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AVM Brothers and Ors. Vs. C.C.E., Bhopal and Ors. - (Customs, Excise and Service Tax Appellate Tribunal) (13 Dec 2017)

In absence of investigation of consignee/buyer of goods, demand is not sustainable



In facts of the case, based upon search by the officers of Directorate General of Central Excise Intelligence, Assessee-appellant was issued with Show Cause Notice on ground that, it had received only invoices, without accompanying goods i.e. plastic granules from Signet Overseas Ltd. (SOL) and associates and availed Cenvat credit, based on such invoices. The statement of Transporters, employees of M/s. SOL and its records were relied upon to make such allegations. It was also alleged that, on enquiry from office of RTO, some of the vehicles used for transportation of goods to the Assessee- Appellant were found to be Tankers, Auto Rickshaws, Scooter and Motor Cycles, which were not capable of transporting the impugned goods. It was thus, proposed to disallow the cenvat credit of Rs. 1,56,07,771/- to the Assessee-Appellant. Further, a demand of Central Excise duty of Rs. 72,02,038/- along with penalty was proposed against the Assessee-Appellant on the ground that, it had cleared finished goods and inputs to AVM Brothers, New Delhi and other parties. The computer records maintained by the Assessee-Appellant and transit passes of M/s. Dashmesh Roadlines were relied upon to frame the charges.

Instant Appeals are against the impugned order passed by the Commissioner. Vide the impugned order, the adjudicating authority has dropped the Duty demand of Rs. 1,27,29,183/- against the Assessee-Appellant M/s. Manish Industries. However, cenvat credit of Rs. 18,85,971/- was disallowed and equal amount of penalty was imposed on it under Rule 15 of Cenvat Credit Rules, 2004. Further, demand of Rs. 72,02,038/- was also confirmed against the Assessee-Appellant along with imposition of equivalent amount of penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002. Besides, impugned order has also imposed penalties on other Appellants and M/s. AVM Brothers under Rule 26 of rules. Feeling aggrieved with impugned order, the above Appellants have filed appeals before the Tribunal. The Revenue is also in appeal before the Tribunal, against dropping of demand of Rs. 1,27,29,183/- by the adjudicating authority.

The Assessee-Appellant had sought cross examination of main transporter and all other transporters, whose vehicles were used for transportation of goods to its factory premises. However, the request was rejected by the adjudicating authority. The Assessee-Appellant also challenged the authenticity of computer data of laptops seized from employees of M/s. SOL. The adjudicating authority has held that, the demands made on the basis of third party statements and records i.e. employees of M/s. SOL are not sustainable. The cross examination of transporter was not allowed by the adjudicating authority and thus, the assessee had no occasion or scope to verify the authenticity of statements of transporter or relied upon documents. Shri Vishal Agarwal, who had issued the bilties, had also stated in his statement that, the bilties were issued only after taking to drivers over phone. In such an eventuality, no demand can be made against the Assessee-Appellant on the basis of third party documents, as held by this Tribunal, in case of CCE, Chennai Vs. R.V. Steels Pvt. Ltd., M/s. TGL Poshak Corporation Vs. CCE, Hyderabad, CCE, Ludhiana Vs. Parmathma Jatinder Singh Alloys Pvt. Ltd.

A demand of Rs. 18,85,971/- was confirmed against the Assessee-Appellant on the ground that the vehicle shown to have transported the goods were not capable of such transportation being tankers, tempos, auto rickshaw and in two cases, were moped and scooter. The receipt of inputs has been denied only on the ground of the vehicles were not capable of transportation of goods. The receipt of inputs has not been disputed, nor has any other corroborative evidence been brought on record by the Department to sustain the charges. The Assessee had provided the correct number of vehicles and also some of the addresses of owners were also provided. In that case, the same could have been verified. The cross examination of transporters were rejected. The records of the assessee-appellant showed the receipt of inputs and their consumption, which has not been disputed by the Department. The final products which have been cleared on payment of duty are not in dispute. The Revenue has also failed to prove flow back of money for non-receipt of the goods. In the absence of any contrary evidence, the Cenvat credit cannot be denied to the Assessee, as held by the judicial forums in case of CCE, Chandigarh Vs. Neepaz Steels Ltd., EM ESS Electricals Vs. CCE, Delhi, Adhunik Ferro Alloys Ltd. Vs. CCE, Chandigarh 2009 (223) ELT 131 (TRI) and C.C.E., Ludhiana Vs. Parmatma Singh Jatinder Singh Alloys P. Ltd. Credit cannot be denied to the Assessee-Appellant.

Another demand of Rs. 72,02,038/- has been made against the Assessee-Appellant on the ground of clearances of raw material and finished goods to AVM Brothers and others. No investigation has been undertaken at AVM Brothers, who allegedly consigned the re-processed granules and received Plastic granules from the Assessee-Appellant. In absence of any investigation from the person, who maintained the details at the factory of the Assessee-Appellant, denial of request for cross examination of transporter and investigation from M/s. AVM Brothers, the alleged recipient of Plastic Granules and consignor of re-processed granules, the demand cannot be sustained. No details of any consideration towards such transactions appearing anywhere. In case of M/s. CCE, Chennai Vs. Dhanvilas (Madras) Snuff Co., the Tribunal held that, in absence of investigation of the alleged consignee/buyer of the goods, the demand is not sustainable. The impugned order, so far as it confirmed the adjudged demand against the Assessee-Appellant is required to be set aside. Appeal filed by the assessee-Appellant is allowed and the Revenue's appeal is rejected.

Relevant : M/s. CCE, Chennai Vs. Dhanvilas (Madras) Snuff Co.MANU/CC/0150/2002 : 2003 (153) ELT 437 (TRI)


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