, inter alia, that imported scrap is first taken to the godowns in Bhiwandi and unloading of the imported Cargo from the container is done for the further transportation. That at Bhiwandi godown the imported goods were not only unloaded from the container but also stacked in there godown till further transportation were made. In the subsequent statement dated 19/12/2008, after three months Shri Rajeshwar Prasad R Dubey gives a different version that the hired transporter never transported any imported goods after they were unloaded at Bhiwandi or New Bombay after their reciet from JNPT. On the other hand questions were put by the investigation to Shri Pravin Kumar A Ranka, the partner of the main appellant as of how the goods reached from Bhivandi to appellants factory. Shri Pravin Kumar could not produce any documentary evidence except the freight payment document of PSTC . It was also stated by Shri Ahok Kumar that the matter was very old and numerous documents have been taken over during searches but it was confirmed that Cenvat Credit was taken by the main appellant after goods were received at their factory. In these circumstances when the same person Shri Rajeshwar Prasad R Dubey was giving contradictory statements regarding transportation of imported goods from Bhivandi to appellants factory, it was necessary to grant Cross Examination of this person who was a third party witnesses. This was more so required when the importer and user of inputs has never confessed to have not received the inputs and that only documents were received. On the issue of granting of Cross Examination CESTAT, in the case of Debu Saha Vs. Commissioner of Custom 1990 (48) E.L.T. 302 Tri., held that no doubt Cross Examination may not be granted in all cases but need for extending Cross Examination will depend on the circumstances of each case. Delhi High Court in the case of Basudev Garg Vs. CC [2013 (194) E.L.T. 353 (Tri-Delhi)], by relying upon the judgement in the case of J & K Cigarettes Ltd. Vs. [2009 (242) E.L.T. 189 (Tri.-Del)], held that statement against the assessee connot be used without giving them an opportunity of Cross Examination. Honble Delhi High Court made following observations in para-10 an 14:-
10. Insofar as the general propositions are concerned, there can be no denying that when any statement is used against the assessee, an opportunity of cross-examining the persons who made those statements ought to be given to the assessee. This is clear from the observations contained in Swadeshi Polytex Ltd.(supra) and Laxman Exports Limited (supra). Apart from this, the decision of this court in J&K Cigarettes Ltd.(supra) clinches the issue in favour of the appellant. In that case, the validity of Section 9D of the Central Excise Act, 1944 reads as under:-
9D. Relevancy of statement under certain circumstances.-(1) A statement made and signed by a person before any Central Excise Officer of a gazette rank during the course of any inquiry or proceedings under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains:-
(a) When the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or
(b) When the person who made the statement is examined as a witness in the case before tha Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.
(2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under this Act other than a proceeding before a Court, as they apply in relation to a proceeding before a Court.
14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D, of the Central Excise Act, 1994. The circumstances referred to in Section 9D, as also in Section 138 B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exist, the Noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi judicial proceedings. The Division Bench also observed as under:-
29. Thus, when we examine the provision as to whether the provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact tat the statement of such a person can be treated as relevant only when the specified ground is, it is obvious that there has to be objective for4mat5ion of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject ot judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted.
5. The same view was taken by us in the case of Sakeen Alloys Pvt Ltd. Vs. CCE Ahd,[2013 (296) E.L.T. 392(Tri-Ahmd.)]. Revenue did not accept this order and filed appeal in the jurisdictional High Court Honble Gujarat High Court in this case held that confessional statements solely, in the absence of any other corroborative evidence, cannot make the foundation for levying excise duty. Appeal filed by the department against this order of Gujarat High Court has also been dismissed by Supreme Court as reported in [2015(A 118) E.L.T. 319] in the present case there is not even a confessional statement from the main appellant that inputs were not received in their factory and Cenvat Credit was taken only on the basis of Bills of entry. Shri Rajeshwar Prasad R Dubey has given contradictory statements and being third party witness his cross-examination was must. On the issue of taking of Cenvat Credit on an allegation that inputs were not received by an asessee Gujarat High Court in the case of Commissioner Vs. Motabhai Iron and Steel Industries 2015(316) E.L.T. 374 (Guj.) made following observations in para-15, 17 and 19:-
(15) Thus, the demand of Rs. 3,26,188/- was based upon the fact that the vehicles which were shown to have transported the goods were not capable of carrying such goods. However, the Tribunal upon appreciation of the evidence on record has found as a matter of fact that the goods were duly found to have been recorded in the assessees factory and were consumed in production. Moreover, payment was made through banking channels and no investigation had been made at the consignorend in this regard. Under the circumstances, no error can be found in the findings recorded by the Tribunal so as to warrant interference.
(17) Thus, from the evidence on record, it appears that all the goods supplied by M/s. Motabhai Iron & Steel had nowhere admitted that the assessee was issued only invoices and that there was no delivery of goods to the assessee. Besides, all the payments that were made to M/s. Motabhai Iron & Steel were made through bank drafts. The Tribunal has also noted that, in all, demand was made in respect of 44 consignments. However, it was only in respect of two transporters, who had transported merely three consignments that the alleged discrepancy had been pointed out, whereas, in case of other transporters, no discrepancy has been found. In the light of the aforesaid findings recorded by the Tribunal, it cannot be said that there is any error in the conclusion arrived at by the Tribunal while deleting the demand of Rs. 13,62,301/-.
(19) From the findings recorded by the Tribunal, it is apparent that payment to M/s. Vasmin Corporation in respect of purchases was made through banking channels. Under the circumstances, the Tribunal has lightly held that demand cannot be confirmed against the assessee. The Tribunal has further found that it is an undisputed fact that all the purchases were duly recorded the statutory books of the assessee and the goods were also found to be entered in its statutory records. That the Department had not made any investigation of the unit of the assessee, which could have supported the findings of the adjudicating authority. None of the consignors of the goods have denied the clearance of goods to the assessee. There was no evidence on records to show that the records maintained by the assessee were not correct. The Tribunal, was according of the view that on the basis of statements of some transporters which were not corroborated by any material on record, a huge credit could not be disallowed is under these circumstances that the Tribunal has set aside the demands and the penalties imposed upon the assessee and the co-noticees.
6. Similarly in the case of Commissioner of Central Excise, Ludhiana Vs. P.J. International Ltd. [2010/ (255) E.L.T. 418 (Tri-Del), it was held by CESTAT-Delhi that once statutory records are maintained by an appellant, which is not doubted by the department, then by mear tallying numbers and dates of LRs and GRs in a statement, cannot be made a conclusive and satisfactory basis for diversion of inputs. In present case there is no evidence that diversion of imported goods took place. In case imported goods were diverted by the main appellant then what was the source of alternate raw materials procured by the main appellant for manufacturing finished goods. There is also no indication in the case records that raw materials in the stock of the main appellant showed any variations.
7. Learned Authorised Representative relied upon the case of CESTAT Mumbai in the case of Ahmednagar Rolling Hills Pvt. Ltd. Vs. CCE Aurangabad [2014 (300) E.L.T. 119 (Tri-Mumbai)]. It is observed from the facts of this case that suppliers of scrap raw materials in this case admitted receiving consideration in case without proper document. Further charge of clandestine production and removal was established by duty payment of Rs. 60,00000/- towards such duty evaded. It is in these Factual Matrix of the case where CESTAT held that cross-examination of the witnesses was not necessary. In the case of Shalini Steels Pvt. Ltd., Hyderabad Vs. CC Hyderabad [2010 (258) E.L.T. 545 (Tri-Bang)] also the supervisor of the appellant in that case gave the confessional statement which was also accepted by the Managing Director of the appellant. It was held by CESTAT that an employ of the appellant cannot be considered as a third party witness and cross examination was not necessary. Similarly in the case of Gopal Industry Ltd. Vs. CCE Indore [2007 (214) E.L.T. 19 (Tri-LB)] Larger Bench held as follows in para 18.1:-
18.1?The Daily report tin factory note-book contained details of production and issue of tin containers by the appellant, which did not reflect in the statutory record. The details of production and clearance of tin containers were also shown in the note-book Daily production report separately in respect of the appellant firm which tallied with the figures shown in the Daily report tin factory which contained figures both for the new tin factory as well in the name of the appellant. In this context, it will be noticed that the managing partner Shri Yogesh Garg confirmed in his statement recorded on 29-9-1998 that the documents recovered under the panchnama on 1-9-1998 were pertaining to production and clearance of tin containers by their factory. He stated that these documents consisted of daily production reports written in note-books, delivery challans, stock record of tins etc. The documents recovered pertained to production and clearance of tin containers. He also stated that amongst other supervisors, even Awadesh Kumar Saxena, Electronics Engineer looked after the production and clearance of the goods of the factory. The authorized signatory of the appellant Girijesh Kumar Rai, confirmed in his statement recorded on 28-9-1998 that the records shown to him were withdrawn from the factory of the appellant in his presence and that he had put his signatures on the said documents at the time of withdrawal on 1-9-1998. The Electronics Engineer, Shri Awadesh Kumar Saxena in his statement dated 28-9-1998 admitted that the portion of daily production reports note-book pertaining to the appellants was prepared by him and that challans and daily production reports which bear his signatures, were prepared by him and they were of the appellant firm. According to him, the daily production report depicted the number of tin containers produced/ manufactured on a specific day. Whenever, he prepared the daily production report/challan he submitted the original copy to the Managing Director. The facts revealed by the Managing Director, Shri Yogesh Garg, the authorized signatory, Shri Girijesh Rai and Shri Awadesh Kumar Saxena make it clear that the said private documents recovered from the appellant premises on 1-9-1998 were maintained by the appellant and that the record, namely, the daily production reports, challans etc. were pertaining to the clandestine production and removal of tin containers without payment of duty. We have perused copies of these two note-books containing the private record and we find that there were signatures of Awadesh Kumar Saxena, Electronics Engineer at various places. The daily report showed particulars of the opening stock, production and the closing stock of the said excisable goods. Admittedly, the production of the tin containers, which was recorded in these daily record books and which were removed, did not appear in the statutory record i.e. RG. 1 register of the appellant. This not a case where mere private record without anything more is relied upon. The private record was recovered from the factory of the appellant, and it is established beyond doubt and not even disputed that it was so recovered and that it belonged to the appellant. The nature of particulars contained in this private record clearly go to show their intrinsic authenticity about the clandestine production and removal of the excisable goods by the appellants who had obtained the excise registration for the manufacture of such goods in the firm name. There cannot be more authentic evidence than recovery of the said private record from the appellants factory which admittedly was prepared and bears the signatures of the supervisors of the appellant, and which is proved to have been maintained in the factory, from the statements of the partner Shri Yogesh Garg, the Electronics Engineer, Shri Awadesh Kumar Saxena who has made several daily reports in the said book, and the authorized signatory, Shri Girijesh Rai in whose presence the note-books were recovered under a panchnama. In answer to question No. 18, Shri Awadesh Kumar Saxena who was shown the Daily production reports, stated in his statement dated 29-9-1998 that all these pertained to the appellants who manufactured the tin containers and that these contained information regarding production and clearance. He also stated in reply to question No. 19 that all challans were prepared by Shri Rajeev Agarwal and others whose signatures he recognized. The authenticity of the recovered documents was admitted by the partner Yogesh Garg [noticee No. (2)] and noticee No. (6) (Girijesh Rai) who also admitted that the record pertained to unaccounted for production and clearance of the tin containers by the appellant. Any subsequent retraction by Shri Awadesh Kumar Saxena has been rightly held to be an afterthought to protect the noticees. This is not a case where any defence was taken up about less consumption of electricity that would have impelled the Revenue Officers to examine consumption of electricity. When production and removal of excisable goods in a clandestine manner is established by such positive documentary evidence and the oral evidence of the managing partner and the supervisor, it cannot be said that the Commissioner committed any error in holding that the appellant had manufactured and cleared tin containers in a clandestine manner. The quantum of liability which is worked out, has not been disputed before us. We find ourselves in complete agreement with the reasoning and findings of the learned Commissioner in holding that the charge of clandestine removal of tin containers by the appellants was established beyond doubt. No further corroboration was required in view of the clinching nature of the oral and documentary evidence establishing clandestine production and removal of tin containers by the appellant. It is evident that Shri Yogesh Garg, noticee No. (2), partner of the appellant, was in charge of the unit and was having overall control of the affairs of the unit. It was, therefore, rightly held that he was aware that the goods clandestinely manufactured and removed in the name of his partnership firm were liable to be confiscated.
7. In view of the above facts involved in this case larger bench held that oral evidence made by the Managing Director of the appellant and the positive documentary evidence recovered from the factory were of clinching nature. However as already mentioned in the present proceedings there is no confessional statement regarding diversion of inputs by the main appellant. The statements of Shri Rajeshwar Prasad R Dubey, proprietor of PSTC, recorded at different times are contradictory, and cannot be relied upon as evidence in the absence of any cross-examination and corroboration.
8. In view of the above observations appeals filed by the appellants are allowed with consequential relief, if any.
(Dictated and pronounced in the Court) (H.K. Thakur) Member (Judicial) Abhishek ??
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