S.S. Sekhon, Member (T)

1. Appellant in appeal No. E-870/04-Mum, an assessee under the Central Excise Act, 1994, is engaged in the manufacture of Printed Self. Adhesive PVC stickers/strips avails benefit of credit of duties paid on inputs used in relation to the manufacture of the exercisable goods; the other appellants are its Managing Director and other executives and dealers, registered under the Central Excise Rules to issue invoices on common notice, consequent to enquiries conducted by the officers alleging

i) Credit has been availed by the assessee, fraudulently on the basis of dealers invoices without, having received the goods mentioned in such invoices and/or using/consuming the same in the manufacture of final products.

ii) Assessee having utilized such fraudulent credit for payment of duty on the final products and submitting false return.

iii) The dealers were alleged to have contravened the provisions of Rule 57GG for having issued invoices without goods and indicating on the invoices false details of transport with a view to enable the assessee to avail fraudulent credit.

iv) The other notices were alleged to have aided and abetted and were liable for penalty under Rule 209A.

2. The Commissioner after considering the replies found the charges leveled against all the notices to survive in to to confirmed the demands of disallowance of credit under Rule 570(1)(b) wrongly availed, demanded the same, imposed a penalty equivalent to the demands so made under Rule 571(4) along with interest under Rule 571(4); imposed penalty vide Rule 173 Q read with Rule 25 and varying amount of penalty under Rule 209A on all the other notices. Hence these appeals and stay applications.

3) After hearing both sides and coming to the issues, it is found that the appeals itself could be decided at this stage, the same are taken up for decision after waiver of predeposit, it is found -

a) The entire case of nonreceipt of the inputs is built upon the statements of the transporters and others are co_notice and the entries of certain transactions in the Saving Bank accounts of the Managing Director of the assessee.

b) Perusal of the Panchnama dated 1.9.99, on the visit of the officer, no discrepancy of finished goods and other stocks was noticed.

c) While statements of 2 transporters were recorded immediately, while the statements of others are recorded about 3 years later. These statement have been analyzed by the learned Advocate and the analysis results, which are recorded hereunder, would indicate that the statement have to be reconsidered in light of the apparent contradiction. Their effect is to be re_evaluated. The impugned order has to be set aside and matter remanded with direction to adjudicate to arrive at fresh findings on this aspect of the statement.

Name of the Transporter : Shri Mohan Appa Patil

Vehicle No. MH04-S-6431

Date of Statement : 07-09-1999

As per Statement

As per Documentary Evidence

He had made no trips for M/s. Arihant Chemicals in last 2 months and before that he had made only local trips in Bhiwandi

He had made trip for M/s. Arihant Chemicals on 20-08-1999, barely 15 days before: his statement outside Bhiwandi to M/s. Sudarshan Chemicals (Ind.) Ltd. Having factory at Roha, Mahad & Pune. Documentary Evidence: D. O. No. NM 640 dated 20-08-1999 covering invoice No. 7294 dated 20-08-1999.



Name of the Transporter : Shri Chunnilal D Hatil

Vehicle No. MH04-S-3164

Date of Statement: 07-09-1999, 24-05-2002 & 20-07-2002

As per Statement

As per Documentary Evidencc

He had made only local trips in Bhiwandi for M/s. Arihant Chemicals: that he himself drives the; vehicle; that he dos not maintain any records, docs nut issue Lorry Receipts and takes payment in cash.

In the month of July & August, itself, he has made several trips outside Bhiwandi for M/s. Arihant Chemicals as well as for M/s. Engg. Chemical Corpn. Where Shri Bhupondra Sakaria, owner of M/s. Arihant is a partner. Documentary Evidence* D. 0. Nos. 643/23-08-1999, 644 / 23-08-19U9, NM502 / 24-07-1999, NM64S/ 23-08-1999 Covering invoice Nos. 7303, 7302, 706H & 7302 of snine da: for deliveries to Dtmibivli, Gorcgaon, Vilcpark & Ialoja.



Name of the Transporter Vehicle No. MH04-C-1353

: Shri Balaram Kucher Patil Date of Statement : 05-U5-2001

As per Statement

As per Documentary Evidence

Me had made only local trips in Bhiwandi for M/s. Arihant Chemicals; that he .himself drives his fathers vehicle: that he docs not maintain any records, does not issue Lorry Receipts and takes payment in cash.

He has made several trips outside Bhiwandi for M/s. Arihant Chemicals as well as for M/s. Engg. Chemical Corpn. where Shri Ghupcndra Sakariu, owner of M/s. Arihant Chemicals is a partner. Documentary Evidcncc" D.0. Nos. NM001 / OH-OH-199U, NM59!VUn-UH-M)99 &NM30:)/(X)-U8-19!)0 covering invoice Nus. 7/!U*t, 7197, 680 of same date for deliveries outside Bhiwandi.



Name of the Transporter : Shri Bhagwan Atmaram Patil

Vehicle No.MH04-s-8181

Date of Statement : 05-02-2001 & 17-07-2002

As per Statement

As per Documentary Evidence

He had made only local trips in Bhiwandi for M/s. Arihant Chemicals: that he himself drives his fathers vehicle: that he docs not maintain any records, docs not issue Lorry Receipts and takes payment in cash.

He has mad* several trips outside Dhiwandi for M/s. Arihanl Chemicals :is will as for M/s. Engg. Chemical Corpn. where Shri Dhupendra Stikarin, owner of M/s. Arihant Chemicals is a partner. Documentary Evidence: D. 0. Nos. NM624 / 12-08-1999) NM597/y 30-07-1999 &NM369/13-08-1999 covering invoice Nos 7246 7191,726 of same date for deliveries outside Bhiwandi



Name of the Transporter : Shri Santosh Kisan Wakdc

Vehicle No. MH04-AG-4327

Date of Statement : 08-06-2002

As per Statement

As per Documentary Evidnnce

He had made only local trips in Bhiwandi for M/s. Arihant Chemicals: that he himself drives his fathers vehicle; that he does not maintain any records, does not issue Lorry Receipts and takes payment in cash.

lie lias made several trips outside Bhiwandi for M/s. Arihant Chemicals us well as frr M/s. Engg. Chemical Corpn. where Shri Bhupendra Sukurla, owner of M/s. Arihant Chemicals is partner. Documentary Evidence: D. 0. Nos. NMU15 / ] 1-OH-1999. NM582/26-07-1999 &332 /10-08-1999 covering invoice Nos. 7234. 7152. & 700 of same date for deliveries outside Bhiwandi.



Name of the Transporter

: Shri Anant M. Mahadik

Vehicle No. : Owner of M/s. Om Koadlines, Bhiwandi.

Date of Statement : 20-05-2002

As per Statement

As per Documentary Evidence

He has never transported goods for M/s. Arihant Chemicals and other suppliers to Vasai; that no record prior to year 2000 was available with him; that he purchased his vehicle between December 2001 to January 2002.

The period of SCN covers only up to year 1999 and he did not even have his own vehicle then, which he purchased almost 2 years later. Besides, he did not have any record prior to year 2000. In such an event, the question of him transporting or otherwise of goods does not arise and his statement has no value, whatsoever.



Name of the Transporter : Shri GanpaL Dashrat Bhoir

Vehicle No. : MH04-O1442

Date of Statement : 05-02-2001

As per Statement

As per Documentary Evidence

He had made only local trips in Bhiwandi for M/s. Arihant Chemicals; that he himseif drives his fathers vehicle, that he does not maintain any records, does not issue Lorry Receipts and takes payment in cash.

The statement has no evidentiary value as the said person does not maintain any records, takes charges in cash and dons not issue any Lorry Receipts.



Name of the Transporter

: Shri Bharat Motiram Patil

Vehicle No. : MH04-C-3248 &MH04-S-1079

Date of Statement : 05-02-2001

As per Statement

As per Documentary Evidence

Me had made only local trips in Bhiwandi for M/s. Arihant Chemicals; that he himself drives his fathers vehicle, that he does not maintain any records, does not issue Lorry Receipts and takes payment in cash.

The statement has no evidentiary value as the said person does not maintain any records, takes charges in cash and does not issue any Lorry Receipts.



Name of the Transporter

: Shri Jitendra Kashinath Patil

Vehicle No. : MH04-S-4557

Date of Statement : 05-02-2001

As per Statement

As per Documentary Evidence

He had made only local trips in Bhiwandi for M/s. Arihant Chemicals: that he himself drives his fathers vehicle, that he does not maintain any records, does not issue Lorry Receipts and takes payment in cash.

The statement has no evidentiary value as the said person does not maintain any records, takes charges in cash and does not issue any Lorry Receipts.



Name of the Transporter

Shri Bhagwan Atmaram Patil

Vehicle No. : MH04-S-8181

Dale of Statement : 17-17-2002

As per Statement

As per Documentary Kvidence

Further statement recorded wherein he stated that he had a driver and he had made trips outside Bhiwandi.

This contradicts his earlier statement of 05-02-2001 wherein he had stated that he never went out of Bhiwandi and that he himself managed all aspects of the vehicle.

IT IS PERETINENT TO NOTE THAT ONLY 2 STATEMENTS WERE RECORDED IMMEDIATELY AND ALL OTHER STATEMENTS WERE, RECORDED ALMOST 3 YEARS AFTER THE RAID AND THE APPELLANTS HAD COMPLAINED IN WRITING TO THE COMMISSIONER THAT THE SAME WERE BEING RECORDED UNDER THREAT AND USING QUESTIONABLE MEANS VIDE LETTER DATED 07-08-2002 AND HAD REQUESTED INDEPENDENT INQUIRY IN THE MATTER. ALSO THE GENERAL MANAGER (WORKS) HAD PERSONALLY MET THE COMMISSIONER IN THIS REGARD BUT NOTHING WAS DONE IN THE MATTER.

d) The plea of vital aspect of the use of the impugned goods, question thereof, as would be evident from the test reports of UDCT on the final end product which were drawn on 27-09-2002, and have not been considered by the adjudicator, are being strongly relied upon by the defence to be in their favour. These are required to be reconsidered. An order issued without supplying and or considering the submissions made by Defence and material relied by them, is bad and in violation of natural justice. The test reports, opinion of UDCT, should be supplied. The defence plea thereon considered. Thereafter findings should be arrived. Reliance on the case of M.S. Name (2000 (123) ELT 39 Cal) and Sunder Ispat Ltd. (: 2002 (141) ELT 24 AP) by the learned Advocate is well founded. The matter needs to be remitted back to be re-determined. Prima facie, there is force in the appellants submission that the alleged inputs are an important component used in the manufacture of their final products. Without receipt and use such final products manufacture cannot, be effected. The appellants valuable right to demonstrate, the receipt and use of the inputs, alleged to be not physically received, is therefore denied by shutting out this vital evidence, which goes to the root of the issue. The order is therefore required to be set aside and remitted for de novo adjudication.

e) The appellants demonstrate for item called Natrosol 250 alleged to have been not received. The same appears to be issued for consumption vide material slip bearing No. 174 to 176 dated 30.08.99, 31.08.99 and 07.09.99 with Order No. 52. The Production Supervisor, D.D. Joshi, has given contradictory statements, on this very product, he should be confronted, with these documents before the adjudicator. The facts are to be established in the remand proceedings now being ordered.

f) From a prima facie perusal of the statements of the godown keepers, the facts of vehicles number being put by and persons responsible thereto and if such vehicles are found to have not transported the goods, the facts are to be redetermined by cross examination of these deponents. Contractions now pointed in the statements resolved, before findings are arrived after giving due consideration to the submission of the assessee thereon.

g) Since the issue is required to be remitted back for redetermination of essential facts, other issues are kept open to be redetermined in the remand proceedings.

3. Consequently all appeals allow as remand. Appeal is disposed.

(Pronounced in Court)