Commissioner of Central Excise & ST, Daman VERSUS Garg Industries Pvt Limited

EXCISE Appeal No. 10151 of 2020-DB

[Arising out of Order-in-Original/Appeal No DMN-EXCUS-000-COM-019-19-20 dated 25.09.2019 passed by Commissioner of Central Excise, Customs and Service Tax-DAMAN]

Commissioner of Central Excise & ST, Daman

VERSUS

Garg Industries Pvt Limited

 

WITH

1. ExciseAppeal  10146 of 2020 (Shri Rajeshwar R Dubay)
2. ExciseAppeal  10147 of 2020 (Shri Daljit Singh Jaiswal)

• ExciseAppeal  10148 of 2020 (Yen Trading Pvt Ltd)

1. Excise Appeal 10149 of 2020 (Shri Shyamsunder P Agarwal)
2. ExciseAppeal  10150 of 2020 (Shri Prabhu Ramesh Chandra Mittal)

 

APPEARANCE :

Shri Prabhat K. Rameshwaram, Addl. Commissioner for the Appellant- Revenue Shri J C Patel & Shri Rahul Gajera, Advocates for the Respondent-Assessee

 

CORAM: HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON’BLE MR. RAJU, MEMBER (TECHNICAL)

DATE OF HEARING: 24.01.2023 DATE OF DECISON: 14.03.2023

 

FINAL ORDER NO.A/10443-10448/2023 RAMESH NAIR :

 

All the appeals filed by the Revenue are arising out of a common Order-in- Original No. DMN-EXCUS-000-COM-019-19-20 dated 25.09.2019 passed by Commissioner of Central Excise, Customs and Service Tax- DAMAN, therefore, all are taken up together for disposal.

 

2. Thebrief facts of the case are that the respondent M/s. Garg Industries Pvt. Ltd. is engaged in the manufacture of articles of Copper and

 

Copper Alloys. Respondent imported inputs/raw-materials such as Copper

/Brass/ Zinc Scrap etc. for use in or in relation to the manufacture of the aforesaid final products; and had availed the cenvat credit of the CVD paid on such imported inputs under the Cenvat Credit Rules, 2002 upto 09.09.2004 and thereafter, under the Cenvat Credit Rules 2004. An intelligence collected by the officers of DGCEI indicate that M/s. Garg Industries Pvt. Ltd.(hereinafter referred to as M/s GIPL)instead of taking the imported inputs to their factory at Daman for use in or in relation to the manufacture of the final products, had diverted the imported inputs for sale in the market. However, they had taken /availed the benefit of Cenvat Credit of CVD and other duties paid on such inputs on the strength of documents [i.e. on the Bills of Entries] only. The intelligence further indicated that M/s GIPL generally engaged M/s. Pankaj Shipping & Transport Co. ( hereinafter referred to as M/s PSTC) as the customs house agent (CHA) for clearance of the imported goods from Port of import at Mumbai; and also as transporter of the said inputs from the Port of import to their works/ factory at Daman. To cover-up the non- receipts of such inputs in the factory premises at daman, and to facilitate availment of CENVAT credit by M/s GIPL, it appeared that M/s GIPL prepared /got prepared forged transportation related documents for the inputs so diverted in connivance with M/s PSTC and others. The intelligence further indicate that records of entry of the vehicles shown to have transported the inputs to their works/ factory at Daman would not be available with Bhilad Check-post or with RTO of Gujarat State.

 

2.1 Based on the above intelligence, simultaneous searches were conducted by the officers of DGCEI in various premises of M/s PSTC (CHA & Transporter), and the records /documents maintained by the various functionaries of M/s PSTC relating to movement of vehicles/ transportation of goods such as Daily Loading Reports, Monthly Truck Loading Reports, CHA dockets, Delivery Challan Books, etc. As follow up action, the officers of the Jurisdictional Commissionerate also carried out searches at the factory premises of M/s. GIPL at Daman. Certain records/ documents were resumed by the officers for further investigation. It was alleged against the respondent that they have taken the Cenvat credit on the strength of duty paying documents (Bills of Entry) without receiving the goods. In these circumstances, the show cause notice was issued to deny the Cenvat credit

 

to the respondent and also proposing penalties on other co-noticees. The matter was adjudicated, the Learned Commissioner in the impugned order set aside charges alleged against the respondents and dropped the proceedings initiated through the show cause notice. Aggrieved with the said order, the Revenue is in appeals before this Tribunal.

 

3. Shri Prabhat Rameshwaram, learned Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the grounds of appeal. He further submits that Learned Adjudicating authority after referring to the details of the various correspondence made between the respondents, the investigating agency viz., DGCEI, and the office of the adjudicating authority with regard to supply of relied-upon documents it was, interalia, concluded by the adjudicating authority that the supply of RUD’s and granting inspection of original seized records to all the Noticee’s & sought by the adjudicator has not been discharged by the investigating agency. These observation and findings by the adjudicating authority are not only contrary to the admitted facts as brought-out in impugned OIO – whereby the adjudicating authority has detailed the various RUDs available with the adjudicating authority – but also illogical, in as much as, when it is being emphatically confirmed by the investigating agency vide their repeated communication as has been brought –out in details in impugned order addressed to the adjudicating authority to the effect that, apart from supplying all the requisite documents to the noticees, such documents have already been handed –over to the office of the adjudicating authority.

 

• He submits that since the investigating agency –i.e. DGCEI admittedly had submitted all the RUDs to the adjudicating authority way-back in the year 2012; hence being available with the Office of the adjudicating authority, it was upon the adjudicating authority to make available requisite RUDs on records with such authority, as directed by the Central Board of Excise & Customs, vide Chapter –III, para 9Aon page 15 of Adjudication Manual. Therefore, the adjudicating authority has not only ignored the Board’s directions in this regard, but has also grossly erred in holding –on to the fallacious claim of the Respondent that they did not receive the relied upon documents.

 

• He also submits that the finding of adjudicating authority that “ the provisions of Rule 15 of the Cenvat Credit Rules, 2004 cannot be invoked in the absence of the determination by the Jurisdictional Commissioner / Asst. Commissioner of the statutory duty mandated on such an officer”, is definitely not in accordance with the statutory provisions, and hence unacceptable. He relies on the ruling of Hon’ble High Court of Delhi in case of National Building Construction Company Ltd. Vs. Union of India &Ors. 2019 (20) G.S.T.L. 515 (Del.)

 

• He further submits that the adjudicating authority have completely missed the charges against the respondent and has overlooked the factual backgroundand outcome of investigation in this case, which are based in the context of denial of Cenvat Credit of input stage duty in view of non-receipt of duty paid inputs and its use in or in relation to manufacture of dutiable final products in the factory premises of M/s GIPL. Merely payment of applicable duties on inputs and possession of duty –paying documents alone are not sufficient to entitle a person to avail cenvat credit thereof. The investigation have sought to allege and establish non-receipts of duty paid inputs by M/s. GIPL and its use in manufacture of dutiable final products based on various tangible/corroborative evidences such as RTO reports evidencing non-transportation of goods to the factory of M/s. GIPL; documentary evidences, statements of key person of M/s GIPL, M/s PSTC, other transporters and records of manipulation of input-output ratio by M/s GIPL; which corroborate the allegations recorded in impugned SCN of wrong availment of Cenvat Credit of imported goods merely on the basis of duty paying documents without physical receipt of goods in their factory premises to be used in the manufacture of final products. The adjudicating authority appears to have ignored the statutory provisions that though Bills of Entry and invoices are the prescribed documents in terms of Rule 9 of the Cenvat Credit Rules, 2004 to avail the Cenvat Credit there-under; however, the same is admissible only if it otherwise fulfils the eligibility thereof in terms of Rule 3 of Cenvat Credit Rules, 2004 dealing with the applicability of the provisions there-under. Thus while the duty paying documents may establish the duty-paid nature of inputs, the other documents such as Lorry Receipts / consignment notes are also mandated and are necessary documents to establish receipt and use of the inputs in the factory of manufacture. If the intent of the government was to allow the benefit of Cenvat Credit merely on

 

the basis of duty paying documents, then there would have been no necessity for incorporating the phrase “ ….received by the manufacturer for use in, on in relation to, the manufacture of final products —-“ in the Cenvat Credit Rules 2002/2004. Therefore, the adjudicating authority has erred in brushing –aside the evidences and reliance on LRs and Transporter’s register and their statements as being third party evidences not to be relied for the purposes of present SCN. In the instate case, the facts and evidence brought –out by the investigations and mentioned in the impugned SCN clearly establish that such imported duty –paid goods covered by the Bills – of –Entry, have neither been received in the factory premises of M/s GIPL nor used in the manufacturing of final products. Therefore, the finding of adjudicating authority in this regard, are clearly out of mis-understood

/wrong interpretation of the statutory provisions and hence contrary to the statutory requirement; and hence clearly unacceptable.

 

• He argued that it is now settled law that in revenue cases the department is not expected to prove its case with a mathematical precision, and is not required to unravel each and every link in the chain. He relied upon the decision of Hon’ble Supreme Court in the case of Collector of Customs, Madras and Other Vs. D.Bhoormull – 1983(13)ELT 1546 (SC).

 

• Shri Prabhat Rameshwaram, learned Additional Commissioner (AR), post hearing filed written submission along with compilation of following judgments which is taken on record.

 

• VINODSOLANKI  UNION OF INDIA- 2009 (233) ELT 157 (SC)
• CCE,CHANDIGARH  VINAY TRADERS- 2016 (340) ELT 521 (Tri-Del)
• RAMACHANDRAREXINS PVT LTD- 2013 (295) ELT 116 (Tri-Bang)
• HARYANASTEEL & ALLOYS LTD- 2017 (355) ELT 451 (Tri-Del)
• LAWNTEXTILES MILLS P LTD- 2013 (297) ELT 561 (Tri-Chennai)
• CCE, MUMBAI Vs. KALVERT FOODS INDIA P LTD.- 2011 (270) ELT 643 (SC)
• TELESTAR TRAVELS P LTD Vs. SPECIAL DIRECTOR OF ENFORCEMENT- 2013 (289) ELT 3 (SC)
• PB NAIR C & F P – 2015 (318) ELT 437 (Tri-Mum)
• RAJESHKUMAR  CESTAT- 2016(333) ELT 256 (Del)
• MONTEXDYG & PTG WORKS- 2007 (208) ELT 536 (Tri-Ahmd)

 

• AGARWALOVERSEAS CORPORATION- 2009 (248) ELT 242 (Tri-Mum)
• KANUNGO& – 1983 (13) ELT 1486 (SC)
• PARAGONSTEELS P – 2018 (15) GSTL 298 (Tri-Bang)

 

4. Learned Counsels Shri J C Patel along with Shri Rahul Gajera,appeared on behalf of the respondent submits that the Principal Commissioner has rightly held that copies of seized documents, both relied upon and non- relied upon, have not been provided to the Respondent, despite several requests made by the respondents over the years. The stand of the investigating authority, DGGI, Mumbai that all the RUDs and Non RUDs have been provided to the Respondents is factually incorrect, contrary to the records and totally untenable. The adjudicating authority in the present matter held that investigating authority has not been able to produce any acknowledgement of receipts of the various seized documents by the Respondents. No such acknowledgment of receipt has been produced even in the present appeal. It is thus amply established and the Principle Commissioner has rightly held that several Relied upon documents have not been provided to the Respondent and several seized non-relied upon documents have also not been returned to the Respondent. In the circumstances, the dropping of the show cause notice by the Principal Commissioner is Justifiable on this ground itself. He placed reliance on the following judgments:

 

• TRIBHUVANDASBHIMJIZAVERI CCE – 1997(92)ELT 467 (SC)
• SHREE VENKATESH METAL CORPORATION CCE- 2012(284)ELT 663.

 

 

 

• He also submits that at the time of search at the Respondent’s factory no shortage of inputs was found and the physical stock of inputs and final productstallied with the  There is no admission of diversion of inputs at Navi Mumbai in any of the statement of the Respondent’s Director and employees. None of the transporters have in their respective statement denied transportation of the inputs to the Respondent’s factory at Daman. There is no evidence whatsoever of the alleged diversion of the inputs at Navi Mumbai. Not a single buyer of such alleged diversion has been

 

identified nor is there any statement of any person stating that there was such diversion at Navi Mumbai. There is no evidence of any alternate source of procurement of the inputs in lieu of the imported inputs which are alleged to be diverted at Navi Mumbai after being cleared from Nhava Sheva Port. In view of the aforesaid undisputed facts, the allegation in the Notice that the imported inputs which were cleared from Nhava Sheva Port were diverted at Navi Mumbai is clearly unsustainable in law and the Principal Commissioner has therefore rightly dropped the show cause notice.

 

• As regard the demand of cenvat credit on the basis of Daily Loading Reports (DLR) and Monthly Loading Report (MLR) of M/s Pankaj Shipping & Transport Co. –CHA cum transporter he submits that Statement of Mr. Dubey, Proprietor ofPankaj Shipping & Transport Co. unequivocally established two things – One that the destination mentioned in the DLRs is not the final destination and that their trailer –truck continued transport even beyond the destination made in DLRs and second that in such event, transport bills were prepared for the final destination beyond that mentioned in DLRs as per the telephonic instructions of the drivers. Thus merely because the destination mentioned in DLRs is Navi Mumbai, it does not follow from that the goods have not been transported beyond Navi Mumabi. What is to be seen that wherever the transportation is continued beyond Navi Mumbai, the transport Bills are prepared for the final destination based on the instruction of the drivers. In case of all the entries appearing in Annexure -1 of the Notice, the transport bills raised on the Respondent by Pankaj Shipping & Transport Co. are for transportation upto factory at Daman and all such bills have been paid by respondent by cheque. It is contended in the show cause notice that the final destination of Daman had not been mentioned in the MLRS and that therefore it should be concluded that the goods were not transported to Daman by Pankaj Shipping & Transport Co. The said contention is totally untenable. Firstly, as against the total 268 entries in Annexure A1 and 67 entries in Annexure –A3 e. total

335 entries, the DGCEI have selectively picked up and provided copies of only 46 MLRs in which the final destination of Daman has not been mentioned. It cannot be concluded on the basis of 46 MLRs selectively picked up by DGCEI that the final destination of Daman was not mentioned in the MLRs. Unless and until copies of all MLRs are provided to the Respondent and examined, it cannot be said on the basis of few MLRs

 

selectively picked by DGCEI that the final destination of Daman was not mentioned in the MLRs.

 

• Without prejudice he also submits that DLRs and MLRs are in the nature of rough records written by Drivers and on the basis of such third party records, no adverse inference can be drawn against the Respondent. Merely because the Drivers have not accurately maintained the MLRs, no adverse inference can be drawn on against the Respondent on the basis of such third party records. He placed reliance on the following decisions:-

 

• CCE Vishnu and Co. 2016(332)ELT 793 (Del.)
• TaksusSteels  Ltd. Vs. CCE -2015(329)ELT 859
• RamaShyama Papers  Vs. CCE – 2004 (168)ELT 494
• RutviSteel and Alloys  CCE – 2009(243)ELT 154
• SunhillCeramics  Ltd. – 2007(217)ELT 353.

 

• He also submits that the Notice has placed reliance on statementdated 19.12.2008 of Rajshwar R. Dubey, in which he stated that where higher freight bills had been prepared on instruction of the party to show transport to the factory of importers, after receipt of total amount of cheque, the excess amount had been adjusted towards miscellaneous expenses in cash. Firstly, a perusal of the said statement would show that his version about higher freight bills and adjustment of excess towards miscellaneous expenses in cash is spoken in respect of the party N.D. Metal and not in respect of the  Secondly, in any event this statement cannot apply to the Respondent because in this statement dated 11.09.2007 he has clearly stated that if their trailer-trucks continued the transport beyond the destination given in DLR, transport Bills were prepared on the basis of telephonic intimation of concerned drivers. In his statement dtd, 19.12.2008, he has confirmed the statement dated 11.09.2007 to be true. Thirdly, in any event, there is no corroborative evidence whatever of adjustment of any freight amount paid by cheque towards miscellaneous expenses in Cash. No details of such alleged expenses in cash undertaken on respondent’s behalf have been provided. Fourthly, Rajeshwar R, Dubey has not been examined as required by Section 9D of the Central Excise Act 1944 and opportunity has not been given to the Respondent to cross examine him as required by the said Section 9D. Fifthly, in any event, no

 

adverse inference can be drawn against the Respondent on the basis of such third party statements of transporters.

 

• He argued that reliance placed on the RTO report relating to Bhilad Check post to allege that the vehicle in question did not enter Gujarat and therefore could not have transported the goods to Daman is totallyuntenable in law. A bare perusal of the said RTO reports would show that no reliance can be placed on the same to allege that the vehicle did not enter Gujarat. It would seen that in the entire RTO Report the vehicles in question have been shown as having gone Out (O) of Gujarat without having entered in (I) to Gujarat. It is not possible for the vehicle to have gone out of Gujarat without having first entered in Gujarat. Further, statement dated 09.02.2009 of Rajendra Kumar Maurya, Driver of Pankaj Shipping and Transport Co. in which he has stated that the vehicles used to enter Gujarat via Talasari where there was no RTO Check Post. Thus merely because the RTO report for Bhilad Check post does not show entry of the vehicle, it cannot be concluded that the vehicle did not enter Gujarat since as stated by the said Driver, the vehicles entered Gujarat via Talasari where there is no RTO check  This also explains why the RTO reports at Bhilad Check post shows the vehicles as having gone out (O) of Gujarat without having entered In (I) to Gujarat via Bhilad Check Post. He placed reliance on the decision of M/s Gujarat Victory Forging Pvt. Ltd. Vs. CCE- 2019 (7)TMI -5-CESTAT- AHMEDABAD.

 

• Further, as regard the cenvat demand as per the Annexure -2 of the show cause notice he submits the cenvat credit in respect of these goods is sought to be denied merely on the ground that the RTO report obtained by the department does not shows entry of these vehicles into Gujarat via Bhilad Check Post.However none of said transporters have in their statement denied transportation of the inputs from Respondent’s Godown in Navi Mumbai to Factory at Daman. On the contrary, Daljit Singh, owner of Jasraj Goods Carriers has in his statement dated 14.06.2007 and 03.2009 maintained that their trucks were used to transport the goods from Respondent’s Godown at Navi Mumbai to Respondent’s factory at Daman and they have received freight charges for such transportation. He has further maintained that Register No. 6 which was recovered from his premises contained trip wise daily entries for all trucks and that these

 

entries were true and correct. Significantly, the DGCEI has not provided the Respondent, copy of the said Register despite several request. Further merely because the RTO report for BiladChek-post does not show the In (I) entry for the vehicles, it cannot be concluded that the vehicles did not enter Gujarat and did not transport the goods to factory.

 

• Asregard the Cenvat demand on the basis of Annexure A3 of the show cause notice he submits that the additional basis for raising the demand in Annexure –A3 is that two sets of Bills of Pankaj Shipping & Transport Co were found in respect of the same consignment, one for transport charges upto Navi Mumbai and another for transport charges upto Daman. However this cannot be ground for concluding that the goods were not transported to Daman. Respondent made payment of only that Bill which is in accordance with the actual transportation. Therefore, where two Bills were found, one upto Navi Mumbai and other upto Daman, Respondent paid the Bill for Navi Mumbai if goods were transported only upto Navi Mumbai and Respondent paid the Bill for Daman if the goods were transported up to Daman. As stated by Rajeshwar R. Dubey in his statement dated 11.09.2007, the said DLRs were prepared by their supervisors located at Panvel-Uran highway open space and on the basis of the DLRs, transport Bills were prepared and further if their trailer-trucks continued the transport beyond the destination given in DLR, transport Bills were prepared on the basis of telephonic intimation of concerned drivers. It is therefore possible that initially the Bills was prepared for the destination as mentioned in DLR and subsequently since the truck continued the transport beyond the destination given in DLR transport Bill was prepared for the final destination. The crucial facts however is that Respondent have paid for the transport bill as per the actual transportation. It is evident from Annexure-3 itself that merely because two sets of Bills were found, that is no ground to conclude that the goods were not transported to Daman.

 

• As regard the cenvat demand as per the Annexure B1 and B2 he submits that the allegation that respondent did not provide the evidence/ documents of further transportation from Navi Mumbai to Daman in respect of the goods mentioned in Annexure –B1 and B2 is patently false and incorrect. By letter dated 20.12.2006, 29.11.2007 and 07.01.2008, Respondenthad submitted copies of various documents such as Delivery

 

Challans, L/Rs, Transport Bills, etc. A complete set of these documents running into over thousand pages has also been submitted along with Respondent’s reply dated 20.01.2014 giving the details of transportation of the goods mentioned in Annexure B1 and B2 to Respondent’s Daman Factory. In the circumstances, the Principal Commissioner has rightly dropped the show cause notice and department’s appeal is liable to be dismissed.

 

5. We have heard both sides and perused the records. We find that the case of the department in present matter is that the imported inputs/ raw materials, as detailed in Annexure A1,A2,A3, B1 and B2 of the SCN, in respect of which Respondent availed the Cenvat Credit of CVD during the period January 2003 to March 2007, was transported from Nhava Sheva Ports to the Respondent’s Godowns at Navi Mumbai and was sold in cash at Navi Mumbai and was not transported to its factory at Daman. On the basis of this contention, the show cause notice proposed to deny the said Cenvat Credit. In the entire investigation the evidences which were brought on records are transporters’ statements and their records i.e Daily Loading Reports (DLR) and Monthly Loading Reports (MLR) andRTO reports according to which the vehicles mentioned in the Challans/records of respondents have not entered into Gujarat via Bhilad Check Post. We find that contrary to this evidences the fact that the respondent have recorded the receipt of the goods in their Raw materials account i.e. RG-23 Part –I and RG-23 Part-II, the purchase of the imported goods under the Bills of Entry in question were booked in books of account. The Respondent has also shown the use of disputed inputs in their factory premises for manufacture of finished goods, even the payment of transportation was also made by cheque. The Revenue could not bring any evidence that the goods covered under the Bills of Entry were diverted to any other place. It is also not the case of the department that the Respondent have procured some unaccounted inputs/raw materials to cover up the quantity of imported input shown in the said Bills of Entry. The statement of director of the Respondent’s company is exculpatory and there is no admission of any diversion of the imported duty paid inputs. Moreover in the present matter revenue could not find out any single buyer of the alleged diverted inputs.

 

• At the outset, it has to be stated that in this case no discrepancy was found in the statutory records. So also apart from the records of RTO and transporters and their statements there is no material evidence brought out by investigation to establish that the goods did not reach the factory of the Respondent. Whereas, all the documentary evidence stand in favour of the Respondent. The argument of revenue that the operation was meticulously planned and therefore the department in such cases cannot be asked to establish the case with mathematical precision. We have no quarrel with the submission made by the learned departmental representative that in clandestine cases, it may not be possible to put forward the case with extreme This does not mean that mere statements recorded would be sufficient to establish the charges alleged in the show cause notice. The statements should be supported by corroborative evidence. In the case on hand, if the department alleges that the raw materials were divertedwithout reaching the factory, then there should surely be evidence to show how the respondent have substituted the raw material since the statutory records show production and clearance of finished goods and clearance thereof on payment of duty. There is absolutely no evidence to show the substitution of raw material which in our view would cut the root of the allegation as the statutory records show that goods were manufactured. No shortage of raw material was detected during search of factory. No single buyer of diverted raw material was found by the revenue. In the present case no such inculpatory statement of alleged diverted imported inputs buyer is available, there was no shortage found in the stock if had the respondent availed the credit without receipt of inputs, there must be shortage of inputs which is not the case here. Thus, we find that the Revenue has failed to discharge the onus as regards the source of receipt of raw materials from any other alternative source rather have made a bald allegation on the manufacturers that they have diverted the imported raw materials on payment in cash in market. It is also observed that these facts are not under dispute that the respondent have recorded the receipt of the goods in RG-23 part-I register / stock register and payment of the same was made through cheque. The finished goods were cleared on payment of Central Excise duty. Transportation charges were also paid by account payee cheque and such payment was accounted for in the books of account. The payment of transportation was made after deduction of TDS. There is no evidence that the inputs shown in the bills of entry received by the respondent were not

 

used in the manufacture of final product. There is no allegation by the department regarding the financial flow back that against the alleged diverted imported inputs in market, any cash payment was received by the Respondent. With all these undisputed vital facts, merely on the basis of the RTO reports and transporters records, it cannot be concluded that the inputs were not received by the respondent in factory. Therefore the facts are established that the respondent have received the inputs in their factory used in the manufacture of final product and same was cleared on payment of duty. Further, the investigation is silent as to how the respondent- manufacturers, manufactured finished material without receiving the inputs. The law is settled that as long as duty payment is accepted on outputs, the benefit of credit available cannot be denied. Therefore, there are no substantial evidences which result the disallowance of credit. In this circumstance, we do not find any infirmity in the impugned order.

 

• We also noticed that in the present case the department for denying the Cenvat Credit placed reliance on third party evidence i.e. transporters documents /statements and RTO records.It is necessary to check the evidentiary value of the third party evidence as held in the judgments in the case of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal CCE, Raipur in Appeal Nos. E/52062 & 52066/2018, which is as follows:

 

9. The law i.e. as towhether the thirdpartyrecords 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 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. PragPentachem 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 – Thirdparty 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].

 

• Thus, it has been consistently held that demands of whatever nature cannot be confirmed solely on the basis of third party’s evidence/records.

 

• As regard the reliance placed on the RTO reports by the revenue, we find that it is common that truck drivers in order not to pay local tax or/ toll tax for some other reasons, take their vehicle through alternate routes. In such case, only on the basis of check-post report, it cannot be concludedthat the truck did not transport the goods to the respondent’s factory. Further the said report appears to be of no evidentiary value as observed that it does not give true and correct details of the inward or outward details of vehicles. The said report is erroneous because if the vehicle has made an inward entry it must have an outward entry before making an inward entry and vice versa. We also noticed that there is an alternate route available for transportation from Mumbai to Daman without going through Bhilad Check Post / without RTO check post. The same is also confirmed by the Driver Shri Rajkumar Maurya in his statement. In the circumstances, we are 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, we are of the view that the respondent has correctly taken the credit.

 

• Without prejudice, we also find that the department has not supplied the relied upon/ non-relied upon documents to the respondent in spite of their requests. It is the submission of Department that the documents were already been provided to the respondent and adjudicating authority. Howeverno such acknowledgment of receipts has been produced by the

 

revenue in the present appeal. The Learned Commissioner in this context given his detail finding at para 44.1.A and discussed the correspondences which have been exchanged by the respondent, investigating agency & the adjudication Section of Commissionerate and held that the supply of RUDs and granting inspection of Original Seized records to all Noticees & sought by the adjudicator has not been discharged by the investigating agency. This is a gross violation of the principles of natural justice. When the show cause notice is issued proposing to such huge cenvat demand and penalties, the department ought to have taken sufficient care to supply all relied upon documents to the respondent. The entire cenvat demand without supply of entire relied upon documents is against the principles of natural justice and hence the show cause notice stands vitiated. For this reason itself, the cenvat demand and penalty cannot sustain. In Tribhuvandas Bhimji Javeri v. Collector of Central Excise,1997 (92) E.L.T. 467 (S.C.), the Hon’ble Apex Court held that non return of the documents by the authorities may severely prejudice the right of the party to offer the proper explanation and to that extent the principles of natural justice may stand violated. In absence of supply of the copies of the documents a party may be deprived of from leading proper evidence and he may not be able to give proper answer of the case against him by adducing positive evidence in support of his own case together with the right to contradict all other allegations. Deciding a case without furnishing proper documents by the Revenue ignoring the essentials of justice, may render the order a nullity.

 

• Once it is clear that the respondent were sought to be issued show cause notice without furnishing copies of relied upon documents and even the efforts were made on the part of the respondents to get the same didnot yield any fruitful result and even today the copies of the documents are not made available to the respondents.

 

• Itis not disputed in our view that first the relied upon documents were not supplied either to the respondent or to the adjudicating authority despite several requests/reminders made to the investigating authority. Even the said documents were not submitted by the revenue along with their appeal or thereafter. Not only that, even after many years of adjudication and filing of revenue’s appeal, the said relied upon documents could not be brought before  It is pertinent to note that despite the above position, during the

 

conclusion of the hearing before us, the learned AR for the revenue sought time for production of relied upon documents on which, we, keeping in view the principles of natural justice granted time to the revenue for production of relied upon documents but since the documents are not available, even after more than one and half months of hearing the revenue could not produce the same before us. In view of the above undisputed fact, it is established that the revenue has failed to provide the relied upon documentswhich is the foundation of the case in hand. Therefore the finding of the adjudicating authority on the point of non availability of relied upon documents can not be found faulted which does not warrant interference in the impugned order.

 

• As regard the plethora of judgments relied upon by learned AR in his post hearing submission, we find that the present case is based on its individual fact. In this nature of cases, the fact varies from one case to another. As discussed above, as per the fact prevailing in present case, the department could not make out a strong case of non receipt of inputs on which the cenvat credit was taken therefore, in view of the facts of the present case which is different from the facts in judgments relied upon by learnedAR, the ratio of the said judgments cannot be made applicable in the present case. Therefore, all the judgments cited by learned AR stand distinguished being involved different facts.

 

6. As per the discussion and findings and observations made by us hereinabove, we do not find any infirmity in the impugned order, hence the appeals of the revenue are not tenable. Accordingly, we uphold the impugned order and dismiss the appeals of the revenue.

(Pronounced in the open court on 14.03.2023)