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lhek “kqYd ,oa dsUnzh; mRikn “kqYd vk;qDrky;] dsUnzh; mRikn Hkou] jsl dkslZ] fjax jksM jktdksV-360001 CENTRAL EXCISE & CUSTOMS COMMISSIONERATE

CENTRAL EXCISE BHAVAN : RACE COURSE RING ROAD RAJKOT 360 001

Phone – (0281) 2442030, 2441980, 2441982 Fax – (0281) 2443313, 2452967 Email: [email protected] Qk- la- F.No. V.25/15-316/Adj/2009

By RPAD/HAND DELIVERY

vkns”k dh rkjh[k Date of order

25.03.2013 ewy vkns”k la- ORDER IN ORIGINAL NO. 43 & 44/COMMR/2013

tkjh djus dh rkjh[k Date of Issue

14.05.2013

vkns”kdrkZ Ordered by

वी प नाभन vk;qDr

ds-m-“kq- vk;qDrky; jktdksV V. Padmanabhan Commissioner,

Customs & Central Excise, Rajkot.

ds lanHkZ esa In the case of

M/s. New Kishan Cement Private Limited & others.

dkj.k crkvks la- ,oa frfFk Show Cause Notice No. & Date

1. AE/D.II/AR-Shapar/Commr/ 55/2011 dated: 29.03.2011

2. IV/3-31/D/2009 dated:

21.10.2008

1. जस य (य ) को यह ित भेजी जाती है, उसे य गत योग के िलए िनःशु क दान क जाती है। This copy is granted free of charge for private use of the person(s) to whom it is sent.

2. इस आदेश से असंतु कोई भी य इस आदेश क ाि से तीन माह के भीतर सीमा शु क, उ पाद शु क एवं सेवाकर अपीलीय यायािधकरण, अहमदाबाद पीठ को इस आदेश के व अपील कर सकता है। अपील सहायक र ज ार, सीमा शु क, उ पाद शु क एवं सेवाकर अपीलीय यायािधकरण,O-20, मेघाणीनगर, यु मे टल हॉ पीटल क पाउ ड, अहमदाबाद-380 016 को स बोिधत होनी चा हए। Any person deeming himself aggrieved by this Order may appeal against this Order to the Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad Bench within three months from the date of its communication. The appeal must be addressed to the Assistant Registrar, Customs, Excise and Service Tax Appellate Tribunal, O-20, Meghani Nagar, Mental Hospital Compound, Ahmedabad-380 016.

3. उ अपील ा प सं. इ.ए.3 म दा खल क जानी चा हए। उसपर के य उ पद शु क (अपील) िनयमावली, 2001 के िनयम 3 के उप िनयम (2) म विन द य य ारा ह ता र कए जाएंगे। उ अपील को चार ितय म दा खल कया जाए तथा जस

आदेश के व अपील क गई हो, उसक भी उतनी ह ितयाँ संल न क जाएँ (उनम से कम से कम एक ित मा णत होनी चा हए)। अपील से स बंिधत सभी द तावेज भी चार ितय म अ े षत कए जाने चा हए।

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The Appeal should be filed in form No. E.A.3. It shall be signed by the persons specified in sub-rule (2) of Rule 3 of the Central Excise (Appeals) Rules, 2001. It shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against (one of which at least shall be certified copy). All supporting documents of the appeal should be forwarded in quadruplicate.

4. अपील जसम त य का ववरण एवं अपील के आधार शािमल ह, चार ितय म दा खल क जाएगी तथा उसके साथ जस आदेश के व अपील क गई हो, उसक भी उतनी ह ितयाँ संलगन क जाएंगी (उनम से कम से कम एक मा णत ित होगी)। The Appeal including the statement of facts and the grounds of appeal shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against (one of which at least shall be a certified copy.)

5. अपील का प अं ेजी अथवा ह द म होगा एवं इसे सं एवं कसी तक अथवा ववरण के बना अपील के कारण के प शीष के अंतगत तैयार करना चा हए एवं ऐसे कारण को मानुसार मां कत करना चा हए। The form of appeal shall be in English or Hindi and should be set forth concisely and under distinct heads of the grounds of appeals without any argument or narrative and such grounds should be numbered consecutively.

6. अिधिनयम क धारा 35 बी के उपब ध के अंतगत िनधा रत फ स जस थान पर पीठ थत है, वहां के कसी भी रा ीयकृत बक क शाखा से यायािधकरण क पीठ के सहायक र ज ार के नाम पर रेखां कत माँग ा ट के ज रए अदा क जाएगी तथा यह माँग ा ट अपील के प के साथ संल न कया जाएगा। The prescribed fee under the provisions of Section 35 B of the Act shall be paid through a crossed demand draft, in favour of the Assistant Registrar of the Bench of the Tribunal, of a branch of any Nationalized Bank located at the place where the Bench is situated and the demand draft shall be attached to the form of appeal.

7. यायालय शु क अिधिनयम, 1970 क अनुसूची-1, मद 6 के अंतगत िनधा रत कए अनुसार संल न कए गए आदेश क ित पर 5.00 पया का यायालय शु क टकट लगा होना चा हए। The copy of this order attached therein should bear a court fee stamp of Re. 1.00 as prescribed under Schedule 1, Item 6 of the Court Fees Act, 1970. 8. अपील पर भी . 5.00 का यायालय शु क टकट लगा होना चा हए। Appeal should also bear a court fee stamp of Rs. 5.00.

3 F. No: V.25/15-316/Adj/2009 M/s. New Kishan Cement Private Limited & Others

1) Show Cause Notice No: AE/D.II/AR-Shapar/Commr/55/2011 dated: 29.03.2011 2) Show Cause Notice No: IV/3-31/D/2008-2009 dated: 21.10.2008

Order-in-Original No: 43 & 44/Commissioner/2013 dated: 25.03.2013

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M/s. New Kishan Cement Pvt. Ltd., Shapar (hereinafter referred to

as “New Kishan”), named as Noticee No. 1 have been issued show cause notice

No. AE/D.II/AR-Shapar/COMMR/55/2011 dated 29.3.2011 (hereinafter

referred to as “notice”) asking them to show cause to this authority as to why:

(i) Cenvat credit amounting to Rs. 1,36,00,295/- should not be recovered

from them under rule 14 of the Cenvat Credit Rules,2004 (“CCR”) read

with proviso to section 11 A(1) of the Central Excise Act, 1944 (“Act”).

(ii) Rs. 1.08 crore deposited by them during the course of investigation

should not be appropriated and adjusted against the Cenvat credit

demanded as above.

(iii) Interest at appropriate rate should not be charged & recovered from them

under rule 14 of the CCR read with section 11AB of the Act.

(iv) Penalty should not be imposed upon them under rule 15 (2) of the CCR

readwith section 11AC of the Act.

2.1 The following noticees have been called upon to show cause as to

why:

i) Registration granted to them under rule 9 of the CCR should not be

revoked and cancelled.

ii) Penalty should not be imposed upon each of them under rule 26 of the

CCR.

Sl. Noticee Noticee No. (as per S.C.N.) 1. M/s. Hindustan Exports 3

2. M/s. Jayshree Vyapar Ltd. 8

3. M/s. Karan Chemicals 9

4. M/s. Karan Marketing 10

2.2 Further, the following noticees have been called upon to show

cause as to why penalty should not be imposed upon them under rule 26 of the

CCR:




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Sl. Noticee Noticee No. (as per S.C.N.) 1. Shri Navneet G. Vadaliya,

Director of M/s. New Kishan

2

2. M/s. Kathiawad Industries 4

3. Shri Kuldipsinh Basiya, partner of

M/s. Hindustan Exports, Bharoodi

and M/s. Kathiawad Industries,

Bharoodi

5

4. Shri Rajan V. Vadaliya, Director of

M/s. New Kishan.

6

5. M/s. Radhey Vyapar Ltd. 7

6. M/s. Maruti Enterprise, Jamnagar 11

7. M/s. Samrat Cement, Hadamtala 12

8. Shri Ashok Vasani, Partner of M/s.

Samrat Cement, Hadamtala.

13

9. Shri Bhavin Pabari, Proprietor of

M/s. Radhey Vyapar Ltd.

14

10. M/s. Pyramid Portland Cement 15

11. M/s. Om Sai Ram Transport,

Jamnagar

16

12. Shri Pravin Bhanderi, Managing

Director of M/s. Pyramid Portland

Cement

17

13. M/s. Pratham Transport, Jamnagar 18

14. M/s. Nilkanth Cement 19

15. M/s. Kailash Cement Industries 20

16. M/s. Tapee Cement 21

17. Shri Khodidas Sojitra, Director of

M/s. Nilkant Cement

22

18. Shri Arvind Gangdas Sakhiya,

Partner of M/s. Tapee Cement

23

19. Shri Dhiraj Rangani, Partner of

M/s. Kailash Cement Industries

24

20. Shri Shashikant Koticha, Director of

M/s. Jayshree Vyapar Ltd.

25

21. Shri Gautam Patel, Partner of M/s.

Karan Marketing

26




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22. Shri Chandrakant J. Patel, partner

of M/s. Karan Chemicals.

27

3. Brief facts of the case are as under:

3.1 Based on intelligence regarding clandestine removal of their

excisable product, namely, cement and wrong utilization of Cenvat credit on

one their inputs, namely, pet coke, the officers of Central Excise, Rajkot carried

out search of the premises of M/s. New Kishan on 26.4.2008.

3.2 During the search operation, the officers found unaccounted stock

of cement valued at Rs. 55,225/- and the same was accordingly placed under

seizure. The officers also found that M/s. New Kishan had shown stock of

1153.735 MT of pet coke in their Cenvat input account register (RG-23 Pt-I

register) and “nil” stock of coke dust/coke breeze/other coke (non-cenvatable

input) in their raw material register (Form IV register).

3.3 On 26.4.2008, the officers recorded statement of Shri Harsukhbhai

Siroya, Chief Chemist of M/s. New Kishan under section 14 of Central Excise

Act, 1944, wherein he, inter alia, stated that they used clinker to manufacture

ordinary Portland cement; that clinker was manufactured by using raw

material like lime stone (70-75%), clay (6-15%) and coke (11-12%).

3.4 On 26.4.2008, the officers also recorded statement of Shri

Kishorebhai Ramjibhai Soliya, Excise clerk of M/s. New Kishan under section

14 of Central Excise Act, 1944, wherein he, inter alia, stated that inputs were

received and entered in relevant registers like Form-IV and RG 23 registers;

that no records were maintained in respect of issuance of raw material used in

the manufacturing process; that the actual quantity of each raw material used

in the manufacture of OPC on any particular day was calculated on the basis of

total production of OPC on that day; that their chemist calculated the

consumption of each raw material on the basis of percentage of raw materials

contained in the total production of OPC on that day; that the chemist

intimated him about the consumption of each input used in manufacture of

total cement on any day of production through a slip/chit and after making

entry in the respective registers, he destroyed the said chits/slips; that the

inputs received in the factory were first weighed at the in-house weigh-bridge

and two slips were prepared out of which one slip was received by him for entry




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in the form prescribed for “incoming input material report” and the other slip

was sent to the supplier in token of having received the same; that after

making entry in “incoming input material report”, the chits were destroyed by

him; that the said “incoming input material report” was also destroyed by him

after making entry in either Form-IV or RG 23-A register depending upon the

nature of inputs; that he did not cross check the physical receipt of goods at

the factory gate but only received the slips prepared at the factory gate; that he

had never taken the physical stock of cenvatable inputs recorded in the register

and hence, there were chances of variation in declared stock and the physical

stock.

3.5 On 26.4.2008, the officers also carried out search of the office

premises of M/s. New Kishan at Gondal Road, Rajkot and resumed certain

records.

3.6 On 26.4.2008, the officers searched the premises of M/s.

Hindustan Exports, Bharoodi and M/s. Kathiawad Industries operating from

the same premises. M/s. Hindustan Exports was a Central Excise registered

dealer of pet coke manufactured by M/s. Reliance Industries, Jamnagar and

was engaged in supply of pet coke (excisable goods) to M/s. New Kishan. M/s.

Kathiawad Industries was engaged in supply of coke dust/coke breeze, etc.

(non-excisable goods) to M/s. New Kishan. The officers recovered 3 cash memo

books bearing Nos. 01, 02 and 03 pertaining to M/s. Kathiawad Industries. On

inquiry, it was revealed that the books contained the office/duplicate copies of

proforma invoices (cash memos) in respect of sales/supply of coke dust/coke

breeze (non-cenvatable items) by M/s. Kathiawad Industries to various

customers, including M/s. New Kishan during the month of August,2008. The

officers also recovered certain weighment slips of coke dust/coke breeze from

the said premises. On scrutiny of the same, it was noticed that the white

coloured slips were in the name of M/s. New Kishan. Shri Kuldipsinh Basiya,

partner of M/s. Hindustan Exports and M/s. Kathiawad Industries informed

the officers that these weighment slips pertained to coke dust/coke breeze

supplied by them to M/s. New Kishan during the month of August,2008 under

proforma invoices and the saem were received by M/s. New Kishan after

weighment and chemical analysis for ascertaining ash content and moisture.

The officers resumed hard disc of computer found from the common premises

of M/s. Hindustan Exports and M/s. Kathiawad Industries under

panchanama-dated 26.4.2008. Verification of cash memo book Nos. 01, 02 and




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03 of M/s. Kathiawad Industries revealed that they had supplied 1630.304 MT

of coke dust to M/s. New Kishan during a short span of about 3 weeks in

April,2008. Thus, it appeared that M/s. New Kishan was using coke dust in

their manufacturing process without reflecting the receipt of coke dust/coke

breeze in their Form-IV register.

3.7 On 26.4.2008, the officers recorded statement of Shri Kuldipsinh,

partner of M/s. Hindustan Exports & M/s. Kathiawad Industries, who inter

alia stated that they also purchased pet coke from M/s. Jayshree Vyapar,

Rajkot and M/s. Hindustan West Coast, Jamnagar and raised second stage

dealer’s invoice on M/s. New Kishan; that pet coke was transported to M/s.

New Kishan in the dumpers/vehicles in their own dumpers/vehicles and no

lorry receipts were prepared in this regard; that they prepared proforma invoice

and weighment slips for local supplies of coke dust/coke breeze, etc. for which

payments were received in cash; for all such invoices, they prepared

computerized weighment slip from their own weigh bridge; that the document

Nos. 61, 62 and 63 (book nos. 01, 02 and 03) withdrawn from M/s. Hindustan

Exports and M/s. Kathiawad Industries under panchnama-dated 26.4.2008

were the proforma invoices (cash memo) issued by M/s. Kathiawad Industries

to various customers; that these proforma invoices contained the details of

goods such as coke dust, coke breeze, iron (coke), coke and coal sold by them

to various customers including M/s. New Kishan and the respective weighment

slips attached to these proforma invoices showed the details of gross weight,

tare weight and net weight in respect of vehicles used for transporting the

goods; that the rate and amount were not mentioned in the proforma invoices

because they had an understanding with M/s. New Kishan that at the end of

the month, they were getting instructions from M/s. New Kishan to issue

invoice adjusting required quantity and after raising such invoices of adjusted

quantity, the proforma invoices and weightment slips were destroyed by them;

that the payment for the quantity of the goods covered under such invoices

raised as per instructions were received by cheques and for the balance

quantity, the payments were received by them in cash; that on settlement of

full payment of goods, the weighment slips and proforma invoices were

destroyed; that on an average, they supplied around 200-300 MT of coke

dust/coke breeze to both M/s. New Kishan and M/s. Major Cement Pvt. Ltd.

on a monthly basis; that the white coloured weighment slips were of M/s. New

Kishan; that the good supplied by them through proforma invoices were

received by M/s. New Kishan after weighment and chemical analysis,




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ascertaining the ash content and moisture; that some of the weighment

slips/proforma invoices recovered during the search remained to be destroyed

for want of settlement of final payment.

3.8 In his statement-dated 27.4.2008, Shri Navneet Vadaliya, Director

of M/s. New Kishan, inter alia, stated that he looked after the day to day

functioning of M/s. New Kishan, such as receipt of raw material, production,

dispatch of goods, etc.; that the job of marketing and sales was looked after by

another Director M/s. Rajan Vadaliya; that the raw material was received only

after weighment and chemical analysis; that 2 slips were prepared at

weighbridge out of which one slip was returned to the supplier; that the

cenvatable raw material was recorded in part-I and II registered while the other

inputs were recorded in form-IV register; that the approximate quantity of pet

coke would be 1150 to 1200 MT whereas gypsum would be in the range of 600

to 625 MT; that though they have no system in their factory for recording day-

to-day quantity of pet coke, etc. used in the manufacturing process, the

physical stock lying in the factory premises would tally with the corresponding

entry in the registered.

3.9 During the period from 26.4.2008 to 1.5.2008, weighment of

inputs claimed by M/s. New Kishan as pet coke lying in the factory was carried

out and a shortage of 20 MT approx. was noticed. On 2.5.2008, the officers

took representative samples of inputs claimed as pet coke which were sent for

testing by National Small Industries Corporation Ltd. (A Government of India

Enterprise), Technical Services Centre, Rajkot. Manager (Testing), NSIC, vide

test report 7.5.2008 forwarded test report No. 10858 dated 7.5.2008 and

confirmed that sample was coke dust and not pet coke.

3.10 On 28.5.2008, the officers recorded statement of Shri Rajan

Vadaliya, Director of M/s. New Kishan, wherein, he inter alia stated that they

used cenvatable inputs like pet coke and HDPE bags; that they received pet

coke from M/s. RIL, Jamnagar through various dealers like M/s. Hindustan

Exports, M/s. Radhe Vyapar Ltd., Rajkot, M/s. Karan Chemicals, Ahmedabad

and M/s. Karan Marketing.

3.11 On the basis of test report, it appeared that the stock of 1153.735

MT goods shown as pet coke (cenvatable input) was not pet coke but coke dust

and non-accountal of coke dust supplied by M/s. Kathiawad Industries in the




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Form-IV register by M/s. New Kishan was on account of the fact that 1153.735

MT of pet coke shown in RG 23 Pt.-I was on the strength of mere paper

transactions only, i.e. by obtaining cenvatable invoices without procuring any

pet coke from the abovenamed dealers.

3.12 The details of cenvat credit availed by M/s. New Kishan during the

period from 2006-07 to 2008-09 (upto 31.5.2008) is as under:

3.13 On 4.6.2008, computer hard disc withdrawn from the common

premises of M/s. Hindustan Exports and M/s. Kathiawad Industries on

26.4.2008 was opened in the presence of their partner Shri Kuldipsinh Basiya

and pancha witnesses. Print-out taken from the hard disc revealed that during

the period from November,2006 to January,2008, M/s. New Kishan and M/s.

Major Cement Pvt. Ltd., Shapar (which are sister concerns), they had supplied

a total quantity of 22102.39 MT of coke dust ( as per details contained in table

appearing on page 8 of the notice). However, M/s. New Kishan had shown

receipt of only 1563.805 MT of coke dust/other coke in the form IV register

maintained by them.

3.14 In his further statement-dated 15.5.2008, Shri Kuldipsinh Basiya,

partner of M/s. Hindustan Exports, inter alia, stated that he was also a partner

of M/s. Kathiawad Industries, a manufacturer-cum-dealer of various types of

coal; that no trading of excisable goods was carried out by M/s. Kathiawad

Industries; that for pet coke, they issued cenvatable invoice of M/s. Hisdustan

Exports only; that pet was purchased from M/s. Radhe Vyapar Ltd., a 1st stage

dealer of M/s. Reliance Industries Ltd.; that on receipt of verbal orders from

M/s. New Kishan, they placed order on M/s. Radhe Vyapar Ltd., who, in turn

supplied the required quantity; that the trucks were unloaded without any

weighment and without making entries in any register; that after unloading,

the said quantity of pet coke was again loaded in their own dumpers/vehicles

and sent to M/s. New Kishan without weighment or entry in any register; that

only corresponding invoice of M/s. Hindustan Exports was prepared by adding

Rs. 60 to Rs. 80/- per MT in the value of pet coke as a commission; that

Sr. No. Year Cenvat credit 1. 2006-07 38,55,593/- 2. 2007-08 70,03,022/- 3. 2008-09 (upto 31.05.2008) 27,41,677/-

Total------------------------------------- 1,36,00,292/-




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though in his earlier statement, he had stated that they supplied about 200 to

300 MT of coke dust/coke breeze to M/s. New Kishan and M/s. Major Cement

Pvt. Ltd., Shapar, on perusing the details of Annexure-I to F. No. 48, he

confirmed that they supplied about 1500 to 2000 MT of coke dust/coke breeze

to M/s. New Kishan and M/s. Major Cement on a monthly basis; that on being

shown file No. 32 containing original invoices meant for M/s. New Kishan and

M/s. Major Cement withdrawn during the search of the premises of M/s.

Hindustan Exports on 26.4.2008, he stated that the same were sent by M/s.

New Kishan and M/s. Major Cement to them for changing the vehicle numbers

mentioned therein as it was at the request of Shri Rajan Vadaliya that they

required only Cenvatable invoices only of pet coke and hence, he diverted the

goods to other customers and issued cenvatable invoices in the name of M/s.

New Kishan by wrongly mentioning the number of his own vehicle on the said

invoices to camouflage the transportation; that M/s. New Kishan and M/s.

Major had instructed him to change the vehicle numbers and to follow the

same procedure in future also; that his customers outside the State did not

require cenvatable invoices of pet coke and hence, he diverted the said goods to

those customers and supplied only cenvatable invoices to M/s. New Kishan;

that the payments in this regard were received through cheques from M/s. New

Kishan and after encashing the same, he used to return the cheque amount to

M/s. New Kishan in cash; that he used to get a commission of Rs. 75/- per ton

on such transactions and the same was deducted by him during handing over

the cash to them.

3.15 On 10.6.2008, the officers recorded the statement of Shri Bipin

Patel, weighbridge in-charge of M/s. New Kishan, wherein, he, inter alia, stated

that goods received from M/s. Hindustan Exports were received under

challans/proforma invoices which were weighed and two copies of weighment

slips were prepared mentioning therein the net weight, tare weight, date,

vehicle no. and one copy of weighment slip was returned to the driver after

signing the same and the other copy was sent to their office; that in the

weighment slips, he used to mention the nature of cargo on the basis of

description of goods mentioned in challans/proforma invoices and also after

getting confirmation of test report from the laboratory; that if pet coke was

mentioned in the challan and the laboratory person confirmed the same after

testing, he used to mention pet coke and for coke dust/coke breeze, he had

mentioned coke dust; that majority of trucks from M/s. Hindustan Exports and

M/s. Kathiawad Industries arrived with coke dust and sometimes pet coke was




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also received; that on being shown file No. 64 withdrawn from the premises of

M/s. Hindustan Exports (page Nos. 7,9,11 containing eight weighment slips),

he stated that these slips were prepared by him on 4.5.2008/5.5.2008 in

respect of coke dust received by M/s. New Kishan; that on an average, three to

four trucks carrying coke dust were received every day from M/s. Hindustan

Exports.

3.16 Further statement of Shri Kuldipsinh Basiya, partner of M/s.

Hindustan Exports and M/s. Kathiawad Industries was recorded on 13.6.2008,

wherein, he, inter alia, endorsed the documents retrieved from the hard disc of

their firm’s computer withdrawn under panchanama-dated 26.4.2008 and kept

in a file containing page Nos. 01 to 69 and confirmed that the details belonged

to their firm only. He inter alia stated that page Nos. 19 to 69 contained the

details of month-wise supply of coke dust/fine to M/s. New Kishan and M/s.

Major Cement from November,2006 to January,2008; that supply of coke

dust/fine to M/s. New Kishan and M/s. Major Cement was done in the name of

“K.C.” only and K.C. (Kishan Cement) is the short name of M/s. New Kishan;

that they had relation only with Shri Rajan Vadaliya, Director of M/s. New

Kishan; that Shri Rajan Vadaliya used to place orders for both companies, i.e.

M/s. New Kishan and M/s. Major Cement; that Shri Rajan Vadaliya decided

where the coke dust/coke breeze was to be unloaded; that they were supplying

coke dust/fine to these parties from December,2005 onwards on the basis of

an open order for the supply of same subject to specification of coke dust

required by them; that page Nos. 1 to 17 contained the details of purchase and

sale of pet coke and the said details were their private records of purchase and

sale of pet coke; that pet coke purchased by them was not only supplied to

M/s. Hindustan Exports and M/s. Major Cement but also to other parties like

M/s. Samrat Cement, Hadamtala and P. P. Enterprise; that P. P. Enterprise

was a code word used by them for showing the diversion of pet coke to parties

outside the State; however, they used to issue excisable invoice of all the pet

coke in the name of M/s. Hindustan Exports and M/s. Major Cement only; that

they were diverting the pet coke to other parties on the bill of M/s. New Kishan

and M/s. Major Cement; that it was done on the instruction of Shri Rajan

Vadaliya as they required cenvatable bill only.

3.17 On 1.10.2008, the officers recorded statement of Shri Ashokbhai

Dhirubhai Vasani, partner of M/s. Samrat Cement, Haramtala, wherein, he,

inter alia, stated that they are engaged in manufacture of Ordinary Portland




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cement (OPC) 53 grade; that on being shown the details of data retrieved from

the computer hard disc of M/s. Hindustan Exports and M/s. Kathiawad

Industries in which 6 trucks of pet coke were shown as diverted by Shri

Kuldipsinh to them, he admitted that he had purchased the said truck loads in

cash payments without any bills; that thus, they did not account for the same

in their books of account.

3.18 On 13.5.2008, the officers intercepted one truck No. GJ-10-W

7484 that was coming out of the godown premises of M/s. Radhey Vyapar Ltd.,

Vavdi, Near Krishna Park, N. H. 8, Rajkot-Gondal Road, Rajkot. On inquiry

with the truck driver Shri Shabbir, it was revealed that the truck was loaded

with pet coke from M/s. Reliance Indusries Ltd. and was required to be

unloaded at the premises of M/s. Pyramid Portland Cement, Hadamtala, as per

the directions of Shri Bhavinbhai, Proprietor of M/s. Radhey Vyapar Ltd. Upon

asking for the invoices and other documents, the driver produced a hand

written chit issued by M/s. Radhey Vyapar and stated that all such documents

were lying at the godown. Accordingly, the godown premises of M/s. Radhey

Vyapar Ltd. was searched in the presence of panchas. During the search, lorry

receipt No. 1564 dated 12.5.2008 for invoice No. 1065742 issued by M/s.

Reliance Industries Ltd. indicating the name of the buyer as M/s. Radhey

Vyapar Ltd. and that of consignee as M/s. New Kishan Ltd. was recovered.

Thus, it appeared that pet coke consigned to M/s. New Kishan Ltd. were being

diverted to M/s. Pyramid Portland Cement. A few similar lorry receipts and

invoices of M/s. Reliance Industries of earlier period were also recovered. The

said records were placed under seizure on 13.5.2008 and the truck bearing No.

GJ-10-W 7484 valued at Rs. 14,00,000/- and 16.540 MT pet coke valued at

Rs. 1,22,131/- were detained and handed over to the depot in-charge of M/s.

Radhey Vyapar Ltd. Later on, the truck and pet coke was placed under seizure

under a reasonable belief that the same was liable to confiscation.

3.19 In his statement-dated 13.5.2008, Shri Shabbir Hussain Sheikh,

truck driver, inter alia, stated that the truck was owned by his father and was

engaged in transportation of pet coke from M/s. RIL, Jamnagar to various

destinations under a transport company namely M/s. Om Sairam Transport

Company, Jamnagar; that he had loaded 16.54 MT of pet coke from M/s.

Reliance Industries Ltd., Khavdi, Jamnagar on the direction of M/s. Radhey

Vyapar and as per the directions, he went to the godown of the said M/s.

Radhey Vyapar situated at plot No. 34/35, Vavdi; that he gave the copy of




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invoice issued by M/s. Reliance Industries Ltd. and copy of lorry receipt issued

by the transporter M/s. Om Sairam Transport, Jamnagar to Shri Ajaybhai of

M/s. Radhey Vyapar; that Shri Ajay retained the invoice/copy of lorry receipt

and gave him a kutcha chit with a direction to deliver the goods at the

premises of M/s. Pyramid; that the details mentioned in the kutcha chit were

the name and address of M/s. Pyramid; that he did not possess any other

document except the said kutcha chit, when intercepted; that he regularly

came to M/s. Radhey Vyapar with the truck load in similar manner which was

about 15 to 18 times a month and every time, he was issued kutcha chit for

delivery at the premises of M/s. Pyramad, where it was unloaded; that he used

to get payment @ Rs. 315/- PMT from M/s. Pyramid; that since last three

months, he had been delivering the pet coke in the premises of M/s. Pyramid

in similar fashion.

3.20 In his statement-dated 13.5.2008, Shri Ajay Pabari, depot in-

charge of M/s. Pyramid, inter alia, endorsed the statement of Shri Shabbir,

driver of truck No. GJ-10-W-7484 and stated that his brother (Shri

Bhavinbhai) was the proprietor of M/s. Radhey Vyapar; that both of them were

looking after the work of M/s. Radhey Vyapar; that he looked after the work at

the depot of the firm at Vavdi; that as per the direction of his brother, he had

prepared kutcha chit in respect of truck No. GJ-10-W-7484 and had asked the

driver to deliver the goods at the premises of M/s. Pyramid.

3.21 On 13.5.2008, the officers searched the premises of M/s. Radhey

Vyapar at Star Plaza, Rajkot and seized several documents including a red

coloured diary containing the details of dispatches made by M/s. Radhey

Vyapar during the month of April,2008.

3.22 On 13.5.2008, the officers recorded statement of Shri Bhavinbhai

Pabari, Proprietor of M/s. Radhey Vyapar, wherein, he, inter alia, stated that

M/s. Radhey Vyapar was engaged in trading of pet coke purchased from M/s.

Reliance Industries Ltd., Khavdi and was not registered with Central Excise

department; that thus, they did not pass Cenvat credit to their excisable

customers; that to pass Cenvat credit, they used to request M/s. RIL to prepare

invoice by mentioning the name of buyer as M/s. Radhey Vyapar and the name

of the excisable unit as the consignee; that in such case, M/s. RIL dispatched

the goods directly to the consignees with Central Excise invoice (transporter

copy and extra copy) and the original copy was sent to them; that such




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customers availed Cenvat credit on the transporter copy of invoices; that

however, on receipt of original copy of invoices, they used to issue

corresponding commercial invoices by adding their profit in the name of such

customers and kept the original copy with them for record; that their main

customers were cement manufacturers, emery powder manufacturers and lime

stone industries; that as per requirement of their customers, they placed order

to M/s. RIL with advance payments; that he admitted that they were supplying

only Central Excise invoices of pet coke to M/s. New Kishan and M/s. Major

Cement and the corresponding goods were diverted to some other cement

manufacturers like M/s. Pyramid, etc.; that the details of such supplies for the

last 15 trucks were mentined on page No. 73 of the red colour diary recovered

during the search and mentioned at Sl. No. 1 of the seized documents of

panchanama-dated 13.5.2008; that for supply of pet coke to M/s. New Kishan

and M/s. Major Cement, he generally requested M/s. RIL to dispatch the goods

directly to them but he was not aware whether the goods consigned to M/s.

New Kishan and M/s. Major Cement were delivered directly or otherwise, but

as far the said 15 trucks were concerned, they had directed the truck drivers to

deliver the goods to M/s. Pyramid only; that Shri Mansukhbhai Patel, Director

of M/s. Major Cement asked him to send only the invoices on behalf of M/s.

New Kishan and M/s. Major Cement and as per his request, they supplied only

the invoices; that they received the payments by cheques for the goods

supplied to these manufacturers but for the said 15 trucks, they have not

received the payment; that they expect the payment in this regard from M/s.

New Kishan and M/s. Major Cement and after receiving the cash from M/s.

Pyramid, he would return the cash to M/s. New Kishan and M/s. Major

Cement; that Shri Jamanbhai from M/s. Pyramid informed him that they did

not require any invoice and were concerned with only goods for which they

would pay in cash; that till date, he had dispatched about 273.120 MT of pet

coke to M/s. Pyramid where the invoices were in the name of either M/s. New

Kishan or M/s. Major Cement; that out of 273.120 MT of pet coke, he had

given invoices for 128.650 MT to M/s. Major Cement and invoices for 144.470

MT to M/s. New Kishan; that he had supplied invoices to maintain relationship

with the customers and for this, he received a consideration of Rs. 80/- PMT as

profit.

3.33 Shri Pravin Bhanderi, Managing Director of M/s. Pyramid, in his

statement-dated 14.5.2008 stated, inter alia, that he looked after the entire

work related to the unit; that his unit was engaged in the manufacture of 53




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grade cement; that they were procuring pet coke from M/s. Radhey Vyapar;

that they had purchased about 5 to 7 trucks without bills from M/s. Radhey

Vyapar during the earlier week; that pet coke received from M/s. Radhey

Vyapar was accompanied with delivery challan or kutcha chits on which name

of their unit, quantity, grade, etc. was mentioned.

3.34 On 21.5.2008, the officers recorded statement of Shri Mohmad

Rafik Gulamhussein Dal, proprietor of M/s. Om Sai Ram Transport, wherein,

he inter alia accepted the facts stated by Shri Shabbir Hussein Sheikh, truck

driver in his statement. He further staed that Shri Bhavin Pabari, proprietor of

M/s. Radhe Vyapar first placed the order with M/s. Reliance Industries Ltd.

and deposited the money and intimated him the delivery order number and

name of the consignee for whom the truck was required to be loaded; that on

the basis of delivery order, he prepared lorry receipt mentioning therein the

name of the consignee and sent trucks for loading pet coke at M/s. RIL and

delivered the same to the respective consignee; that on an average, he used to

send 10 trucks of pet coke to M/s. Pyramid on monthly basis; that sometimes,

Shri Bhavin Pabari instructed him to deliver the truck to their depot at Vavdi,

Rajkot; that in such cases, the lorry receipts and copy of invoices were retained

by M/s. Radhey Vyapar and in turn kutcha chit was given with a direction to

deliver the loaded goods to the address mentioned in the said kutcha chit; that

he received the payments towards transportation from M/s. New Kishan and

M/s. Major Cement through cheques only; that in respect of diverted goods, he

received the payments in cheques from the party whose name was mentioned

as consignee in the lorry receipt; that generally, the receipt of goods was

endorsed on the respective copy of lorry receipts, however, in case of diverted

goods, the same was taken over by M/s. Radhey Vyapar and was returned by

courier after three to four days having received the endorsement of either M/s.

New Kishan or M/s. Major Cement.

3.35 Further statement of Shri Bhavinbhai Pabari was recorded on

21.5.2008, wherein, he inter alia stated that the copies of (1) L. R. No.

1559/12.05.08 for invoice No. 1065618 (2) L. R. No. 1560/12.05.08 for invoice

No. 1065626 (3) L. R. No. 1563/12.05.08 for invoice No. 1065625 (4) L. R. No.

1564/12.05.08 for invoice No. 1065742 that were recovered during the search

of the premises of their godown at Vavdi on 13.5.2008 were in respect of pet

coke loaded on the trucks of M/s. Om Sai Ram Transport, Jamnagar from M/s.

RIL, Khavdi out of which Sl. No. (1) and (2) were consigned in the name of M/s.




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Major Cement while Sl. No. (3) and (4) were consigned in the name of M/s. New

Kishan; that the copies of lorry receipts and corresponding invoices were

retained by them and in its place, they have issued kutcha chits for delivery to

the premises of M/s. Pyramid; that the lorry receipt mentioned at Sl. No. (4)

above was for truck No. GJ-10-W-7484, which was intercepted by the officers

of the Department; that the remaining three trucks had gone to the premises of

M/s. Pyramid, however, they refused to accept the said three trucks as they

had got the information that the officers had intercepted one of their truck on

that day, i.e. 13.5.2008; that the drivers of the said three trucks then went to

the premises of M/s. Major Cement and M/s. New Kishan respectively,

however, they refused to accept the trucks for want of original lorry

receipts/invoices as they were also aware of interception of one trucks by the

Excise officers; that if the truck No. GJ-10-W-7484 had not been intercepted on

that day, they would have delivered all the goods at the premises of M/s.

Pyramid as per existing practice and would have supplied the cenvatable

invoices to M/s. Major Cement or M/s. New Kishan; that Shri Mansukhbhai

had requested him to send the cenvatable invoices only.

3.36 On 18.6.2008, the officers searched the office premises of M/s.

Partham Transport and resumed various documents including dispatch note

books (daily registers) for the period from 26.4.2006 to 31.3.2008 containing

the details of pet coke dispatched by them to various customers including M/s.

New Kishan.

3.37 On 19.6.2008, statement of Shri Manoj Virani, proprietor of M/s.

Partham Transport was recorded under section 14 of the Central Excise Act,

1944, wherein, he inter alia stated that his transport company was engaged in

transportation of pet coke from M/s. RIL, Jamnagar on behalf of various

parties but mainly of M/s. Jayshree Vyapar since last 4 years; that he used to

keep private records of all the trucks dispatched by him in a day in the daily

dispatch registers; that he disclosed the names of the customers of M/s.

Jayshree Vyapar; that drivers informed him that the goods sent to M/s. New

Kishan were delivered to other places.

3.38 On 25.6.2008, statement of Shri Khodidasbhai Sojitra, Director of

M/s. Nilkanth Cement, Haramtala was recorded under section 14 of the

Central Excise Act, 1944, wherein, he inter alia stated that his unit was

engaged in manufacture of 53 grade cement since 2006-07; that annual




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turnover of his unit for the year 2006-07 was Rs. 25 lakh and for the year

2007-08 was Rs. 1.30 crore; that his unit was not registered with Central

Excise; that they procured pet coke from M/s. Jayshree Vyapar with bill as well

as without bill; that the payment for the billed quantity was made by cheques

whereas payments for unbilled quantity was made in cash; that Shri

Satishbhai or Shri Kamleshbhai of M/s. Jayshree Vyapar first asked him

whether he required the goods under bill or otherwise; that the rates of goods

sold without bill were less; that on finalization of the deal, they sent the truck

load from Jamnagar alongwith kutcha chit mentioning the name of Shri

Mansukhbhai, etc. and other truck details like truck number, weight of pet

coke and freight etc., that the truck after weighment was offloaded at his

factory premises and freight payment was made in cash to the driver of the

truck; that after three or four days, he made cash payment of goods to Shri

Satishbhai Parekh or Shri Kamleshbhai of M/s. Jayshree Vyapar; that on an

average, he received 5 to 10 truck loads of pet coke from M/s. Jayshree Vyapar

out of which bills were made for 2 to 3 truck loads only.

3.39 On 24.6.2008, statement of Shri Arvind Gangdasbhai Sakhiya,

partner of M/s. Tapee Cement, Metoda was recorded under section 14 of the

Central Excise Act, 1944, wherein, he inter alia stated that their unit was

engaged in the manufacture of OPC for the last four years; that their factory

was registered with Central Excise Department and availing the benefit of

exemption notification No. 8/2003; that they procured pet coke from M/s.

Radhey Vyapar and M/s. Jayshree Vyapar; that they procured pet coke from

M/s. Radhey Vyapar on regular bills and without bill from M/s. Jayshree

Vyapar; that the entire procurement of pet coke from M/s. Jayshree Vyapar

was without bills; that he gave his requirement to Shri Satishbhai of M/s.

Jayshree Vyapar who sent the truck after one or two days; that a kutcha chit

mentioning the name of Shri Arvindbhai Bhathawala or Shri Mansukhbhai

Bhathawala came alongwith truck; that he made the payment of goods and

freight charges in cash to the truck driver; that they have stopped procuring

goods from M/s. Jayshree Vyapar since last eight months.

3.40 On 24.6.2008, statement of Shri Dhiraj Rangani, partner of M/s.

Kailash Cement, Metoda was recorded under section 14 of Central Excise Act,

1944, wherein, he inter alia stated that their unit was engaged in manufacture

of OPC for the last four years and their factory was registered with Central

Excise Department; that they procured pet coke from M/s. Radhey Vyapar on




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regular basis and without bills from M/s. Jayshree Vyapar; that the entire

procurement of pet coke from M/s. Jayshree Vyapar was without bills; that he

gave his requirement to Shri Satishbhai of M/s. Jayshree Vyapar who sent the

truck after one or two days; that a kutcha chit mentioning the name of Shri

Rajesh Bhathawala or Shri Kamleshbhai Bhathawala or Shri Premji

Bhathawala came alongwith the truck; that he made the payment of goods in

cash to Shri Satishbhai and freight charges in cash to the truck driver; that

they procured 5 to 7 truck loads of pet coke from M/s. Jayshree Vyapar

without cover of bills during a month.

3.41 On 2.7.2008, the officers searched the office and godown premises

of M/s. Jayshree Vyapar and resumed relevant documents.

3.42 On 2.7.2008, statement of Shri Satish Parekh, Manager-cum-

godown-in-charge of M/s. Jayshree Vyapar was recorded under section 14 of

Central Excise Act, 1944, wherein, he inter alia stated that he was working

with M/s. Jayshree Vyapar since last 25 years; that his job was to receive

orders from various parties and give delivery as per the direction from his

office; that their firm was dealing in trading of pet coke and other items; that

pet coke was supplied to M/s. New Kishan, M/s. Major Cement, Shri

Maheshbhai Bhathawala, Shri Kamleshbhai Bhathawala, Shri Bharatbhai

Bhathawala, etc.; that he did not know the addresses of their clients but was

dispatching the goods on the direction of his owner Shri Shashikantbhai or

Shri Kamleshbhai; that the original invoice of M/s. RIL alongwith LR was

retained by him and subsequently sent to his office; that he did not recollect

having supplied any other coal, except pet coke to M/s. New Kishan.

3.43 On 18.9.2008, statement of Shri Sashikant Koticha, Director of

M/s. Jayshree Vyapar Ltd. was recorded under section 14 of the Central Excise

Act, 1944, wherein, he inter alia stated that he is the Director of the said firm

which is duly registered with Central Excise Department; that he is looking

after the entire dealings of the said firm; that their firm is engaged in trading of

various items including pet coke and other coke; that their firm is a registered

dealer of M/s. RIL, Jamnagar since its inception in 1998; that they procured

pet coke from M/s. RIL on excisable invoices only; that their transport

company, namely, M/s. Partham Transport, Jamnagar used to receive pet coke

from M/s. RIL, Jamnagar on their behalf; that they sold pet coke on three

invoices, namely, retail invoices issued to the retail customers, tax invoices




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issued to the customers registered with Sales Tax Department or having TIN

number and excisable invoices issued to the manufacturer/dealer registered

with Central Excise Department and to whom they passed on the cenvat credit;

that at the request of their customers, they facilitated them by providing pet

coke without bill and collected payment only in cash for such sales; that to

accommodate the quantity of legitimate sales of pet coke, they used to issue

retail as well as tax invoice to the same customer and payments for retail sales

were collected in cash whereas for tax invoices, the same were in cheques only;

that they provided cenvatable invoices to M/s. New Kishan and respective pet

coke consignments were diverted to other customers, i.e. mini cement plants in

Rajkot during 2006-07 at the request of Shri Manuskhbhai, partner of M/s.

Major Cement; that they did so to maintain business relations with them; that

he admitted of having misused the status of registered dealer.

3.44 It appeared from invoices of M/s. Karan Chemicals and M/s.

Karan Marketing, both of Ahmedabad that they took the services of M/s.

Maruti Enterprise, Jamnagar for carrying and supplying pet coke to M/s. New

Kishan. It further appeared that the lorry receipts issued by the said M/s.

Maruti Enterprise showed the names of consignor as M/s. Karan Chemicals

and M/s. Karan Marketing but the goods were being sent directly to M/s. New

Kishan from Jamnagar.

3.45 On 27.5.2008, statement of Shri Dipak Thakashibhai Sayani,

commission agent of M/s. Maruti Enterprise was recorded under section 14 of

the Central Excise Act, 1944, wherein, he inter alia stated that M/s. Maruti

Enterprise was owned by Shri Gautambhai Patel, Jagat Patel and Chandrakant

Patel, where were also owners of M/s. Karan Marketing, M/s. Karan Chemicals

and M/s. Karan Logistics, Ahmedabad; that the said transport company is

engaged in transportation of pet coke/sulphur on behalf of M/s. Karan

Chemicals and M/s. Karan Marketing and the freight charges were handled by

M/s. Karan Logistics; that the lorry receipts were pre-printed; that as per the

directions of the owners of M/s. Karan Chemicals and M/s. Karan Marketing,

pet coke was supplied to various parties including M/s. New Kishan directly

from Jamnagar; that the pet coke supplied to M/s. New Kishan or to M/s.

Major Cement, Shapar were recorded in the name of M/s. Major Cement only

as according to him, both M/s. New Kishan and M/s. Major Cement were

involved in diversion of pet coke as they had to offload the cargo at other places

on the instructions of responsible persons of both the companies, however, the




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receipts were given by M/s. New Kishan and M/s. Major Cement on the

returnable copies of lorry receipts; that in such cases, the extra transportation

cost was paid by M/s. New Kishan and M/s. Major Cement directly to the

drivers; that based on the instructions received from the owners of M/s. Karan

Chemicals and M/s. Karan Marketing, he destroyed the record of earlier period

of M/s. Maruti Marketing.

3.46 Statements of Shri Gautam Jamnadas Patel, partner of M/s. Karan

Marketing were recorded on 17.10.2008 and 22.10.2008 under section 14 of

the Central Excise Act, 1944, wherein, he inter alia stated that they were

supplying pet coke to M/s. New Kishan since November,2007; that before that,

M/s. Karan Chemicals was supplying the same to them; that he could not say

for sure that the goods dispatched by them would have been delivered to M/s.

New Kishan; that however, on seeing the statement of Shri Dipakbhai Sayani,

commission agent of their transport company, he admitted that M/s. New

Kishan might be diverting the goods to other places with the help of their

transporters and drivers; that since they were receiving the receipts of the

goods from M/s. New Kishan in terms of duplicate copy of lorry receipts and

also confirmation of receipts on phone with a request for preparing invoices in

the name of either M/s. New Kishan or M/s. Major Cement, they did not bother

much about the diversion; that they purchased the pet coke from M/s. RIL and

sent the same to M/s. New Kishan directly from Jamnagar; that they did not

have any idea about where to deliver the goods and hence, directed the

transporter to deliver the goods at Shapar; that the authorized persons of M/s.

New Kishan or M/s. Major Cement used to instruct the truck drivers to deliver

the goods at their desired places; that they endorsed the duplicate copies of the

lorry receipts in token of receipts of the goods either in the name of M/s. New

Kishan or M/s. Major Cement and handed over the same to the driver of the

truck which was ultimately received by them; that on seeking the endorsement,

they understood that the goods were delivered to M/s. New Kishan or M/s.

Major Cement and in the meantime, they got instruction to prepare the

invoices in the name of either M/s. New Kishan or M/s. Major Cement; that he

did not know whether the pet coke was delivered to the said M/s. New Kishan,

M/s. Major Cement or somewhere else; that they received the payment through

cheques only.

3.47 Statements of Shri Chandrakant Jamnadas Patel, partner of M/s.

Karan Chemicals were recorded on 17.10.2008 and 22.10.2008 under section




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14 of the Central Excise Act, 1944, wherein, he inter alia stated that he was

one of the partners of M/s. Karan Chemicals; that his firm was engaged in

trading of pet coke and sulphur; that they were registered dealers of M/s. RIL,

Jamnagar for trading of pet coke and sulphur; that their firm was registered

with the Central Excise department since 2006; that they started trading of pet

coke from Janurary,2007; that they were supplying pet coke to M/s. New

Kishan since January,2007; that he could not say for sure that pet coke

dispatched by them would have been delivered to M/s. New Kishan; that

however, on seeing the statement of Shri Dipakbhai Sayani, commission agent

of their transport company, he admitted that M/s. New Kishan might be

diverting the goods to other places with the help of transporter/drivers; that

since they were receiving the receipts of the goods from M/s. New Kishan in

terms of duplicate copy of lorry receipts and also confirmation of receipts on

phone with a request for preparing invoices either in the name of M/s. New

Kishan or M/s. Major, they did not bother much about the diversion; that they

purchased pet coke from M/s. RIL and sent the same to M/s. New Kishan

directly from Jamnagar; that they did not have any idea about where to deliver

the goods and hence, directed their transporter to deliver the goods at Shapar;

that the authorized persons of M/s. New KIshan or M/s. Major directed the

truck drivers to deliver the goods at desired places; that they endorsed the

duplicate copies of the lorry receipts in token of receipts of the goods either in

the name of M/s. New Kishan or M/s. Major and handed over to the driver of

the truck which were ultimately received by them; that on seeing the

endorsement on duplicate copy of lorry receipt, they understood that the goods

were delivered either to M/s. New Kishan or M/s. Major Cement; that in the

meantime, they got instruction to prepare the invoices in the name of either

M/s. New Kishan or M/s. Major Cement; that he did not know whether pet

coke was delivered to the said M/s. New Kishan, M/s. Major Cement or

somewhere else; that they received the payment through cheques only.

3.48 Statements of Shri Rajan Vadaliya, Director of M/s. New Kishan

(Noticee No. 6) were recorded on 6.10.2008, 7.10.2008, 8.10.2008, 10.10.2008

and 14.10.2008. The gist of his statements narrated in para 23 of the show

cause notice is as under:

he endorsed the Panchnama dated 26.04.2008 drawn at the premises of

noticee No. 1, the statement dated 26.04.2008 of Shri Hasmukh Siroya,

Chief Chemist; the statement dated 26.04.2008 of Shri Kishorebhai Soliya,




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clerk; the statement dated 27.04.2008 of noticee No. 2 (Shri Navneet

Vadaliya, Director of M/s. New Kishan) and Panchanama dated

26.04.2008 drawn at the office premises of noticee No. 1;

he admitted that the weighment slips contained at page Nos. 7,8,11 in file

No. 64 withdrawn from the premises of noticee Nos. 3 and 4 indicating the

receipt of coke dust/coke breeze were prepared by his weighment incharge

Shri Bipinbhai, however, the goods mentioned there as coke dust were not

coke dust but the same was iron.

he was not having any written proof showing the receipts of iron from

noticee No. 4 as the said purchase from noticee No. 4 was free of cost and

he had only paid the transportation charges in cash;

he admitted that the stock of other coke as on 26.04.2008 in their Form-IV

register was nil since 23.11.2007 and that the quantity of coke dust

received by noticee No. 1 were not shown in Form IV register as the same

were received free of cost from the noticee Nos. 3 or 4 without bill in small

quantity and hence, not reflected in the records;

he agreed to the Panchnama dated 02.05.2005 drawn at the factory

premises in respect of drawal of representative samples, however, he did

not agree with the test report dated 07.05.2008 of NSIC, Technical

Services Centre (The National Small Industries Corporation Ltd.) - a

Government of India Enterprise, as per which the sample was of coke dust

and not pet coke.

he admitted the mistake on his part as well as on the part of his Chemist,

his clerk and noticee No. 2 in their statements recorded earlier as regards

not mentioning the usage of iron in the manufacturing process;

he stated that he was not in a position to give proof of his negation in

respect of the data taken from the computer hard disc of noticee Nos. 3

(M/s. Hindustan Exports, Bharoodi) and 4 (M/s. Kathiawad Industries,

Bharoodi) showing the supply of coke dust from 1.11.2006 to 31.1.2008,

file No. 64, 48, proforma invoices as per documents mentioned at Sr. Nos.

61, 62, 63 in Annexure to Panchanama dated 26.04.2008 drawn at the

premises of noticee Nos. 3 and 4, statements dated 26.04.2008,




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15.05.2008 and 13.06.2008 of noticee No. 5 (Shri Kuldipsinh Basiya,

partner of M/s. Hindustan Exports, Bharoodi & M/s. Kathiawad

Industries, Bharoodi).

he admitted the procurement of coke dust through the proforma invoices

Nos. 6131, 6132, 6136, 6137, 6138 and 6139 all dated 17.04.2007 of

noticee Nos. 4 having corresponding entries in data taken out for the

period November-2006 to 31.01.2008 from the computer hard disc of

noticee Nos. 3 and 4 withdrawn from the computer hard disc of noticee

Nos. 3 and 4 withdrawn from the premises of noticee Nos. 3 and 4,

however, he did not agree with the details of supply of coke dust for this

period by noticee No. 4.

he admitted that the original bills contained in file No. 32 withdrawn from

the premises of noticee Nos. 3 and 4 were sent by him for changing the

vehicle number and place of delivery; that the goods in respect of said

invoices were received by their weighbridge operator by mistake and

Cenvat credit was taken on the same day;

he agreed that he had taken Cenvat credit on such invoices in wrong

manner and added that due to practical adjustments in the industries, it

sometimes happens that the goods consigned to one party, were diverted

to other party’s premises and later on, the same were received by the first

party along with bill;

he stated that due to practical adjustments, it sometimes happen that the

goods are diverted; however, he did not have any proof to substantiate the

same;

On being shown the Panchnama and various statements recorded in

respect of diversion of pet coke through the truck intercepted by the officers

of Central Excise on 13.05.2008, he stated that all the said evidences do

not prove indulgence of noticee No. 1 in diversion of pet coke but did not

produce any proof to substantiate his negation in respect of various

panchnamas and statements of Shri Ajaybhai Pabari & Shri Bhavinbhai

Pabari of M/s. Radhe Vyapar Ltd., Shri Pravin Bhanderi of M/s. Pyramid

Cements, Shri Mohmad Rafik, owner of M/s. Om Sai Ram Transport

shown to him, statement of Shri Manojbhai, owner of M/s. Pratham




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Transport, Jamnagar, the statement of Shri Shashikantbhai Koticha,

Managing Director of M/s. Jayshree Vyapar Ltd., Rajkot, however, he did

not have any proof to substantive his negation in this regard.

4. On 14.10.2008, Shri Rajan Vadaliya was arrested and produced

before the Chief Judicial Magistrate, Rajkot, who remanded him to judicial

custody. Thereafter, CJM, Rajkot granted him bail on 17.10.2008. The

Department preferred an appeal before the Hon. Sessions Court against the

said bail order of CJM, Rajkot. Hon. Sessions Court heard both the sides and

directed Shri Rajan Vadaliya to pay up the evaded duty amount or be ready for

cancellation of bail order passed by CJM, Rajkot. Shri Rajan Vadaliya

expressed willingness to pay up the evaded duty amount and tendered 4

cheques of Rs. 27 lakh each, totally amounting to Rs. 108 lakh to the

Department.

5. A separate show cause notice No. IV/03-31/D/2008-09 dated

21.10.2008 was issued to M/s. New Kishan proposing confiscation of 11.750

MTs (235 bags of 50 kgs each) of unaccounted stock of cement that was placed

under seizure on 26.04.2008 under rule 25 of Central Excise Rules,2002. The

notice also proposed separate penalty against M/s. New Kishan and Shri

Navneetbhai Vadalilya, Director of M/s. New Kishan under rule 25 of Central

Excise Rules,2002. The same is also taken up for adjudication through this

order.

6. Based on the various evidences gathered during the course of

investigation, the Department issued Show Cause Notice No. AE/D.II/AR-

Shapar/COMMR/55/2011 dated 29.03.2011 to M/s. New Kishan (noticee No.

1) and others summarizing the evidences & consequent allegations as under:

“25. Whereas, it appears that:-

I. The noticee No. 1 tried to deceive the central excise department by not

reflecting the actual purchase of coke dust/coke breeze in their Form-IV

register and showing the use of pet coke as input in a higher proportion in

order to unduly avail huge amount of Cenvat credit thereon. Inspite of

receiving a regular supply of coke dust from noticee No. 4, the receipts

were not shown in Form-IV register maintained by the said assessee.

Instead, they were showing only the purchase of pet coke on an average of




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the quantity adjusting to the quantity of coke dust/coke breeze so

purchased. Such indulgence on the part of noticee No. 1, indicates a well

planned scheme for evading Central Excise duty.

II. The quantity of pet coke declared in the statutory records and the quantity

of coke dust/coke breeze shown to have been supplied by the noticee No.

4, if properly accounted for and used in the manufacturing process by the

noticee No. 1 would have resulted in excess production than accounted for,

which would have been cleared in clandestine manner.

III. The stock of pet coke shown to the search party was actually coke dust as

confirmed by the Manager Testing, NSIC, Rajkot and therefore, the receipts

of pet coke shown in RG-23-Pt.I as well as the corresponding Cenvat credit

availed in RG-23-Pt-II by noticee No. 1 were based on mere paper

transactions. The said indulgence gets reliance through the corroborative

evidences, recovered/noticed/found during the investigation from the

possession of various suppliers viz. noticee Nos. 3,7,8,9 and 10, the

transporters and their respective confessions that they had supplied only

the Cenvatable invoices without goods. Therefore, it appears that noticee

No. 1 was procuring only the cenvatable invoices of pet coke and availed

and utilized cenvat credit without using the same in the manufacturing

process.

IV. The mode of financial transactions between Noticee No. 1 with noticee Nos.

3 and 4, as admitted by noticee No. 5 in his statements supports and

establishes the above wherein he, acknowledged, inter alia, that they

were supplying only Cenvatable invoices of pet coke; that the payments

were received in cheques only; that he, after encashing the said cheques

was deducting his commission charges as well as the value of coke

dust/coke breeze supplied to the Noticee No. 1, returned the balance

amount to noticee No. 1 in cash. In addition, the depositon of Shri Bhavin

Pabari, proprietor of noticee No. 7 to the extent that he was to receive the

payments from the customers in cash in respect of 15 diverted trucks and

on receiving the same he would hand over the same to noticee No. 1,

further consolidated the indulgence mentioned above.

V. The attitude of noticee No. 1 in evading C. Ex. duty can be gauged from the

fact that even after booking of the case against them on 26.04.2008,




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noticee No. 1, with the help of their another pet coke supplier, namely, the

noticee No. 7 was diverting the pet coke consigned to noticee No. 1 to the

premises of noticee No. 15 in a truck No. GJ-10-W-7484 intercepted by the

officers of Central Excise, Rajkot on 13.05.2008. The truck along with

loaded quantity of diverted pet coke was first detained and later on seized

vide Panchanama dtd. 15.05.2008. Subsequently, the same were

provisionally released on execution of Bond and Bank Guarantee. A Show

Cause Notice to this effect has been issued on 11.11.2008.

VI. The details recovered from the computer hard disc of noticees Nos. 3 and 4

indicated supply of coke dust/coke breeze to noticee No. 1 for the period

from Nov-2006 to January-08. The noticee No. 5 in his statement admitted

that they were supplying coke dust to noticee No. 1 prior to this period also

but had not kept the respective records for earlier period. It appears from

the records that there was an unexpected increase of purchase and use of

pet coke by noticee No. 1 during 2006-07 as compared to previous years.

Further, it appears from the records (dispatch books) seized from the

noticee No. 18 and confessional statements of their various suppliers,

transporters and ultimate users of such diverted pet coke that the noticee

No. 1 was also indulging in diverting the pet coke to other manufacturers

and acquiring only Cenvatable invoices during this earlier period also. The

suppression of the fact of not showing the receipts of coke dust/coke

breeze received from the noticee No. 4 in statutory records clearly shows

their intention to hide the diversion of pet coke right from the F. Y. 2006-07.

Moreover, the investigation in the matter has revealed that the records for

the earlier period were destroyed by some of the co-noticees as is evident

from their statements recorded during the course of investigation.

Nevertheless, indication and their corroborative evidences certainly

indicate that the noticee No. 1 was indulged in wrong availmnet and

utilization of Cenvat credit on a larger scale during 2006-07 & 2007-08

and 2008-09 (upto April-08).

26. Thus from the paras supra, it appears that

I. The noticee No. 1 (M/s. New Kishan) has contravened the provisions of

Rule 3 of Cenvat Credit Rules,2004 (hereinafter referred to as the

CCR,2004) inasmuch as the said noticee has availed Cenvat credits on pet

coke without actually receiving the same in their factory.




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II. Rule 4 of CCR,2004 inasmuch as the Cenvat credits in respect of pet coke

were taken without receipt of the said goods in the factory.

III. Rule 9(5) of CCR,2004 inasmuch as noticee No. 1 failed to maintain proper

records for the receipt, disposal, consumption and stock of the inputs and

manipulated the said records so as to show the receipt of pet coke without

actually receiving them;

IV. It also appears that the noticee Nos. 3 (M/s. Hindustan Exports, Bharoodi),

8 (M/s. Jayshree Vyapar Ltd.) 9 (M/s. Karan Chemicals) and 10 (M/s.

Karan Marketing) are registered with Central Excise as registered dealers

and all of them connived with the said noticee No. 1 and others to abet the

noticee No. 1 in availing Cenvat Credit, which was not available to them

otherwise, and thus, concerned themselves in transporting, keeping and

selling of the excisable goods, which they knew or had reasons to believe,

were liable to confiscation and as such it appears that their registrations

are liable to be revoked and they have also rendered themselves liable to

penalty under rule 26 of the Central Excise Rules.

V. The noticee No. 4 (M/s. Kathiawad Indsutries, Bharoodi) and 7 (M/s.

Radhe Vyapar Ltd.) being not registered with Central Excise department,

yet connived with the said noticee No. 1 in the entire dealings and thus,

they have also rendered themselves liable for penalty under rule 26 of the

Central Excise Rules, 2002.

27. It also appears that the noticee Nos. 2 ( Shri Navneet Vadaliya, Director of

M/s. New Kishan), 5 (Shri Kuldipsinh Basiya, Partner of M/s. Hindustan

Exports & M/s. Kathiawad Industries, Bharoodi), 6 (Shri Rajan Vadaliya),

11 (M/s. Maruti Enterprise, Jamnagar), 12 (M/s. Samrat Cement,

Haramtala), 13 (Shri Ashok Vasani, partner of M/s. Samrat Cement,

Haramtala), 14 (Shri Bhavinbhai, Proprietor of M/s. Radhey Vyapar), 15

(M/s. Pyramid Portland Cement) 16 (M/s. Om Sai Ram Transport,

Jamnagar), 17 (Shri Pravin Bhanderi, Managing Director of M/s. Pyramid

Portland Cement), 18 (M/s. Partham Transport, Jamnagar), 19 (M/s.

Nilkanth Cement, Haramtala), 20 (M/s. Kailash Cement/Kaveri Cement)

21 (M/s. Tapi Cement), 22 (Shri Khodidas Sojitra, Director of M/s. Nilkanth

Cement), 23 (Shri Arvind Gangdas Sakhiya, Partner of M/s. Tapi Cement),

24 (Shri Dhiraj Rangani, partner of M/s. Kailash Cement/Kaveri Cement),




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25 (Shri Sashikant Koticha, Director of M/s. Jayshree Vyapar), 26 (Shri

Gautam Patel, Partner of M/s. Karan Marketing) and 27 (Shri

Chandrakant Patel, partner of M/s. Karan Chemicals) connived with the

said noticee No. 1 and abetted them in availing Cenvat Credit which was

not available to them otherwise and concerned themselves in transporting,

keeping and selling of the excisable goods, which they knew or had

reasons to believe, were liable to confiscation and as such, they have also

rendered themselves liable to penalty under rule 26 of the Central Excise

Rules,2002.”

7. Accordingly, show cause notice No. AE/D.II/AR-

Shapar/COMMR/55/2011 dated 29.3.2011 under adjudication was issued to

the abovenamed noticees.

8. Defence submissions: 8.1 During the course of adjudication, noticees have advanced their

submissions, which are as under:

Noticee No.

Noticee Date of submission

1. M/s. New Kishan Cement Pvt. Ltd. 28.3.2013

2. Shri Navneet Vadaliya, Director of M/s. New Kishan

Cement Pvt. Ltd.

28.3.2013

3. M/s. Hindustan Exports (“HE”) 28.3.2013

4. M/s. Kathiawad Industries (“KI”) 28.3.2013

5. Shri Kuldipsinh Basiya, Partner of HE & KI 28.3.2013

6. Shri Rajan Vadaliya, Director of M/s. New Kishan

Cement Pvt. Ltd.

28.3.2013

7. M/s. Radhey Vyapar Ltd. 13.9.2012

8. M/s. Jayshree Vyapar Ltd. 15.3.2013

9. M/s. Karan Chemicals 28.3.2013

10. M/s. Karan Marketing 28.3.2013

11. M/s. Maruti Enterprise 5.9.2012

12. M/s. Samrat Cement 28.3.2013

13. Shri Ashok Vasani,

Partner of M/s. Samrat Cement

28.3.2013

14. Shri Bhavin Pabari, Proprietor of M/s. Radhey

Vyapar Ltd.

13.9.2012




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15. M/s. Pyramid Portland Cement 13.9.2012

16. M/s. Om Sai Ram Transport Undated

17. Shri Pravin Bhandari, Managing Director of M/s.

Pyramid Portland Cement

13.9.2012

18. M/s. Pratham Transport 28.3.2013

19. M/s. Nilkanth Cement 13.9.2012

20. M/s. Kailash Cement Industries 19.5.2011 and 12.9.2012

21. M/s. Tapee Cement 19.5.2011 and 12.9.2012

22. Shri Khodidas Sojitra,

Director of M/s. Nilkant Cement

13.9.2012

23. Shri Arvind G. Sakhiya,

Partner of M/s. Tapee Cement

19.5.2011, 4.9.2012 & 26.2.2013

24. Shri Dhiraj Rangani,

Partner of M/s. Kailash Cement Industries

19.5.2011 & 12.9.2012

25. Shri Shashikant Koticha,

Director of M/s. Jayshree Vyapar Ltd.

15.3.2013

26. Shri Gautam Patel,

Partner of M/s. Karan Marketing

28.3.2013

27. Shri Chandrakant Patel

Partner of M/s. Karan Chemicals

28.3.2013

8.2 After receiving the notice, some of the noticees addressed several

letters for extension of time limit, etc. Some of them did not file reply until

personal hearing and filed the same thereafter.

8.3 The submissions made with reference to the contents of the notice,

are summarized as under:

(a) M/s. New Kishan, Shri Rajan Vadalia and Shri Navneet Vadalia (i.e.

Noticee Nos. 1,2 and 6):

They have submitted that M/s. New Kishan is engaged in manufacture of

cement & clinker; that main raw material used by them include pet coke; that

except pet coke, all other raw materials are non-excisable or exempted from

Central Excise duty; that it is on record that no incriminating

documents/records were found from the factory/office premises of M/s. New




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Kishan; that the allegation regarding wrongful availment of Cenvat credit is

leveled on the basis of evidences/records seized from third party premises as

well as on the basis of ambiguous depositions made by the suppliers of pet

coke and transporters; that the material/evidence relied upon in the notice do

not support the entire quantum as proposed in the show cause notice. They

have further submitted that they had purchased a total quantity of 571.330 MT

of pet coke from M/s. Harsidhdhi Fertilizers & Chemicals and had availed total

Cenvat credit of Rs. 3,50,867/- on the same; that there is no evidence to allege

that entire quantity of pet coke purchased by them from M/s. Harsidhdhi

Fertilizers & Chemicals was not received by them; therefore, it is undisputed

that the pet coke purchased by them from M/s. Harsidhdhi Fertilizer &

Chemicals was actually received in their premises and credit was properly

taken on the same.

With regard to pet coke purchased by them from M/s. Radhey Vyapar, it

is submitted on the basis of statements of Shri Bhavin Pabari, Proprietor of

M/s. Radhey Vyapar that out of total purchase of 4633.058 MT, dispute is

limited to 144.470 MT of pet coke; that credit cannot be denied on the entire

quantity of pet coke purchased by them from M/s. Radhey Vyapar. With regard

to the disputed 144.470 MT (15 consignments) of pet coke, they have

submitted that the show cause notice does not clarify which specific invoices

were given to them without supply of pet coke; that unless it is specified in the

notice, it cannot be presumed that they had availed credit on the basis of any

such invoices; that they had not availed any Cenvat credit on the 4

consignments of pet coke intercepted by the Department and hence, the

question of denying the credit does not arise.

With regard to pet coke purchased by them from M/s. Jayshree Vyapar

Ltd., it is submitted that they had purchased a total quantity of 4068.929 MT

of pet coke from them and had availed Cenvat credit of Rs. 21,75,414/- on the

same; that Shri Satish Parekh, godown keeper of M/s. Jayshree Vyapar Ltd.

has not stated anything about diversion of pet coke meant for M/s. New

Kishan. By relying on the statements of Shri Sashikant Kotecha, Shri Satish

Parekh, both of M/s. Jayshree Vyapar & Shri Manoj Kanjibhai Virani of M/s.

Pratham Transport and daily dispatch register, it is submitted that they had

not issued any invoice in the name of M/s. New Kishan (but the same was

covered by invoices issued in the name of M/s. Major Cement). On this basis, it

is submitted that the entire quantity of 4068.929 MT of pet coke supplied by




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M/s. Jayshree Vyapar was received by M/s. New Kishan and hence, the

allegation of wrongful denial of Cenvat credit is not sustainable.

With regard to pet coke purchased by them from M/s. Karan Chemicals,

it is submitted that they had purchased a total quantity of 5260.870 MT of pet

coke from them and had availed Cenvat credit of Rs. 29,60,742/- on the same;

that Shri Dipakbhai Sayani of M/s. Maruti Enterprise, Jamnagar, who had

stated in his statement-dated 27.5.2008 that he was not aware about the

delivery of goods at M/s. New Kishan, M/s. Major or any other places and

sometimes, goods delivered at places other than M/s. New Kishan or M/s.

Major Cement were endorsed with the seal of either M/s. New Kishan or M/s.

Major, has immediately retracted the statement under affidavit sworn before

notary (copy scanned on page 11 of the submission) and hence, his statement

is not left with any evidential value.

With regard to pet coke purchased by them from M/s. Karan Marketing,



that in view of retraction of his statement by Shri Dipakbhai Sayani of M/s.

Maruti Enterprise, Jamnagar, the allegation regarding diversion of pet coke

purchased by M/s. New Kishan from M/s. Karan Marketing is not sustainable

in the eyes of law.

With regard to pet coke purchased by them from M/s. Hindustan Export,



that consignments mentioned in the name of PP Enterprise were neither

received by them nor they had taken any credit on the same, which can be

verified from RG 23 A Part-I and Part-II maintained by them; that one

consignment of 17.260 pet coke shown as sold to M/s. Samrat Cement was

actually received by M/s. New Kishan and they had also taken credit for the

same in RG 23 A Part-II; that therefore, they had rightly taken credit on

1731.130 MT (1748.390-17.260 MT) of pet coke purchased from M/s.

Hindustan Exports.

They have further stated that Shri Kuldipsinh Basiya of M/s. Hindustan

Exports has retracted his statements by making affidavits dated 16.5.2008,




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14.6.2008 and 11.11.2008 (copy enclosed) before notary and hence, his

statements cannot be relied.

On the above basis, they have submitted that out of the total Cenvat

credit of Rs. 1,36,00,292/-, the amount of Cenvat credit which can be disputed

and denied is Rs. 1,03,195/ only.

They have further submitted that the show cause notice merely relies

upon statements of co-noticees; that 2 main co-noticees have promptly

retracted their statements and copies of their affidavits are enclosed with their

submission for ready reference; that statements of Managing Director, Director,

Authorized Signatory, Supervisor and weighment in-charge of M/s. New Kishan

are ex-culpatory and not corroborated by the statements of raw material

suppliers; that statements of pet coke suppliers, transporters and other

customers do not prove anything positive; that all the allegations are based on

third party depositions or records seized from third party; that Hon. Supreme

Court in the case of Central Bureau of Investigation v/s V. C. Shukla & Ors,

1998 (75) ECR 484 has held in para 39 that even correct and authentic entries

in books of account cannot, without independent evidence of their

trustworthiness, fix a liability upon a person.

They have further submitted that except for M/s. Radhey Vyapar, no

other supplier of pet coke have conclusively deposed that they had diverted any

particular consignment (s) of pet coke; that some of the suppliers have given

their statements on mere hearsay by making references to transporters, truck

drivers, etc.; that some other suppliers have given vague statements; that

reliance placed by the Department on the statements of Shri Dipakbhai Sayani

of M/s. Maruti Enterprise (transporter), M/s. Manoj Virani of M/s. Pratham

Transport (transporter), entries made in the daily dispatch register of the said

transporter, etc. is misplaced inasmuch as the same is not corroborated. They

also placed reliance on the decision of Hon. Tribunal in the case of M/s. Raj

Sandeep Co., 2003 (162) ELT 1028 (T), wherein, it is held that suspicion

however strong, cannot be a substitute of proof.

They have further submitted that reliance placed by the Department on

computer print out is hit by the safeguard and conditions stipulated in section

36 B(2) of the Central Excise Act, 1944 and hence, the same cannot be




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considered as admissible evidence. They cited the following decisions to

support this argument:

i) Jindal Nickel & Alloys Ltd., 2012 (279) ELT 134 (T)

ii) Hindustan Granites, 2010 (262) ELT 885 (T)

iii) Harsinghar Gutka Pvt. Ltd., 2008 (221) ELT 77 (T)

iv) Premium Packaging Pvt. Ltd., 2005 (184) ELT 165 (T)

v) Premier Instruments & Controls Ltd., 2005 (183) ELT 65 (T)

vi) International Computer Ribbon Corporation, 2004 (165) ELT 786 (T)

They have further submitted that the Department had found some

weighment slips and gate outward register of M/s. Hindustan Export and M/s.

Kathiawad Industries, Bharoodi showing consolidated dispatches of coke

dust/iron to the premises of M/s. New Kishan as well as M/s. Major Cement;

that it was explained by Shri Rajan Vadalia, Director of M/s. New Kishan in his

statements that they had received waste iron separated from coal; that the

same was non-usable waste for M/s. Hindustan Exports and M/s. Kathiawad

Industries, Bharoodi and hence, it was received free of cost; that Shri

Kuldipsinh Basiya has also stated in his statement that the main suppliers of

coal other than pet coke were M/s. Welspun Power & Steel Ltd., M/s. Nilkanth

Concast Pvt. Ltd., M/s. Mono Steel (India) Ltd., M/s. SAL Steel Ltd., M/s. New

Tech Foundry, M/s. Electrotherm (I) Ltd. etc.; that all these companies are

steel making companies; that while making sponge iron, waste coal containing

high iron content emerge as a by-product; that M/s. Hindustan Exports &

M/s. Kathiawad Industries separated waste iron particles from waste coal and

supplied the said waste iron to M/s. New Kishan in the name of coke dust; that

the said coke dust was not recorded in their books of accounts as the same

cannot be used as fuel in place of coal, coke or pet coke; that quantity of coke

dust alleged to have been procured by them in the notice (Annexure-B thereto)

was very high as compared to the 3 proforma invoice books resumed from the

premises of the aforesaid suppliers and they had not procured so much coke

dust as alleged.

They have further submitted that on 26.4.2008, Department had taken

samples from 1153.735 MT of pet coke lying in stock in their premises.

Thereafter, Department carried out weighment of the entire stock from

26.4.2008 to 1.5.2008. Owing to this, ground dust came to the top of the heap

of pet coke lying in stock. On 2.5.2008, Department again took samples from




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the same stock of pet coke lying in their premises and got the same tested from

NSIC Technical Service Centre at Rajkot. They have contended that the method

adopted by the Department for drawing the sample was not in accordance with

method of sampling prescribed under BIS standard (copy submitted). They

have further contended that the laboratory from which Department got the

sample tested did not carry out test with reference to sulphur level and calorific

value; that hence, reliance placed by the Department on report-dated 5.5.2008

of NSIC stating that sample was not pet coke is misplaced. They also

submitted a specimen copy of test report issued by M/s. Reliance Industries

Ltd. regarding specifications of pet coke. They have also submitted that denial

of cross-examination of chemical examiner was unjustified and in violation of

the principles of natural justice. Their Director had refused to accept the test

report and stated that they did not agree with the method of testing. On this

basis, they requested for re-testing of the samples. They also submitted that

where there is a doubt regarding test report, it was important to get the goods

tested by an independent and outside laboratory. They have cited decisions of

Hon. Tribunal in the case of U. K. Paints Industries, 1994 (74) ELT 392 (T),

Taurion Steel Co. Pvt. Ltd., 2009 (241) ELT 390 (T) and Punjab Stainless Steel

Industries, 2000 (122) ELT 428 (T). They also relied upon e-mail supposedly

exchanged between M/s. Major Cement and M/s. Quality Services & Solution,

Gandhidham, wherein, the latter has opined that Ash, VM and FC is not

sufficient to decide the type of coal.

They have relied upon the following decisions in support of their plea for

cross-examination of the chemical examiner:

i) Kellogg India Ltd., 2006 (193) ELT 385 (Bom.)

ii) Hazoor Sahib Chemicals P. Ltd., 2008 (226) ELT 444 (T)

iii) Sandur Manganese & Iron Ores Ltd., 2007 (218) ELT 291 (T)

iv) State of Kerala v/s K. T. Shaduli Grocery Dealer, AIR 1977 SC 1627.

v) Kalra Glue Factory v/s Sales Tax Tribunal, 1987 (65) CTR (S.C.) 233.

vi) Sanjeev Woollen Mills, 2006 (158) ELT 477 (T)

vii) Jai Ganesh Textile and Woollen Pvt. Ltd., 2002 (149) ELT 352 (T).

They have further submitted that corrigendum-dated 14.2.2013 issued

by the Department is improper and bad in law inasmuch as it is clearly

mentioned at Sl. No. 23 & 24 to panchanama-dated 26.4.2008 that samples of

pet coke and cement were drawn from their premises.




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They have further submitted that denial of cross-examination is in

violation of the principles of natural justice, as held in the following decisions:

i) Rama Shyama Papers Ltd., 2004 (168) ELT 494 (T)

ii) Himla Hosiety Mfg. Dye. & Printing Mills (P) Ltd., 2004 (164) ELT 274 (T).

iii) Lakshman Exports Limited, 2002 (143) ELT 21 (S.C.)

iv) Arya Abhushan Bhandar, 2002 (143) ELT 25 (S.C.)

v) Trinity Electric Syndicate Pvt. Ltd., 2005 (179) ELT 53 (T)

They have further submitted that grave charge of availment of CENVAT

credit without receiving the inputs cannot be made on the basis of

assumptions and presumptions; that the same is required to be proved with

cogent and tangible evidences; that charge of illicit clearance or availment of

CENVAT credit without receipt of the goods cannot be made merely on the

basis of alleged ambiguous confessional statements. They have relied upon the

following citations:

i) M/s. Ghodavat Pan Masala Products Ltd., 2004 (175) E.L.T. 182 (Tri. -

Mumbai)

ii) Shri Radheshyam Kanoria, 2006 (197) E.L.T. 130 (Tri. - Mumbai)

iii) M/s. Pioneer Industries, 2006 (193) ELT 506 (T)

iv) Shri Shiv Charan Bajpai, 2003 (160) ELT 1138 (T)

On the above basis, they have submitted that the demand of Cenvat

credit is not sustainable. Therefore, demand of interest is also not sustainable.

They have further submitted that they are not liable to penalty under

rule 15(2) of Cenvat Credit Rules,2004 readwith section 11AC of the Central

Excise Act, 1944. They have cited the decision of Hon. Supreme Court in the

case of Tamil Nadu Housing Board, 1994 (74) ELT 9 and Hindustan Steel Ltd.,

1978 (2) ELT J 159.

On the above basis, Shri Rajan Vadalia and Shri Navneet Vadalia,

Directors are also not liable to penalty.

With regard to show cause notice dated 21.10.2008, M/s. New Kishan

and Shri Navneetbhai Vadaliya, Director have filed a common submission




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dated 25.10.2008. They have submitted that the officers had not carried out

physical verification of the stock and further, there is no evidence to proide tha

they intended to remove the goods clandestine.

(b) M/s. Hindustan Exports, M/s. Kathiyawad Industries and Shri Kuldipsinh Basiya, Partner (i.e. Noticee Nos. 3, 4 and 5):

They have submitted original affidavits dated 16.5.2008, 14.6.2008 and

11.11.2008 seeking to retract the statements of Shri Kuldipsinh Basiya. They

have further submitted that M/s. Hindustan Exports (“HE”) have supplied

1748.390 MT of pet coke to M/s. New Kishan; that M/s. HE has issued

invoices in favour of M/s. New Kishan and has passed on Cenvat credit; that

M/s. HE received the inputs under proper documents and sold the same under

valid documents; that during the course of investigation, it was categorically

stated that M/s. HE had received the payment from M/s. New Kishan through

cheque and the Department has not produced any evidence to prove that the

said amount was paid back to M/s. New Kishan; that the Department has not

produced any evidence to prove that M/s. New Kishan had not used the pet

coke received from M/s. HE for use in manufacture of their final product and

the said final product was not cleared on payment of duty.

They have further submitted that when the statements of Shri

Kuldipsinh Basiya were recorded, he was mentally sick and under mental

treatment at Rajkot and they had submitted copies of medical record and

certificate submitted to the Department under registered post dated

24.10.2008; that Shri Kuldipsinh Basiya has already retracted his earlier

statements and hence, the same have lost evidential value.

They have further submitted that as per deposition, M/s. HE issued

excisable invoices of pet coke in the name of M/s. New Kishan and M/s. Major

only; that however, it is evident from the invoices recovered from the premises

of M/s. HE under panchanama-dated 26.4.2008 that they supplied pet coke to

several other parties; that a close scrutiny of the entries at page Nos. 1 to 17

would reveal that consignments mentioned in the name of M/s. PP were

neither supplied to M/s. New Kishan nor invoices were issued in their favour;

that it would be seen from the entries made on these pages that in respect of

one entry, pet coke was shown as sold to M/s. Samrat Cement but the same

was supplied to M/s. New Kishan; that there is no other event on the basis of




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which it can be presumed that M/s. HE issued invoices in favour of M/s. New

Kishan and sold the goods to other parties.

They have further submitted that “the department (has) heavily relied

upon the computer print out, after due editing therein, taken from the hard disk

seized from the premises of M/s. HE for alleging that in guise of the supplies

shown in said computer print-out, the invoices were pet coke given to M/s. New

Kishan without supply of pet coke…the hard disk from which the said printout

was taken was of the computer placed on the stock yard and used was not

consistently used for the period from Nov 2006 to April 2008. The proper

accounting and records were being maintained at the office situated at Star

Plaza, Rajkot. The computer at stock yard was maintained for entries for

reference and which were not authentic as the same were made by various

person at the same time period. The details stored in the said computer were not

the data which were recorded in regular process of information for the purpose of

activities shown therein. The computer was also not under lawful control of any

person of stock yard. There was no information which were regularly supplied to

the computer in the ordinary course of the said activities. It is also to submit that

the said computer was not operating properly. The accuracy of the contained

stored in the said computer is not reliable inasmuch as the same were entered

by various person also the same were in coding in nature. Since the contains are

showing supplies to single party mentioned as “KC” meaning of which can only

be given by the person who entered the said information, however, no version of

these person were recorded. There is also clear evidence on the computer

printout statement that the same were not drawn as such in the form it was

stored in the computer but the same was edited before printing, inasmuch as

heading of the data it is mentioned that, the source as hard disk, which was

typed by the excise officers themselves before taking computer printout. It is also

worth to appreciate that the contains of said computer printout was not certified

as correct by any of person”.

They have further submitted that Department had found some

weighment slips and gate outward register of M/s. Hindustan Exports and

M/s. Kathiawad Industries, Bharoodi showing consolidated dispatches of coke

dust/iron to the premises of M/s. New Kishan as well as M/s. Major Cement;

that “the item supplied by your noticee, viz. waste iron separated from coal and

the same was non-usable waste for M/s. Hindustan Export & M/s. Kathiawad

Ind. Bharudi and hence, supplied free of cost”; that this waste was not recorded




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in their books of accounts as the same cannot be used as fuel; that quantity of

coke dust alleged to have been supplied by them in the notice (Annexure-B

thereto) was very high as compared to the 3 proforma invoice books resumed

from their premises and they had not supplied so much coke dust as alleged to

M/s. New Kishan; that therefore, the case of the Department that they had

supplied huge quantity of coke dust instead of pet coke and sale of pet was

only paper transaction is not substantiated.


rule 26 of Central Excise Rules,2002 and have cited the following decisions in

support of this plea:

i) Man Industries (India) Ltd., 2004 (175) E.L.T. 435 (Tri. - Del.)

ii) Steel Tubes of India Ltd., 2007 (217) ELT 506 (T)

They have further submitted that most of the period covered by the

notice is prior to 1.3.2007 and hence, no penalty is imposable on them under

rule 26. In support of this plea, they have cited the decision of Commissioner

(A) in the case of Kaluram Heda as well as Tribunal in the case of Ispat

Industries Ltd., 2008 (226) ELT 218 (Tri.-Mumbai). Decision in the case of M/s.

Dhanlaxmi Tube and Metal Industries, 2012 (282) E.L.T. 206 (Guj.) is also

cited.

They have further submitted that separate penalty on partnership firm

and partners cannot be imposed, as held by Hon. High Court of Gujarat in the

case of Mohammed Farookh Mohammed Ghani, 2010 (259) ELT 179 (Guj.).

They have finally submitted that proposal for withdrawal of registration

certificate is not proper and justified.

(c) Submissions by M/s. Radhe Vyapar Ltd., Rajkot and Shri Bhavin Pabari, Proprietor of M/s. Radhe Vyapar Ltd. (Noticee No. 7 & 14):

M/s. Radhe Vyapar Ltd., Rajkot and its proprietor Shri Bhavinbhai

Pabari have submitted that penalty under rule 26 of Central Excise Rules,

2002 can only be imposed when the person has a reason to believe that the

goods are liable to confiscation; that in the present case, they are engaged in

trading of goods not registered with Central excise and they did not pass

Cenvat credit to the excise manufacturers; that therefore, being a bona fide




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supplier, they cannot be penalized for act of others; that it is nowhere alleged

in the show cause notice that they had a reason to believe that the goods are

liable to confiscation. On this basis, they have submitted that they are not

liable to penalty.

(d) M/s. Jayshree Vyapar Limited (Noticee No. 8), M/s. Om Sai Ram Transport (Noticee No. 16), Shri Shashikant Koticha (Noticee No. 25), Shri Gautam Patel (Noticee No. 26):

They requested to supply a copy of submission made by the main noticee

and submitted that they would file their submissions thereafter. They have not

filed any submission of their own rebutting the allegations leveled against them

in the notice.

(e) M/s. Karan Chemicals, Ahmedabad (Noticee No. 9), M/s. Karan Marketing (Noticee No. 10), Shri Chandrakant Patel, Partner of M/s. Karan Chemicals (Noticee No. 27) and Shri Gautam Patel, Partner of M/s. Karan Marketing (Noticee No. 26):

They have submitted that during the course of investigation, the main

noticee has categorically admitted the receipt of the material and payment

thereof to them through account payee cheque as well as payment to the

transporter; that the department has not produced any evidence to prove that

the said amount was paid back by them; that the department has not

produced the evidence that goods were returned to them by the main noticee or

the raw material received by the main noticee was not used in the manufacture

of final product.

They have further stated that Shri Dipakbhai Sayani of M/s. Maruti

Enterprise has already retracted his statement dated 27.5.2008 within 24

hours by making an affidavit before notary; that therefore, the deposition made

by Shri Dipakbhai Thakarshibhai Sayani of M/s. Maruti Enterprises,

Jamnagar has lost its evidential value and in light of this, there is nothing,

except hearsay, to show that M/s. New Kishan Cement Private Limited had

availed credit of duty without actual supply of the goods to them; that in

absence of any cogent evidence, no proceedings are sustainable against them.




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They have further submitted that most of the period is prior to 1.3.2007

and hence, no penalty is imposable on them under rule 26. In support of this

plea, they have cited the decision of Commissioner (A) in the case of Kaluram

Heda as well as Tribunal in the case of Ispat Industries Ltd., 2008 (226) ELT

218 (Tri.-Mumbai). Decision in the case of M/s. Dhanlaxmi Tube and Metal

Industries, 2012 (282) E.L.T. 206 (Guj.) is also cited.




They have also submitted that proposal for withdrawal of registration


(f) M/s. Maruti Enterprise, Ahmedabad (Noticee No. 11):

Vide their letter dated 5.9.2012, they had requested for extension of time

limit for filing reply. Thereafter, they have not filed any reply rebutting the

allegations leveled against them.

(g) M/s. Samrat Cement (Noticee No. 12) and Shri Ashok Vasani (Noticee No. 13):

They have submitted that they “adopt the defence submission made by

supplier of coal/coke and main notice M/s. New Kishan Cement P. Ltd.”. They

have further submitted that there is no case where they had received pet coke

for which invoices were issued in favour of M/s. New Kishan; that the main

noticee has already clarified that the inputs under consideration was sold by

them to the main noticee and the main noticee has also accepted to have

received the material and having paid the price for the same; that the payment

due to them was also received by account payee cheque; that the Department

has not produced any evidence to prove that the amount paid by the main




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noticee to them was returned back; that the Department has also not produced

any evidence to show that the raw material received by the main noticee was

not used by them in manufacture of final product.

They have further submitted that there is no mens reas and hence,

penalty cannot be imposed on them. They have relied upon the decision of Hon.

Tribunal in the case of Man Industries (India) Ltd., 2004 (175) ELT 435 (T).

They have also cited the decision of Hon. Tribunal in the case of Steel Tubes of

India Ltd., 2007 (217) ELT 506 (T) to contest penal action proposed against

them.

They have further submitted that Department has not quantified the

duty/credit involved on the pet coke supposedly dealt with by them; that

without quantification, penalty cannot be imposed on them under rule 26 of

the Central Excise Rules,2002.

They have further submitted that penalty is not imposable on them also

because Department has not recorded their statement.






(h) Submissions by M/s. Pyramid Portland Cement (Noticee No. 15), Shri Pravin Bhanderi, Managing Director of M/s. Pyramid Portland Cement (Noticee No. 17), M/s. Nilkanth Cement (Noticee No. 19) and Shri Khodidas Sojitra, Director of M/s. Nilkanth Cement (Noticee No. 22):

They have submitted that they are not liable for penalty under rule 26 of

Central Excise Rules, 2002 proposed against them considering that they bona

fide purchaser and there is no allegation in the notice that they had reason to

believe that the goods were liable to confiscation.

They have cited the decision of Hon. High Court of Karnataka in the case

of Five Star Shipping Co. Ltd., 2012 (278) ELT 196 (Kar.,) in their support.




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(i) Submissions by M/s. Pratham Transport (Noticee No. 18):

They have submitted that there were 8 entries for 140.160 MT in the

daily dispatch register showing that goods meant for M/s. Major Cement

Private Limited were diverted to a place other than premises of M/s. Major

Cement. However, there is no entry in respect of M/s. New Kishan; that they

were not aware about any diversion of pet coke by M/s. Jayshree Vyapar

Limited; that sometimes, they gathered from truck drivers that particular

consignment was not delivered at the place mentioned in the challan but was

supplied elsewhere. They have further submitted that they have no

evidence/proof to this effect but they used to endorse daily dispatch register as

informed by the truck driver. They have further stated that they have never

verified the authenticity of the information of the truck driver and have received

the freight for the destination declared in the delivery challan.






They have further submitted that most of the period is prior to 1.3.2007

and hence, no penalty is imposable on them under rule 26. In support of this

plea, they have cited the decision of Commissioner (A) in the case of Kaluram

Heda as well as Tribunal in the case of Ispat Industries Ltd., 2008 (226) ELT

218 (Tri.-Mumbai). Decision in the case of M/s. Dhanlaxmi Tube and Metal

Industries, 2012 (282) E.L.T. 206 (Guj.) is also cited.









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(j) Submissions by M/s. Kailash Cement Industries (Noticee No. 20), M/s. Tapee Cement Industries (Noticee No. 21), Shri Arvind Sakhiya, Partner of M/s. Tapee Cement Industries (Noticee No. 23) and Shri Dhiraj Rangani, Partner of M/s. Kailash Cement Industries (Noticee No. 24):

They have submitted that whatever pet coke was procured without bills

was procured from M/s. Jayshree Vyapar Ltd. and not from M/s. Radhey

Vyapar Ltd; that this fact is not disputed by the Department; that the said pet

coke was not meant for M/s. New Kishan or procured from M/s. New Kishan;

that therefore, pet coke procured by them without bill from M/s. Jayshree

Vyapar Ltd. had no connection with M/s. New Kishan; that “if it happened to be

the goods covered under such invoices might be managed by our supplied

without our knowledge and hence, merely be a coincidence.”

They have further submitted that burden of proof lies with the

Department to prove that the goods procured by them without bills were the

same goods covered by invoices issued in the name of M/s. New Kishan; that

no correlation is established between the goods received by them and the

invoices issued in the name of M/s. New Kishan; that penalty cannot be

imposed on mere speculation and assumption.

They have further submitted that there is nothing in their statements to

show that they were aware that the pet coke was liable to duty which was not

paid by the supplier; that they had purchased the pet coke from a dealer and

not a manufacturer; that there is no dispute over the fact that the

manufacturer (M/s. RIL) had discharged duty on the said goods; that rule 26(1)

is not application to alleged wrong availment of cenvat credit on the basis of

invoices issued by a registered dealer without delivering the goods; that they

had purchased the goods from M/s. Jayshree Vyapar Ltd. on principal-to-

principal basis and it had nothing to do with issuance or non-issuance of

invoices to any other manufacturer; that hence, they had neither any

knowledge regarding issuance of invoice by the said dealer to M/s. New Kishan

without delivery of goods nor it was their concern; that therefore, rule 26(2)(i) is

also not applicable to their case; that they had neither issued invoices on the

basis of which alleged benefit of Cenvat credit was availed by M/s. New Kishan

nor abetted in making the said invoices in any manner; that the goods in

question purchased by them, though without bills from M/s. Jayshree Vyapar

Ltd were in compliance with the orders placed by them directly; that the dealer




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had never told them that the goods supplied to them were adjusted against

invoices issued in the name of M/s. New Kishan; that they were neither a

beneficiary of ineligible Cenvat credit nor involving in abetting the preparation

of such invoices and hence, they are not liable to penalty under rule 26(2) of

Central Excise Rules,2002; that Department has also not established that the

goods received by them were the same as those covered by the invoices issued

to M/s. New Kishan; that penalty cannot be imposed under rule 26(2) of

Central Excise Rules on mere speculation and assumption that goods

purchased by them are same as covered by the invoices issued in the name of

M/s. New Kishan.

They have also submitted that show cause notice also does not specify

the sub-rule of rule 26 of Central Excise Rules under which penalty is

proposed against them.

By citing statements of dealers, they have made the following

submission:

(i) Shri Kuldeep Singh Basiya, partner of M/s. Hindustan Exports and M/s.

Kathiyawad Industries were engaged in trading of pet coke to M/s. New

Kishan and M/s. Major Cement under cover of proforma invoices; that

such proforma invoices were converted into invoices at the time of

finalization done on monthly basis and payments thereof were received

by cheques; that rest of the proforma invoices were destroyed after

getting payment in cash; that he further stated that they issued

cenvatable invoices only in the name of M/s. New Kishan at their request

and the goods corresponding to such invoices were diverted to other

customers who did not require invoices; that thus, he has nowhere

mentioned that the balance quantity was supplied to them through M/s

New Kishan Cement or the customers procuring the goods without bills

were having knowledge about issuance of invoices to M/s. New Kishan

for the said quantities of goods; that in view thereof, provisions of rule 26

of the CER, 2002 for imposition of penalty upon them are not invocable

in this case.

(ii) None of the statements of Director of M/s. New Kishan indicates that the

quantity of goods specified in the impugned invoices was

supplied/diverted to them either in full or a part thereof.




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(iii) Diversion of pet coke as alleged in the show cause notice was done only

at the end of suppliers and without their knowledge; that they always

placed orders for purchase of pet coke directly to their suppliers who

supplied the same to them; that however, it was not in their knowledge

that the same was adjusted against the cenvatable invoices that might

have been issued to M/s. New Kishan as alleged.

(iv) Even the goods intercepted in transit were found to be in the name of

M/s. New Kishan Cement and being diverted at the instructions of M/s.

Radhe Vyapar Limited to M/s. Pyramid Portland Cement, Hadamtala and

not to them.

(v) By relying the statement-dated 13.5.2008 of Shri Bhavinbhai Pabari,

they have submitted that dealers were diverting the goods without

informing the customers about the name of party to whom invoice was

issued.

(vi) Shri Manoj Kanjibhai Virani of M/s. Pratham Transport has clearly

stated that goods were diverted to them on the instructions of M/s.

Jayshree Vyapar Ltd. Hence, there was no connivance between them and

M/s. New Kishan.

(vii) Shri Satish Parekh, Manager-cum-godown in-charge of M/s. Jayshree

Vyapar Ltd. has stated that pet coke was supplied to M/s. New Kishan

through challans prepared in the name of individuals at the instructions

of Shri Shashikantbhai or Shri Kamleshbhai; that accordingly, pet coke

was delivered to them through challan and payment was made in cash;

that transaction was directly with the supplier and not with M/s. New

Kishan;

(viii) Shri Shashikantbhai has stated that M/s. Jayshree Vyapar Ltd.

facilitated their customers by providing pet coke without bills on cash

basis and such supply was adjusted by issuing retail as well as tax

invoice to the same customer; that they provided cenvatable invoices to

M/s. New Kishan and the consignments of pet coke were diverted to

other customers; that it is clear from his statement that diversion of

goods without bills was through mutual understanding of suppliers

(M/s. Jayshree Vyapar Ltd.) and customers like them; that there is no




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nexus between customers and M/s. New Kishan for purchase of pet coke

from M/s. Jayshree Vyapar for adjustment of pet coke covered by

invoices issued in the name of M/s. New Kishan; that therefore, there is

no mens rea on their part and hence, they are not liable to penalty under

rule 26 of Central Excise Rules, 2002.

They have further submitted that there is no quantification of pet coke

allegedly diverted to them in the show cause notice and hence, penalty cannot

be imposed on them on the basis of vague show cause notice.

They have also cited the following decisions:

i) V. K. Vora, 2005 (187) ELT 264 (T)

ii) R. K. Steel, 2006 (206) ELT 1082 (T)

iii) Sangam Sales Corporation, 2011 (263) ELT 319 (T)

iv) Shri Manoj Kumar Pani, 2010 (260) ELT 92 (T)

The partners have additionally submitted that once penalty is not

imposable on partnership firm, being partners, they are also not liable to

penalty. They have also submitted that separate penalty on partners in

addition to penalty on partnership firm is not imposable. They have cited the

decision of Hon. High Court of Gujarat in the case of Mahendra Kumar

Kapadia, 2010 (260) ELT 51 (Guj.) in this regard.

(k) Further submissions by M/s. Kailash Cement Industries (Noticee No. 20), M/s. Tapee Cement Industries (Noticee No. 21), Shri Arvind Sakhiya, Partner of M/s. Tapee Cement Industries (Noticee No. 23) and Shri Dhiraj Rangani, Partner of M/s. Kailash Cement Industries (Noticee No. 24):

They have submitted that the show cause notice does not specify the

quantity of pet coke alleged to have been purchased by them which was

rendered liable to confiscation or this was merely a case of abetment; that the

show cause notice does not specify the sub-rule of rule 26 under which penalty

is proposed; that provisions of rule 26(2) were inserted vide notification No.

8/2007-CE (NT) dated 1.3.2007 and does not apply retrospectively; that the

show cause notice does not specify the quantity of pet coke purchased by them

prior to 1.3.2007; that allegations have been levelled against them only on the

basis of confessional statements of various persons including their partner

which are not corroborated by any documentary evidence; that penalty under




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rule 26 can be imposed only if presence of mens rea is established. They have

cited the following decisions:

i) VVF Limited, 2011 (267) ELT 134 (T)

ii) Ashish Gupta, 2007 (214) ELT 339 (T)

iii) Daya Shankar Tiwari, 2007 (09) LCX 248

iv) Adhunik Alloys Ltd., 2010 (254) ELT 221 (P&H)

v) Mukand Ltd.

They have further submitted that Department has not any produced any

evidence to establish connivance between them and anyone else to enable M/s.

New Kishan to avail Cenvat credit without receiving any goods or abetting the

dealers in issuing fake invoices to M/s. New Kishan without supplying any

goods; that therefore, they are not liable for penalty under rule 26 of Central

Excise Rules, 2002. They have cited the following decisions:

i) B. C. Sharma, 2000 (122) ELT 158 (T)

ii) Harish Dye and Printing Works, 2001 (138) ELT 772 (T)

iii) Manish Richariya & Ors, 2003 (89) ECC 394

iv) Moontex Dyeing and Printing, 2007 (119) ECC 185

(l) Shri Arvindbhai G. Sakhiya (Noticee No. 23):

Shri Shailesh G. Sakhiya, Partner of M/s. Tapee Cement under letters

dated 4.9.2012 and 26.2.2013 informed that Shri Arvindbhai G. Sakhiya

passed away on 1.8.2012 and submitted death certificate No. 144207 dated

8.8.2012 issued by Rajkot Municipal Corporation.

9. Cross-examination & Personal hearing:

9.1 Personal hearing was fixed on 5.9.2012. Shri Paresh Sheth,

Advocate and Shri Rajan Vadaliya, Director of M/s. New Kishan attended the

hearing on 5.9.2012 and requested to provide copy of test report of samples

drawn on 26.4.2008 referred in paragraph 3 on page of the show cause notice.

They also submitted that if these samples were not tested, the same may be

tested and they may be provided a copy of the same. Further, under their letter

dated 11.9.2012, M/s. New Kishan requested for cross-examination of a large

number of persons, namely, panchas who were present in the factory premises




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on 26.4.2008, 2.5.2008 & 3.5.2008; Shri Haresh Kalaria (Chief Chemist),

panch witnesses at M/s. Hindustan Exports/Kathiawad Industries, Shri

Kuldipsinh Basiya, Chemical Examiner of NSIC, Shri Ajay Pabari, Shri Shabir

Sheikh, Shri Bhavin Pabari, Shri Pravin Bhandari, Shri Md. Rafik Gulam

Hussein, Shr Dipak Sayani, Shri Vallabhbhai Javia, Shri Ramesh Advani, Shri

Manoj Virani, Shri Dhiran Rangani, Shri Arvind Gangdas, Shri Khodidas

Sojitra, Shri Satish Parekh, Shri Shashikant Kotecha, Shri Ashok Vasani, Shri

Chandrakant Patel and Shri Gautam Patel. The request was not acceded to

after considering the facts of the case.

9.2 On 5.9.2012, appearing on behalf of M/s. New Kishan and Shri

Rajan Vadaliya, Director of M/s. New Kishan, Shri Paresh Sheth, Advocate

requested to provide copy of test report of samples drawn on 26.4.2008 referred

in paragraph 3 on page of the show cause notice. They also submitted that if

these samples were not tested, the same may be tested and they may be

provided a copy of the same.

9.3 On verification of panchanama-dated 26.4.2008 drawn at the

factory premises of M/s. New Kishan, it was observed that there is no narration

regarding drawl of any samples. In absence of any narration in the

panchanama regarding drawl of any samples & sealing the same in the

presence of independent panchas, it became clear that no samples were drawn

from their premises. Consequently, on 14.2.2013, a suitable corrigendum to

the show cause notice was issued and the noticees were given opportunity of

personal hearing on 26.2.2013. In response to this, Shri Paresh Sheth,

Advocate under letter dated 25.2.2013 reiterated the request for cross-

examination of the chemical examiner.

9.4 Under letter dated 26.2.2013, the noticee was informed that they

were already informed under earlier letter dated 15.2.2013 that their request

for cross-examination was not acceded to and they were granted personal

hearing on 4.3.2013. On 4.3.2013, Shri Paresh Sheth, Advocate appeared on

behalf of M/s. New Kishan and requested/reiterated the request for cross-

examination of atleast Chemical Examiner. The request was not acceded to in

the facts of the case and vide letter dated 6.3.2013, M/s. New Kishan and all

other noticees were given opportunity of personal hearing on 15.3.2013.

Considering the request made by Advocate of M/s. New Kishan to adjourn the

hearing fixed on 15.3.2013, hearing was held on 19.3.2013. Shri Paresh Sheth,




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Advocate appeared for hearing on 19.3.2013 and requested for 10 days time for

filing submissions.

9.5 On 13.9.2012, Shri Pragnesh Hirpara, Advocate appeared on

behalf of noticee Nos. 7, 14, 15, 17, 19 and 22 and reiterated the submissions

already made by them. Under his further letter dated 21.2.2013, he informed

that they have already attended hearing on 13.9.2012 and are not desirous of

any further hearing.

9.6 M/s. Kailash Cement Industries (Noticee No. 20), M/s. Tapee

Cement Industries (Noticee No. 21) and Shri Dhiraj Rangani (Noticee No. 24)

under their respective letters received on 26.2.2013 have requested to decide

the case on the basis of their written submissions.

9.7 The remaining noticees did not avail the opportunity of personal

hearing.

10. Discussion and Findings:

10.1 I have carefully gone through the facts of the case as well as the

submissions advanced by the noticees.

10.2 The basic issue involved in this case is proposed denial of Cenvat

credit totally amounting to Rs. 1,36,00,295/- taken by the main noticee M/s.

New Kishan on pet coke on the ground that they had taken this credit on mere

invoices issued by several dealers without actually receiving the said

cenvatable item, claimed as input used by them in manufacture of clinker &

cement. I find that the officers of Central Excise visited their factory on

26.4.2008 and found that they had recorded a stock of 1153.735 MT of pet

coke in their Cenvat input account register, i.e. RG 23 Pt.-I register and nil

quantity of non-cenvatable inputs like coke dust, coke breeze, etc. in their raw

material account register, i.e. Form-IV register. The officers carried out

weighment of the goods claimed as pet coke and noticed shortage of

approximately 20 MT. On 2.5.2008, the officers took representative samples

from the stock of goods claimed as pet coke and sent the same to NSIC

Technical Services Centre- Rajkot (A Government of India Enterprise) for

testing. The report given by the NSIC Technical Services Centre under their

letter No. NSIC/TSC/CSC/CL/08-09 dated 7.5.2008 revealed that the sample

was coke dust and not pet coke. Thus, according to the test report given by the




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NSIC Testing Services Centre, the goods comprising the stock lying in the

premises of M/s. New Kishan were coke dust, a non-cenvatable item and not

that of pet coke, on which M/s. New Kishan had taken Cenvat credit.

10.3 M/s. New Kishan have contended that the Department ought to

have tested the sample drawn on 26.4.2008 and should have provided them

with a copy of the test report in this regard. However, on going through the

panchanama drawn at the premises of M/s. New Kishan on 26.4.2008, it is

observed that the same does not contain any narration regarding drawl of

samples of pet coke. There is a mention of 3 packets of samples of pet coke and

3 packets of samples of cement at Sl. No. 23 & 24 respectively of the annexure

to the said panchanama but in the absence of any narration in the

panchanama that samples were being drawn and separately packed in 3

packets, it cannot be said that any samples were drawn on 26.4.2008. The only

inference that can be drawn from the entries at Sl. No. 23 & 24 of the annexure

is that 3 packets of pet coke and 3 packets of cement were taken into custody

from their premises by the officers. Further, the statement-dated 14.10.2008 of

Shri Rajan Vadaliya, Director of M/s. New Kishan also refers to samples drawn

on 2.5.2008 and there is no reference to any samples drawn on 26.4.2008.

There is a difference between formally drawing of samples of any goods for

testing and mere taking into custody of ready-to-carry packets of such goods.

In the absence of any narration regarding actual drawl of samples in the

panchanama, the contention of M/s. New Kishan that samples were drawn on

26.4.2008 is not supported by the facts on record.

10.4 I also find that M/s. New Kishan have argued that Department has

relied upon test report of samples that were not drawn in accordance with the

method prescribed under BIS standards. They have further contended that

these samples were not tested in a proper manner. They have submitted copy

of “specifications of Petcoke” printed on the letterhead of Reliance Industries

and a test report dated 31.3.2012 on the letterhead of Quality Services &

Solutions (QSS). They have sought cross-examination of the chemist of NSIC

Technical Services Centre, Rajkot who tested their samples. In this regard, I

find from the statement dated 14.10.2008 of Shri Rajan Vadaliya, Director of

M/s. New Kishan that replying to Q.10, he has agreed with the sampling

procedure followed on 2.5.2008 and has not requested for re-drawal of samples

etc. for any reason in his statement that was recorded after over 5 months. I

also find that M/s. New Kishan have admitted in paragraph 6.4.2 of their




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written submission that NSIC Technical Services Centre tested the samples

with reference to ash content, volatile matter and fixed carbon. A comparison

between the specifications of pet coke circulated by M/s. Reliance Industries

Limited (a copy of which has been circulated by the noticee during the present

proceedings) and the findings of NSIC Technical Services Centre reveals the

following:

Sl. Parameter Specification of petcoke as per RIL

Test report of NSIC Technical Service Centre

1. Ash content 1, max 58.40

2. Volatile Matter 8, min 13.80

3. Fixed Carbon 87, min 27.80

10.5 It is clear from the above comparison that report given by NSIC

Technical Service Centre to the effect that sample is not pet coke cannot be

faulted even by applying the specifications placed on record by noticees

themselves. The sample has failed in two of the three specifications tested by

the Department by a wide margin. The e-mail exchanged between M/s. Major

Cement (and not M/s. New Kishan) and M/s. Quality Services & Solutions

(QSS) referred in paragraph 6.4.7.1 of their written submission cannot come to

their rescue owing to the fact that they have deliberately not disclosed the

material fact regarding the low percentage of fixed carbon reported by NSIC

Technical Services Centre to QSS. They have made request for re-testing and

cross-examination of chemical examiner. However, while making the request

for re-testing and cross-examination, they have not pinpointed any specific

discrepancy or error in conducting the tests carried out by the NSIC Technical

Services Centre with reference to the three parameters tested by them.

Consequently, they have failed to build a case for re-testing and cross-

examination.

10.6 I further find that findings of the NSIC Technical Service Centre based on which the Department has alleged that the goods lying stock in the premises of M/s. New Kishan were not cenvatable pet coke but non-cenvatable coke dust, is not a matter of coincidence. It is a matter

of record that documentary evidence in the form of cash memo book Nos. 1,2

and 3 recovered from the premises of M/s. Kathiawad Industries revealed that

during April,2008, the said supplier had supplied 1630.304 MT of coke dust to




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M/s. New Kishan, date-wise details of this are given in Annexure-B to the show

cause notice. This fact is duly confirmed by Shri Kuldipsinh Basiya, partner of

M/s. Kathiawad Industries in his statement-dated 26.4.2008 recorded under

section 14 of Central Excise Act, 1944, which was never retracted (unlike

affidavits filed with intent to retract statements dated 15.5.2008 and

13.6.2008, which are separately discussed in this order). In fact, Shri

Kuldipsinh has gone on record stating that he supplied cenvatable invoices of

pet coke that were issued by his partnership firm M/s. Hindustan Exports to

M/s. New Kishan, without actually supplying any pet coke and received a

consideration of Rs. 75/- per tonne from M/s. New Kishan. Therefore, there is

no merit in the request for cross-examination of chemist and re-test of the

samples made by M/s. New Kishan.

10.7 I also find that the entire dispute is about Cenvat credit availed by

M/s. New Kishan on goods claimed to be duty paid pet coke. M/s. New Kishan

is a registered manufacturer of clinker & cement and there is no reason to

believe that they were or are not aware of the provisions of rule 9(5) of Cenvat

Credit Rules,2004. According to this, the burden of proof regarding the

admissibility of the CENVAT credit is upon the manufacturer or provider of

output service taking such credit. The Department has placed overwhelming

evidence on record to show that 1153.737 MT raw material lying in the

premises of M/s. New Kishan was coke dust and not pet coke. Therefore, M/s.

New Kishan were required under the law to conclusively establish that the said

goods were pet coke and not coke dust. There can be no denying the fact that

the goods, at all times, were in their custody. Therefore, they were required to

take every possible step to demonstrate at all times that goods on which they

had taken Cenvat credit were pet coke. They have not made any attempt to do

so. They have not only failed on this count but they have also failed to place on

record documentary evidence to show that they had received each and every

consignment of pet coke on which they had taken Cenvat credit under a test

report issued by accredited laboratory.

10.8 Therefore, test report of NSIC Technical Service Centre coupled

with documentary evidence in the form of cash memo book Nos. 1,2 and 3

recovered from the premises of M/s. Kathiawad Industries, supplier of coke

dust and statements of Shri Kuldipsinh Basiya, partner of the said supplier

goes to establish that 1153.737 MT of goods found lying in the premises of

M/s. New Kishan on 26.4.2008 that were accounted for in their statutory




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register as pet coke was actually coke dust, a non-cenvatable item. Therefore,

it is held that M/s. New Kishan had wrongly availed Cenvat credit on 1153.735

MT of coke dust and accordingly, the demand of irregularly availed Cenvat

credit on the said coke dust is required to be upheld.

10.9 I shall now deal with the allegation leveled against M/s. New

Kishan that they had also availed Cenvat credit on the basis of cenvatable

invoices issued by M/s. Hindustan Exports, M/s. Radhey Vyapar Ltd., M/s.

Jayshree Vyapar Ltd., M/s. Karan Chemicals and M/s. Karan Marketing

without actually receiving pet coke covered by such invoices.

10.10 M/s. New Kishan have stated in paragraph 5.1 of their written

submission dated 28.3.2013 that the notice does not support denial of entire

Cenvat credit, in paragraph 5.4.4 ibid that 144.470 MT of pet coke purchased

from M/s. Radhey Vyapar Ltd. is disputed, in paragraph 5.8.10 that they had

taken Cenvat credit on 17.260 pet coke that was actually consigned to M/s.

Samrat Cement, in paragraph 5.10 that amount of Cenvat credit which can be

disputed and denied is Rs. 1,03,195/-, etc. Through these averments, M/s.

New Kishan have already conceded that they have taken Cenvat credit on pet

coke in a wrongful manner. They have mainly relied upon a scanned copy of

affidavit supposedly bearing signatures of Shri Dipakbhai Thakarsheebhai

Sayani dated 28.5.2008, photocopy of affidavits dated 16.5.2008, 14.6.2008

and 11.11.2008 signed by Shri Kuldipsinh Bhikhubha Basiya to the effect that

they are retracting their respective statements. They also made request for

cross-examination of each and every person named in the notice but eventually

pressed for cross-examination of the chemical examiner. They have also raised

objection against reliance placed by the Department on the computer print out

taken from the hard disc of computer recovered by the officers from the

common premises of M/s. Hindustan Exports and M/s. Kathiawad Exports.

They have relied upon a large number of judicial pronouncements in support of

their plea for cross-examination. I have carefully gone through these case laws

and I find that none of them deal with the issue involved in the present case,

i.e. admissibility of Cenvat credit which is governed by Cenvat Credit

Rules,2004. These Rules cast the burden of proof regarding the admissibility of

the CENVAT credit on the manufacturer and as already held earlier, M/s. New

Kishan have failed to submit any documentary evidence showing that they

always received pet coke accompanied by a test certificate from a accredited

laboratory.




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10.11 In the case of M/s. Jagdish Shanker Trivedi v/s CC, Kanpur, 2006

(194) ELT 290 (Tri.-Del.), Hon. Tribunal while relying on various judgments of

Hon. Supreme Court has held as under:

“7.1 The question as to whether there was any contravention of natural

justice by the customs authorities when the persons whose statements

were recorded were not produced to enable their cross-examination, came

up for consideration by the Supreme Court in Kanungo's case (supra) in the

context of the provisions of confiscation made under Section 167(8) of the

Sea Customs Act read with Section 3(2) of Imports and Exports (Control)

Act, 1947 and the Supreme Court in paragraph 12 of the judgment rejected

that contention in the following terms:

“12. We may first deal with the question of breach of natural justice. On

the material on record, in our opinion, there has been no such breach. In

the show cause notice issued on August 21, 1961, all the material on

which the Customs Authorities have relied was set out and it was then for

the appellant to give a suitable explanation. The complaint of the appellant

now is that all the persons from whom enquiries were alleged to have been

made by the authorities should have been produced to enable it to cross-

examine them. In our opinion, the principles of natural justice do not

require that in matters like this the persons who have given information

should be examined in the presence of the appellant or should be allowed

to be cross-examined by them on the statements made before the Customs

Authorities. Accordingly we hold that there is no force in the third

contention of the appellant.”

The decision in Kanungo & Co. was followed by the Calcutta High Court in

Tapan Kumar Biswas v. Union of India (supra) in paragraph 17 of the

judgment and it was held that in a proceeding under the Customs Act the

proceedees are not entitled to cross-examine the witnesses. The decision in

Ashutosh Ghosh and Another v. Union of India and Others reported in

1977 Criminal Law Journal N.O.C. 67, was also relied upon and it was

observed in paragraph 20 of the judgment that the Supreme Court in

Ashutosh Ghosh’s case has categorically held that a proceedee is not

entitled to cross-examine the witnesses. The decision of the Division Bench

of the Calcutta High Court in Kishan Lal case (supra) was also referred in

paragraph 18 of the judgment and it was held to be laying down the

proposition that cross-examination of the witnesses (in the matter under




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the Sea Customs Act) was not comprehended. Referring to all these

decisions, the Court held, that a proceedee was not entitled to cross-

examination of any witnesses under Section 124 of the said Act which

lays down the extent of applicability of the principles of natural justice and

under which a proceedee was not entitled to cross-examine any witnesses

(para 11). Thus in view of the decisions of the Hon’ble Supreme Court in

Kanungo & Co., Ashutosh Ghosh and of the Calcutta High Court, in the

above two decisions, it is abundantly clear that a noticee cannot claim a

right to cross-examine under Section 124 of the said Act.”

10.12 Hon. Tribunal in the case of Fortune Impex v/s CC, Calcutta, 2001

(138) ELT 556 (Tri.-Kolkata) [affirmed in 2004 (164) ELT 4 (S.C.) & 2004 (167)

ELT A 134 (S.C.)] has held as under:

“…The learned Advocate has also emphasised that non-allowing of cross-

examination of 26 persons sought by him also vitiates the proceedings.

The cross-examination of the witness, wherever necessary, has to be

allowed in Departmental Proceedings. But it is not required that in each

and every case cross-examination should necessarily be allowed. There is

no absolute right of cross-examination provided in the Customs Act. This

was the view held by the Calcutta High Court in the case of Tapan Kumar

Biswas v. UOI, 1996 (63) ECR 546. Cross-examination of witnesses cannot

be demanded as of right. The presumption is that unless the noticee

makes out a case for cross-examination he will not be granted cross-

examination. The Appellate Tribunal in the case of Debu Saha v. Collector

of Customs, 1990 (48) E.L.T. 302 (T) held that “It is no doubt true that in all

cases, cross-examination need not be granted, but it all depends on the

circumstances of each case.” The Tribunal also observed in that case that

if the Collector comes to the conclusion that the cross-examination is not

material then by assigning reasons, he can reject the prayer…”

10.13 During investigation, evidence in the form of data contained in the

hard disc of a computer shared by M/s. Hindustan Exports and M/s.

Kathiawad Industries revealed that during the period from November,2006 to

January,2008, M/s. Kathiawad Industries, a supplier of non-cenvatable items,

who operated from the premises of M/s. Hindustan Exports and was looked

after by Shri Kuldipsinh Basiya, partner of both M/s. Hindustan Exports and

M/s. Katiawad Industries had supplied a total quantity of 22102.39 MT of coke




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dust to M/s. New Kishan and their sister concern, namely, M/s. Major Cement.

However, M/s. New Kishan had shown receipt of only 1563.805 MT of coke

dust in their Form-IV registers.

10.14 Shri Kuldipsinh Basiya, partner of M/s. Hindustan Exports & M/s.

Kathiawad Industries, both operating from a common business premise, has

stated the following facts in his statements dated 26.4.2008, 15.5.2008 and

13.6.2008 recorded under section 14 of Central Excise Act, 1944:

M/s. Hindustan Exports was registered as 2nd stage dealer who

raised invoices on M/s. New Kishan for supply of pet coke. They

purchased pet coke from M/s. Radhey Vyapar Ltd. (Noticee No. 7),

who was a 1st stage dealer of pet coke manufactured by M/s. RIL;

Pet coke received from M/s. Radhey Vyapar was unloaded by them

without any weighment and without entering the same in any

register;

They settled the accounts with M/s. New Kishan on monthly basis

and destroyed the proforma invoices without preparing any invoice;

After perusing the details of Annexure-I to file No. 48 recovered

from their premises, he admitted that they supplied 1500 to 2000

MT of coke dust/coke breeze to M/s. New Kishan and M/s. Major

Cement;

Original invoices contained in file No. 32 found in their premises

were sent back by Shri Rajan Vadaliya, Director of M/s. New

Kishan (Noticee No. 6) for changing the vehicle numbers;

He was acting on the request of Shri Rajan Vadaliya (Noticee No. 6)

that they required only cenvatable invoices of pet coke and hence,

he diverted the pet coke to other customers and issued cenvatable

invoices of pet coke in the name of M/s, New Kishan by changing

the vehicle number, etc.




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Customers outside the state did not require cenvatable invoices of

pet coke and hence, he diverted the goods to such customers and

issued the invoices in the name of M/s. New Kishan;

He received the payment from M/s. New Kishan through cheque,

which he encashed and returned the cash amount back to them

after deducting his commission @ Rs. 75/- PMT.

They supplied coke dust/fine to M/s. New Kishan (and M/s. Major

Cement) using code name “K.C” (Kishan Cement);

They dealt with Shri Rajan Vadaliya, Director of M/s. New Kishan

only;

They diverted pet coke covered by invoices issued in the name of

M/s. New Kishan at the instructions of Shri Rajan Vadaliya,

Director of M/s. New Kishan.

P.P. Enterprise was a code word used by them for showing the

diversion of pet coke to parties outside the state whereas excisable

invoices were prepared in the name of M/s. New Kishan.

10.14 The above facts are corroborated by the statement of Shri Bipin

Patel, weighbridge in-charge of M/s. New Kishan, who, in his statement

recorded under section 14 of Central Excise Act, 1944 has stated that majority

of trucks received from M/s. Hindustan Exports and M/s. Kathiawad

Industries were loaded with coke dust; that on an average, 3-4 trucks loaded

with coke dust were received by M/s. New Kishan from M/s. Kathiawad

Industries every day.

10.15 This goes on to establish that M/s. New Kishan were receiving a

huge quantity of coke dust on day-to-day basis. However, when the officers

visited their factory on 26.4.2008, it was found that they had shown ‘nil’ stock

of coke dust & other non-cenvatable raw material and had instead shown a

stock of 1153.735 MT of cenvatable pet coke, which, on testing was found to be

coke dust, a non-cenvatable item.




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10.16 The record further reveal that on 13.5.2008, officers intercepted

one truck bearing No. GJ 10 W 7484 coming out of the godown of M/s. Radhey

Vyapar Ltd., Rajkot. The driver of the truck revealed that the truck was

carrying pet coke loaded from M/s. RIL and was being transported to the

premises of M/s. Pyramid Portland Cement, Hadamtala on the instructions of

Shri Bhavinbhai Pabari, Proprietor of M/s. Radhey Vyapar Ltd. On further

inquiry, it was found that the truck was loaded with 16.54 MT of pet coke

covered by LR No. 1564 dated 12.5.2008 & invoice No. 1065742 issued by M/s.

RIL showing the name of buyer as M/s. Radhey Vyapar Ltd. and consignee as

M/s. New Kishan. In his statement recorded under section 14 of Central

Excise Act, 1944, Shri Shabbir Hussain Sheikh, truck driver revealed that he

was given a kutcha chit by Shri Ajay Pabari, depot in-charge of M/s. Radhey

Vyapar Ltd. bearing the name and address of M/s. Pyramid Portland Cement.

He further stated that he transported pet coke to M/s. Radhey Vyapar Ltd. 15

to 18 every month and delivered pet coke in the above said manner to M/s.

Pyramid Portland Cement since last 3 months. In his statement recorded under

section 14 of Central Excise Act, 1944, Shri Ajay Pabari has admitted the facts

stated by Shri Shabbir, truck driver. I find that Shri Bhavinbhai Pabari,

Proprietor of M/s. Radhey Vyapar Ltd. has stated the following facts in his

statements dated 13.5.2008 recorded under section 14 of Central Excise Act,

1944:

As they were not registered with Central Excise Department, they

facilitated passing of Cenvat credit by requesting M/s. RIL to

prepare invoice showing M/s. Radhey Vyapar Ltd. as buyer and

the name of excisable unit to whom Cenvat credit was intended to

be passed, as consignee;

They supplied Central Excise invoices to M/s. New Kishan and

corresponding goods were diverted to M/s. Pyramid Portland

Cement and others;

The last 15 trucks, as per details mentioned at page No. 73 of the

red colour diary recovered from them, were diverted to M/s.

Pyramid Portland Cement and they had sent the corresponding

invoices to M/s. New Kishan and M/s. Major Cement; that M/s.

New Kishan and M/s. Major would make the payment through

cheque and after receiving the payment from M/s. Pyramid




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Portland Cement in cash, they would hand over the cash to M/s.

New Kishan and M/s. Major.

They had given invoices for 144.470 MT of pet coke to M/s. New

Kishan for a consideration of Rs. 80/- PMT.

Pet coke covered by lorry receipt Nos. 1563/12.5.2008 for invoice

No. 1065625 and 1564/12.5.2008 for invoice No. 1065742 meant

for M/s. New Kishan was diverted to M/s. Pyramid Portland

Cement under cover of kutcha chits.

Three more trucks loaded with diverted pet coke had reached the

premises of M/s. Pyramid Portland Cement but they refused to

take delivery as they had learnt about interception of truck No. GJ

10 W 7484; that if the said truck had not been intercepted, they

would have delivered the entire quantity of pet coke at the

premises of M/s. Pyramid Portland Cement and supplied

cenvatable invoices to M/s. New Kishan and M/s. Major Cement.

10.17 The above facts are corroborated by the statement of Shri Pravin

Bhanderi, Managing Director of M/s. Pyramid Portland Cement recorded under

section 14 of Central Excise Act, 1944.

10.18 Shri Sashikant Koticha, Director of M/s. Jayshree Vyapar Ltd., a

registered dealer of M/s. RIL has also admitted in his statement dated

18.9.2008 recorded under section 14 of Central Excise Act, 1944 that they

facilitated their customers by providing pet coke without bill and collected

payment in cash; that the cenvatable invoices were issued in the name of M/s.

New Kishan while the corresponding pet coke consignments were diverted to

mini cement plants in Rajkot during 2006-07. Shri Manoj Virani, proprietor of

M/s. Pratham Transport, Jamnagar who looked after transportation of pet coke

purchased by M/s. Jayshree Vyapar Ltd. from M/s. RIL has also admitted in

his statement dated 19.6.2008 that the truck drivers had informed him from

time to tome that pet coke sent to M/s. New Kishan was delivered at other

places.

10.19 Shri Dipak Sayani, commission agent of M/s. Maruti Enterprise,

who was engaged in transportation of pet coke on behalf of M/s. Karan




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Chemicals (Noticee No. 9) and M/s. Karan Marketing (Noticee No. 10) has also

admitted in his statement-dated 27.5.2008 recorded under section 14 of

Central Excise Act, 1944 that truck drivers informed him that they were

unloading pet coke meant for M/s. New Kishan at other places on the

instructions of responsible persons of M/s. New Kishan for which M/s. New

Kishan paid extra transportation cost directly to the drivers. He further stated

that he destroyed the record pertaining to earlier period on the instructions of

the owners of M/s. Karan Chemicals and M/s. Karan Marketing. In their

respective statements recorded under section 14 of Central Excise Act, 1944,

Shri Gautam Patel, partner of M/s. Karan Marketing and Shri Chandrakant

Patel, partner of M/s. Karan Chemicals, a registered dealer with Central Excise

Department, have admitted that authorized persons of M/s. New Kishan

directed the truck drivers to deliver the goods at desired places; that he cannot

confirm that pet coke dispatched in the name of M/s. New Kishan was

delivered to them only; that they had issued invoices in the name of M/s. New

Kishan as per instructions received and he did not know whether pet coke was

delivered to M/s. New Kishan.

10.20 Thus, all the above 5 dealers of pet coke have admitted and stated

that they had merely issued Cenvatable invoices of pet coke in the name of

M/s. New Kishan to facilitate them to take Cenvat credit while pet coke was

diverted for use by other parties. They have also admitted that they earned

commission on per tonne basis for providing cenvatable invoices to M/s. New

Kishan.

10.21 The actual buyers of pet coke have also accepted that they

purchased pet coke without invoices and made cash payment to the

dealers/suppliers.

10.22 Considering that the goods lying in stock were not found to be pet

coke on being subjected to chemical analysis by a laboratory run by

Government of India Enterprise and the dealers have also admitted that they

diverted pet coke and they merely provided cenvatable invoices to M/s. New

Kishan, the plea of cross-examination is rejected.

10.23 The affidavits, scanned and photocopies of which have been

submitted alongwith written submission were never filed before any

Departmental officer by the concerned persons. Therefore, they are discarded. I




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also rely upon the decision of Hon. Tribunal in the case of Tara Chand Shival,

2003 (158) E.L.T. 699 (Tri. - Del.), wherein, it has been held that when original

affidavits retracting from the confessional statement were neither submitted to

the Commissioner nor there is any evidence on record to indicate that any such

affidavit was received by the Commissioner, confessional statement is reliable.

10.24 M/s. New Kishan have further argued that computer printout

containing details of 22,102.39 MT of coke dust to M/s. New Kishan and their

sister concern M/s. Major Cement that was taken from the hard disc of

computer recovered from the common premises of M/s. Hindustan Exports and

M/s. Kathiawad Industries is not considered to be admissible evidence. They

have cited various case laws in support of this argument. M/s. Hindustan

Exports, M/s. Kathiawad Industries and Shri Kuldipsinh Basiya, partner,

through a common submission have also challenged the evidential value of the

date taken from computer on the ground that computer was not used

regularly, etc. However, I find from the record that the computer hard disc was

opened in the presence of Shri Kuldipsinh Basiya, partner and independent

witnesses on 4.6.2008 while Shri Kuldipsinh Basiya had already admitted in

his statement recorded under section 14 of Central Excise Act, 1944 on

15.5.2008, i.e. prior to opening of the hard disc that they were supplying 1500-

2000 MT of coke dust to M/s. New Kishan and their sister concern M/s. Major

Cement every month under the code name “K.C.” for Kishan Cement. The table

prepared on page 8 of the show cause notice on the basis of data contained in

the computer hard disc that was opened subsequent to the admission of Shri

Kuldipsinh Basiya is only a corroboration of the facts already admitted by him.

The submissions advanced by M/s. Hindustan Exports, M/s. Kathiawad

Industries and Shri Kuldipsinh Basiya questioning the authenticity of data

found from their computer is nothing but afterthought considering the facts

admitted by Shri Kuldipsinh Basiya in his statements recorded under section

14 of Central Excise Act, 1944. It is a basic and settled law that what is

admitted need not be proved, as held by Hon. Supreme Court in the case of

Systems & Components Pvt. Ltd., 2004 (165) ELT 136 (S.C.).

10.25 I also find that Hon. Tribunal in the case of Copier Force India

Ltd., 2008 ((231) E.L.T. 224 (Tri. - Chennai) has held as under:

“Revenue has argued that once the printout is taken in presence of

responsible persons who dealt with the data entry in the CPU and




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retrieval, printouts of such data do not need to comply with the

safeguards enlisted u/s 36B(2) of the Act. While this is a reasonable

stand, we find that the data retrieved are proved by the bank

statements and oral evidence of employees of CFI. Thus the

computer printouts are not solely relied on as evidence and the non-

fulfilment of conditions under 36B(2) alleged does not affect the

printouts being used in proceedings.

…

The Computer printouts are amply corroborated by the bank statements.

Therefore the provisions of Section 36B cannot be invoked to make its

application in the proceedings impermissible. The printout is not a

standalone evidence; they become evidence only when juxtaposed

alongside the bank statements. Section 36B does not bar such use of a

printout in proceedings which does not satisfy the requirements of its Sub-

section 2(d).”

For the above reasons, the argument is rejected.

10.26 I also find that Shri Kuldipsinh Basiya has submitted affidavit

dated 16.5.2008 stating that contents of his statement dated 15.5.2008 are not

voluntary; affidavit dated 14.6.2008 stating that contents of his statement

dated 13.6.2008 are not voluntary and affidavit dated 11.11.2008 stating that

his earlier statements do not clarify the actual facts of the case. He has also

submitted that he was mentally sick during the period when his statements

were recorded and he had submitted the certificate of doctor under registered

post to the Department. In this regard, I find that the noticee has taken 2

diametrically opposite stands to escape from the consequences of his

statements recoded under section 14 of Central Excise Act, 1944 inasmuch as

the affidavits were not only never submitted to the Department at any point in

time and have been produced for the first time on 28.3.2013, i.e. after expiry of

about 5 years of recording his statement but the affidavits also make no

mention about the supposed mental sickness. The certificates dated

20.10.2008 and 23.10.2008 of doctor are full of ambiguous expressions like

“likely to be suffering”, “as per history given by relatives” etc. and in any case,

the statements which find mention in the show cause notice were recorded on

26.4.2008, 15.5.2008 and 13.6.2008, about 4 months earlier to his supposed

interaction with the doctor and no representation was ever made to the

Department advancing medical grounds at the time of recording the




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statements. While the noticee has claimed that they had submitted the doctor’s

certificate through registered post on 24.10.2008, no such claim is made in

regard to the affidavits, making it amply clear that no valid ground was ever

existed for retracting the statements. Accordingly, the plea is rejected.

10.27 I also find that Shri Rajan Vadaliya, Director of M/s. New Kishan

chose to adopt denial mode throughout the investigation. However, this tactic

is of no help considering the overwhelming evidence discussed in the preceding

paragraphs.

10.28 I shall now deal with the case laws cited by M/s. New Kishan to

argue that the charge of wrongful availment of Cenvat credit without receiving

the inputs cannot be made based on assumptions and presumptions. In the

relied upon decision in the case of Ghodavat Pan Masala Products Ltd., 2004

(175) ELT 182 (T), Hon. Tribunal has held that when the department has based

his case on the statement of certain parties and when the statements were

retracted in writing by them, it was imperative on the department to have

brought corroborative evidence to substantiate the allegation of clandestine

removal. The department having not done so, has lost their right to raise the

demand merely on presumption/assumption. In the case of Radheshyam

Kanoria, 2006 (197) ELT 130 (T), Hon. Tribunal has held that the allegations of

clandestine removal, which are quasi criminal in nature are required to be

proved by the revenue by production of sufficient tangible evidence on record.

In the case of Pioneer Industries, 2006 (193) ELT 506 (T), Hon. Tribunal has

held hat demand alleging clandestine removal cannot be made merely on the

basis of confessional statements when the assessee had produced documentary

evidence to show that the goods were not misdeclared. In the case of Shri Shiv

Charan Bajpai, 2003 (160) ELT 1138 (T), Hon. Tribunal has held that

confession should not be made the sole ground to prove guilt. In this regard, I

find that the facts involved in all the relied upon decisions are distinguishable

inasmuch as none of them dealt with provisions of Cenvat Credit Rules,2004

where the burden to prove the admissibility of credit is cast upon the

manufacturer and not on the Department. In the case of Commissioner of

Central Excise, Chandigarh v/s Spark Steel Sales, 2010 (256) ELT 134 (T),

Hon. Tribunal has held as under:

“6.5 The eligibility for taking of credit by the manufacturers on the

basis of documents issued by the dealers is necessarily dependent

upon the eligibility of the dealers to pass on the credit. If the goods




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are not proved to have been delivered by the dealers to the

manufacturers, the invoices issued by the dealers could not be

treated as valid documents for passing on the credit. In other words,

if it was held that the dealers were not eligible to pass on the credit,

in view of serious defects in the documents, the question of

manufacturers taking credit based on such ineligible documents will

not arise. The burden to prove that the documents under which

credit taken are valid documents is shifted to the manufacturers

after major discrepancies have been brought out by the

Department.”

In this case, M/s. New Kishan have not placed on record any

documentary evidence to establish that consignments of goods accounted for

by them as pet coke were invariably received under certificates/test reports

issued by accredited laboratories at the material time certifying the goods to be

pet coke. Further, the sample tested by the Department through a Government

of India undertaking run laboratory established that goods accounted for as pet

coke were not pet coke. The dealers have admitted that they diverted the pet

coke meant for M/s. New Kishan at the instance of the Shri Rajan Vadaliya for

monetary consideration and provided them with cenvatable invoices for taking

Cenvat credit in a wrongful manner. The supplier of coke dust (accounted for

by M/s. New Kishan as pet coke) has accepted the fact that they supplied coke

dust on a regular basis to M/s. New Kishan. The weighbridge in-charge of M/s.

New Kishan has gone on record stating that most of the trucks unloaded at the

factory premises of M/s. New Kishan brought coke dust. The actual buyers of

pet coke have also accepted that they purchased pet coke without invoices and

made cash payment to the dealers/suppliers. A common thread running across

all these evidences is that M/s. New Kishan had entered into an arrangement

with commonly controlled M/s. Hindustan Exports (dealer of pet coke) and

M/s. Kathiawad Industries (supplier of coke dust and other non-cenvatable

items) to actually supply coke dust but issue invoices of pet coke to enable

them to take wrongful credit on such invoices without receiving pet coke in

their factory premises. Thus, the decisions cited by M/s. New Kishan are of no

avail. For the above reasons, their further plea that they had acted in a bona

fide manner & hence, they are not liable to penalty and their reliance on the

decisions of Hon. Supreme Court in the case of Tamil Nadu Housing Board,

1994 (74) ELT 9 (S.C.) and Hindustan Steel Ltd., 1978 (2) ELT J 159 is also

misplaced. The above evidences clearly prove that their act of taking Cenvat




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credit in a wrongful manner was pursuant to a modus operandi perpetrated by

them with intent to evade payment of duty and not an act of inadvertence and

hence, mandatory penalty is rightly proposed agaisnt them. I draw support

from the decision of Hon. Supreme Court in the case of M/s. Rajasthan

Spinning & Weaving Mills, 2009 (238) E.L.T. 3 (S.C.)

10.29 The evidences discussed in the preceding paragraphs clearly

establish that over and above the Cenvat credit taken on the stock of coke dust

found lying in their factory on 26.4.2008, the remaining Cenvat credit covered

by the notice was also taken by M/s. New Kishan in a wrongful manner,

without actually receiving the said input in their factory premises. They had

perpetrated the fraudulent availment of Cenvat credit in a deliberate manner

with intent to cause loss to the revenue and hence, the proposal to recover the

entire Cenvat credit by invoking extended period in terms of rule 14 of Central

Excise Rules,2004 readwith proviso to section 11A(1) of Central Excise Act,

1944 is required to be upheld. As a corollary, demand of interest under section

11AB of Central Excise Act, 1944 on the amount of Cenvat credit wrongly

taken is also upheld. Consequently, I also hold that M/s. Kishan are liable to

mandatory penalty proposed against them under rule 15 (2) of Central Excise

Rules,2004 readwith section 11AC of Central Excise Act, 1944.

11.1 I shall now deal with the proposals directed against the remaining

noticees. It is proposed against M/s. Hindustan Exports (Noticee No. 3), M/s.

Jayshree Vyapar Ltd. (Noticee No. 8), M/s. Karan Chemicals (Noticee No. 9) and

M/s. Karan Marketing (Noticee No. 10) to revoke the registration granted to

them under rule 9 of Central Excise Rules and impose penalty against them

under rule 26 of Central Excise Rules. I have already discussed in the

preceding paragraphs that the abovenamed dealers issued cenvatable invoices

of pet coke in favour of M/s. New Kishan in order to facilitate them to take

Cenvat credit while the input covered by such invoices was diverted to other

customers. Two of them have categorically admitted that they provided the

invoices to M/s. New Kishan for monetary consideration paid to them on per

tonne basis. They have cited the decisions in Steel Tubes of India Ltd. – 2007

(217) ELT 506 (T-LB) and order No. 259/2009 (Ahd-III) passed by

Commissioner (A) to oppose penalty. However, I rely upon the decision of Hon.

Tribunal in the case of M/s. Nashik Strips Pvt. Ltd., 2010 (256) ELT 307 (T) to

hold that all the abovenamed dealers who are responsible for providing invoices

to M/s. New Kishan for taking Cenvat credit without supplying the pet coke to




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them are liable to penalty under rule 26 of Central Excise Rules,2002. I also

rely upon the decision of Hon. Tribunal in the case of Commissioner of Central

Excise, Ahmedabad v/s Navneet Agarwal, 2012 (276) ELT 515 (Tri.-Ahmd.),

wherein, it has been held that penalty under rule 26 of Central Excise

Rules,2002 is imposable even before introduction of rule 26(2), which provided

for penalty where invoices were issued without delivery of goods. Accordingly, I

hold the abovenamed dealers as well as Shri Kuldipsinh Basiya (Noticee No. 5)

who is partner of M/s. Hindustan Exports, Shri Shashikant Koticha (Noticee

No. 25) who is Director of M/s. Jayshree Vyapar Ltd., Shri Gautam Patel

(Noticee No. 26) which is partner of M/s. Karan Marketing and Shri

Chandrakant Patel (Noticee No. 27) who is partner of M/s. Karan Chemicals, as

liable to penalty under rule 26 of Central Excise Rules,2004 for the entire

period covered by the notice. For the purpose of quantifying the penalty, the

particulars like quantity of pet coke for which these dealers provided invoices

to M/s. New Kishan and the amount of Cenvat credit taken by M/s. New

Kishan on the said invoices is as under:

Sl. Name of the dealer Total quantity of Pet coke covered by invoices issued in the name of M/s. New Kishan*

Total Cenvat credit taken by M/s. New Kishan#

1. M/s. Hindustan Exports 1748.390 MT Rs. 11,43,077.00 2. M/s. Jayshree Vyapar

Ltd. 4068.929 MT Rs. 21,75,414.00

3. M/s. Karan Chemicals 5260.870 MT Rs. 29,60,742.00 4. M/s. Karan Marketing 6031.103 MT** Rs. 41,46,412.00 * As per details contained in respective submissions filed by dealers. ** 5681.670 as per M/s. New Kishan. # As per details contained in the submission filed by M/s. New Kishan.

11.2 I also find that the abovenamed dealers have acted willfully in

providing invoices to M/s. New Kishan for taking Cenvat credit on one hand

and on the other hand, they diverted the input to other buyers. They have

systematically abetted M/s. New Kishan in wrongful availment of Cenvat credit

and breached the law for several years and therefore, they deserve exemplary

punishment. Accordingly, I hold that Central Excise registration granted to

each of them under rule 9 of Central Excise Rules,2004 is liable to be revoked.

11.3 With regard to penalty proposed against the remaining noticees, I

find that Shri Navneet Vadaliya (Noticee No. 2) and Shri Rajan Vadaliya




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(Noticee No. 6) are Directors of M/s. New Kishan and have played active role in

orchestrating the modus operandi under which M/s. New Kishan received only

cenvatable invoices from dealers for taking credit in a wrongful manner and the

dealers sold the pet coke covered by such invoices to several buyers who

consciously bought this excisable item without invoices. Therefore, I rely upon

the following decisions to hold that both of them are individually liable for

penalty under rule 26 of Central Excise Rules,2002:

i) M/s. Nashik Strips Pvt. Ltd., 2010 (256) ELT 307 (T)

ii) Mahesh Kadakia, 2007 (217) ELT 223 (T)

11.4 With regard to M/s. Kathiawad Industries (Noticee No. 4), I find

that Shri Kuldipsinh Basiya is a common partner of M/s. Hindustan Exports

and M/s. Kathiawad Industries. He entered into an arrangement with M/s.

New Kishan, according to which, the former issued cenvatable invoices in the

name of M/s. New Kishan showing sale of pet coke that was actually diverted

to other buyers and never supplied to M/s. New Kishan while the latter

supplied coke dust in large quantities to enable M/s. New Kishan to

camouflage the non-receipt of pet coke covered by the invoices issued by M/s.

Hindustan Exports. Thus, in supplying coke dust in place of pet coke, thereby,

substituting the pet coke covered by invoices issued by M/s. Hindustan

Exports meant for M/s. New Kishan, with coke dust, they had rendered the pet

coke covered by the invoices issued by M/s. Hindustan Exports liable to

confiscation under section 25 of Central Excise Rules,2004 and hence, the

abovenamed noticee is liable to penalty under rule 26 of Central Excise Rules.

11.5 M/s. Radhey Vyapar Ltd. & Shri Bhavin Pabari (Noticee No. 7 & 14

respectively) knowingly engaged themselves in selling and supplying pet coke to

the buyers other than M/s. New Kishan (for whom it was actually meant &

whose name was also mentioned in the excisable invoices issued by the

manufacturer). Thus, by selling & supplying the excisable goods to persons

other than the consignee already named in the invoice issued by the

manufacturer, they also rendered pet coke liable to confiscation under section

25 of Central Excise Rules,2004 and rendered themselves liable to penalty

under rule 26 of Central Excise Rules,2004. With regard to M/s. Samrat

Cement & their partner Shri Ashok Dhirubhai Vasani (Noticee No. 12 & 13

respectively), M/s. Pyramid Portland Cement & their Managing Director Shri

Pravin Bhanderi (Noticee No. 15 & 17 respectively), M/s. Nilkanth Cement &




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their Director Shri Khodidas Sojitra (Noticee 19 & 22 respectively), M/s.

Kailash Cement Industries & their partner Shri Dhiraj Rangani (Noticee No. 20

& 24) and M/s. Tapee Cement Industries & their partner Shri Arvind G.

Sakhiya (Noticee No. 21 & 23 respectively), I find that all these noticees are also

engaged in manufacturing excisable goods, namely, cement and bought

cenvatable input, namely, pet coke from the abovenamed dealers without bill

despite the fact that the pet coke was actually covered by invoices prepared in

the name of M/s. New Kishan. Their respective partners/Directors were

instrumental in the procurement process. One of the Directors, namely, Shri

Khodidas Sojitra has admitted that they purchased the pet coke without bill

because it was cheaper when compared with pet coke offered with bill. None of

them have shown that they were inexperienced persons ignorant about the

Central Excise law and procedures regarding clearance of excisable goods.

Therefore, there is no reason to believe that they were not aware about the fact

that excisable goods which were offered to them without invoice and at a

cheaper rate was on account of compromise with duty component that was

being fraudulently availed by M/s. New Kishan as Cenvat credit on the

strength of invoices that should have been actually issued in their respective

names, considering that eventually, it was they who were the actual recipient of

the goods. I have carefully gone through the case laws cited by them but the

same are not applicable to the present case which rest on a different footing

and is covered by ratio of the decision of Hon. Tribunal in the case of M/s. Om

Sivam Textiles v/s Commissioner of Central Excise, Salem, 2006 (201) ELT 572

(Tri.-Chennai), which is reproduced below:

“7. I have carefully considered the facts of the case and the

submissions of the ld. SDR. It is not disputed that the appellants

had received excisable goods without cover of proper invoice. The

document under cover of which goods had been consigned to the

appellants had been taken back by the supplier. The goods removed

without payment of duty by a manufacturer or registered person of a

wareshouse or a registered dealer are liable for confiscation in terms

of sub-rule 1 of Rule 25 of the Central Excise Rules, 2001. Therefore,

the confiscation of the goods is proper. As the goods had been seized

from the appellants they were allowed to redeem the goods on

payment of a fine. As per Rule 26 of the Central Excise Rules, 2001,

any person who acquires possession of, or is in any way concerned

in transporting, removing, depositing, keeping, concealing, selling or




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purchasing, or in any other manner deals with, any excisable goods

which he knows or has reason to believe are liable to confiscation

under the Act or these rules, shall be liable to a penalty not

exceeding the duty on such goods or rupees ten thousand,

whichever is greater. The lower appellate authority found that Shri

M. Paramasivam, as an experienced trader, should have known that

cotton yarn should not have been received without invoice and

concurred with the lower authority that the appellant had abetted

the clandestine removal by M/s. Kumaran Textiles. Therefore, the

imposition of penalty of Rs. 10,000/- on the appellants is also in

accordance with law. In view of my above findings, I do not find any

infirmity with the impugned order passed by the Commissioner

(Appeals). Accordingly I dismiss the appeal.”

11.6 In view of the above, I hold the abovenamed noticees are liable to

penalty under section 26 of Central Excise Rules,2004. However, it is seen from

the record in the form of notarized copy of death certificate No. 144207 dated

8.8.2012 isued by Rajkot Municipal Corporation submitted by Shri Shailesh G.

Sakhiya under his letter dated 4.9.2012 that Shri Arvind G. Sakhiya (Noticee

No. 23) passed away on 1.8.2012. Therefore, by following the decision of Hon.

High Court of Himachal Pradesh in the case of Pamwi Tissues Ltd., 2010 (252)

ELT 38 (H.P.), I do not impose any penalty on late Shri Arvind G. Sakhiya.

11.7 The ratio of the decision in the case of M/s. Om Sivam Textiles

supra would also apply to M/s. Maruti Enterprise (Noticee No. 11), M/s. Om

Sai Ram Transport (Noticee No. 16) and M/s. Pratham Transport (Noticee No.

18) inasmuch as Shri Dipak Sayani, commission agent of M/s. Maruti

Enterprise, Shri Mohmad Rafik Gulamhussein, Proprietor of M/s. Om Sai Ram

Transport and Shri Manoj Kanjibhai Virani, Proprietor of M/s. Pratham

Transport have all admitted in their respective statements recorded under

section 14 of Central Excise Act, 1944 that they had knowingly transported the

cenvatable pet coke lawfully consigned to M/s. New Kishan to the other

consignees by taking instructions of dealers. Thus, they also abetted the

offence perpetrated by M/s. New Kishan in connivance with the dealers and

hence, I hold them liable to penalty under rule 26 of Central Excise

Rules,2004.




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11.8 It is also argued that separate penalty cannot be imposed on

partner once partnership firm is penalized. However, the argument fails in the

light of the decision of Hon. Tribunal in the case of Central Excise, Daman v/s

Commissioner of Mohd. Amin A. S. Lakha, 2012 (275) E.L.T. 465 (Tri. - Ahmd.)

upholding separate penalty on partner by relying on the decision of Hon.

Supreme Court in the case of Prakash Metal Works, 2007 (216) ELT 660 (S.C.).

The decision of Hon. Supreme Court upholding separate penalty on partner

and partnership firm was also relied/followed in the following decisions:

(i) Ranjikant Ratilal Kadiwala - 2009 (245) ELT 379 (T)

(ii) Ashirwad Synthetics - 2009 (245) ELT 444 (T)

(iii) Textoplast Industries - 2011 (272) ELT 513 (Bom)

12. With regard to show cause notice No. IV/03-31/D/2008-09 dated

21.10.2008, I find that during the course of search of the premises of M/s. New

Kishan on 26.4.2008, the officers found that they had failed to account for

11.750 MT (235 bags of 50 kgs each) of Ordinary Portland Cement valued at

Rs. 55,225/- in their Daily Stock Account. Consequently, I hold these goods

liable for confiscation under rule 25 of Central Excise Rules,2002 and hold

M/s. New Kishan liable to penalty under the said rule. I also find that Shri

Navneetbhai Vadalia, Director of M/s. New Kishan has admitted in his

statement-dated 27.4.2008 that he looked after the day to day activities of the

factory and hence, I hold him liable to penalty under rule 26 of Central Excise

Rules,2002. I rely upon the following decisions to support my decision in this

regard:

(i) Bharat Rolling Mills, 2012 (284) ELT 539 (T)

(ii) Ambica Poly Tubes, 2010 (262) ELT 447 (T)

13. In view of the above discussion and findings, I pass the following order:

Order

(I) Show Cause Notice No. AR/D.II/AR-Shapar/COMMR/55/2011 dated 29.3.2011:

(A-I) I deny Cenvat credit amounting to Rs. 1,36,00,295/- (Rupees One Crore

Thirty Six Lakh and Two Hundred Ninety Five only) taken by M/s. New

Kishan Cement Pvt. Ltd., Shapar (Veraval), Shitla Mata Mandir Road,




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Shapar, Dist. Rajkot and order for its recovery under rule 14 of Cenvat

Credit Rules, 2004 readwith proviso to section 11A(1) {now, section

11(4)} of Central Excise Act, 1944 from them.

(A-II) I order for recovery of interest at the appropriate rate on the amount of

Cenvat credit confirmed at (A-I) above, from M/s. New Kishan Cement

Pvt. Ltd., Shapar (Veraval), Shitla Mata Mandir Road, Shapar, Dist.

Rajkot under rule 14 of Cenvat Credit Rules,2004 readwith section 11AA

(earlier 11AB) of the Central Excise Act, 1944.

(A-III) I impose penalty of 1,36,00,295/- (Rupees One Crore Thirty Six Lakh

and Two Hundred Ninety Five only) on M/s. New Kishan Cement Pvt.

Ltd., Shapar (Veraval), Shitla Mata Mandir Road, Shapar, Dist. Rajkot

under rule 15 (2) of Cenvat Credit Rules, 2004. However, in terms of

proviso to section 11 AC of the Central Excise Act, 1944, if the Cenvat

credit as determined above and the interest payable thereon under

section 11AA (earlier 11AB) is paid by the said M/s. New Kishan Cement

Pvt. Ltd. within 30 days from the date of communication of this order,

the amount of penalty liable to be paid under this section shall be 25% of

the penalty so imposed. In terms of the second proviso to section 11AC of

the Central Excise Act, 1944, the benefit of such reduced penalty under

the first proviso shall be available only if the amount of penalty is also

paid by the said M/s. New Kishan Cement Pvt. Ltd. within the period of

30 days referred to above.

(A-IV) I appropriate the amount of Rs. 1.08 crore paid by M/s. New Kishan

Cement Pvt. Ltd., Shapar towards payment of wrongly availed Cenvat

credit totally amounting to Rs. 1,36,00,295/- and order for recovery of

the balance amount of Cenvat credit.

(B-I) I revoke the Central Excise registration granted to the following noticees:

a) M/s. Hindustan Exports, Bharoodi (Noticee No. 3).

b) M/s. Jayshree Vyapar Ltd., Rajkot (Noticee No. 8).

c) M/s. Karan Chemicals, Ahmedabad (Noticee No. 9).

d) M/s. Karan Marketing, Ahmedabad (Noticee No. 10).




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They shall surrender the original registration certificate to the

jurisdictional Central Excise authority immediately upon receipt fo this

order.

(B-II) I impose following penalty upon the noticees below mentioned noticees

under rule 26 of Central Excise Rules,2004:

Noticee No.

Noticee Penalty (Rs.)

Penalty (Rupees, in words)

3. M/s. Hindustan Exports 5,00,000/- Five Lakh only.

8. M/s. Jayshree Vyapar Ltd. 5,00,000/- Five Lakh only.

9. M/s. Karan Chemicals 5,00,000/- Five Lakh only.

10. M/s. Karan Marketing 5,00,000/- Five Lakh only.

(C-I) I impose following penalty upon the noticees below mentioned noticees

under rule 26 of Central Excise Rules,2004:

Noticee No.

Noticee Penalty (Rs.)

Penalty (Rupees, in words)

2. Shri Navneet G. Vadaliya, Director of M/s. New Kishan Cement Pvt. Ltd.

5,00,000/- Five Lakh only.

4. M/s. Kathiawad Industries, Bharoodi.

1,00,000/- One Lakh only.

5. Shri Kuldipsinh Basiya.


6. Shri Rajan V. Vadaliya, Director of M/s. New Kishan Cement Pvt. Ltd.

25,00,000/- Twenty Five Lakh only.

7. M/s. Radhey Vyapar Ltd., Rajkot.


11. M/s. Maruti Enterprise, Jamnagar

50,000/- Fifty Thousand only.

12. M/s. Samrat Cement, Hadamtala.

2,50,000/- Two Lakh Fifty Thousand only.

13. Shri Ashok Vasani, Partner of M/s. Samrat Cement, Hadamtala.


14. Shri Bhavin Pabari of M/s. Radhey Vyapar Ltd.





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15. M/s. Pyramid Portland Cement


16. M/s. Om Sai Ram Transport, Jamnagar


17. Shri Pravin Bhanderi, Managing Director of M/s. Pyramid Portland Cement.


18. M/s. Pratham Transport, Jamnagar.


19. M/s. Nilkanth Cement. 2,50,000/- Two Lakh Fifty Thousand only.

20. M/s. Kailash Cement Industries.


21. M/s. Tapee Cement Industries.


22. Shri Khodidas Sojitra, Director of M/s. Nilkant Cement.


23. Shri Arvind Gangdas Sakhiya, Partner of M/s. Tapee Cement Industries.

Nil (on account of his demise)

Nil (on account of his demise)

24. Shri Dhiraj Rangani, Partner of M/s. Kailash Cement Industries.


25. Shri Shashikant Koticha, Director of M/s. Jayshree Vyapar Ltd.


26. Shri Gautam Patel, Partner of M/s. Karan Marketing.

2,00,000/- Two Lakh only.

27. Shri Chandrakant J. Patel, partner of M/s. Karan Chemicals.

2,00,000/- Two Lakh only.

Show Cause Notice No. AE/D.II/AR-Shapar/COMMR/55/2011 dated

29.3.2011 is decided in above terms.

(II) Show Cause Notice No. IV/03-31/D/2008-09 dated 21.10.2008: (A-I) I confiscate 11.750 MT of Ordinary Portland Cement valued at Rs.

55,225/- under rule 25 of Central Excise Rules,2002 and in lieu of




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confiscation, I impose fine of Rs. 6,000/- (Rupees Six Thousand only)

upon M/s. New Kishan Cement Pvt. Ltd., Shapar (Veraval), Dist. Rajkot.

(A-II) I impose penalty of Rs. 6,000/- (Rupees Six Thousand only) upon M/s.

New Kishan Cement Pvt. Ltd. Shapar (Veraval), Dist. Rajkot under rule

25 of Central Excise Rules,2002.

(A-III) I impose penalty of Rs. 6,000/- (Rupees Six Thousand only) upon Shri

Navneetbhai Vadaliya, Director of M/s. New Kishan Cement Pvt. Ltd.,

Shapar (Veraval), Dist. Rajkot under rule 26 of Central Excise Rules.

Show Cause Notice No. IV/03-31/D/2008-09 dated 21.10.2008 is

decided in above terms.

(V. Padmanabhan)

Commissioner, Customs & Central Excise,

Rajkot. Rajkot, dated 31.3.2013. F. No. V.25/15-316/Adj/2009. To

01 M/s. New Kishan Cement Private Limited, Gandhi Chambers, Gondal Road, Rajkot

02 Shri Navneet Gokulbhai Vadaliya, Director, M/s. New Kishan Cement Private Limited, Gandhi Chambers, Gondal Road, Rajkot

03 M/s. Hindustan Exports, (Bharoodi), 929, 930, Star Plaza, Near Circuit House, Rajkot 360 001

04 M/s Kathiawad Industries (Bharoodi), 929, 930, Star Plaza, Near Circuit House, Rajkot 360 001

05 Shri Kuldipsinh Basiya, Partner, M/s Hindustan Exports, (Bharoodi) & M/s Kathiawad Industries, (Bharoodi), 929, 930, Star Plaza, Near Circuit House, Rajkot 360 001

06 Shri Rajan V. Vadaliya, Director, M/s. New Kishan Cement Private Limited, Gandhi Chambers, Gondal Road, Rajkot.

07 M/s. Radhe Vypar, 127, Star Chambers, Panchnath Plot, Harihar Chowk, Rajkot 360 001

08 M/s. Jayshree Vypar Limited, Jayshree Vyapar Bhavan, Near Shivalik-5, Gondal Road,Rajkot 360 002




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09 M/s. Karan Chemicals, 408, Balleshwar Avenue, Opp. Rajpath Club, S.G. Road, Bodakdev, Ahmedabad 380 015

10 M/s. Karan Marketing, 408, Balleshwar Avenue, Opp. Rajpath Club, S.G. Road, Ahmedabad 380 015

11 M/s Maruti Enterprise, 403, Deepak Shopping Centre, Ranjit Road, Opp. Sajuba High School, Jamnagar 361 001

12 M/s. Samrat Cement and Chemical Industries, 126/127, Arthik Bhavan, 2nd floor, Near Bombay Petrol Pump, Gondal Road, Rajkot 360 002

13 Shri Ashok Dhirubhai Vasani, Partner, M/s. Samrat Cement and Chemical Industries, 126/127, Arthik Bhavan, 2nd floor, Near Bombay Petrol Pump, Gondal Road, Rajkot 360 002

14 Shri Bhavinbhai Pabari, Proprietor, M/s. Radhe Vypar, 127, Star Chambers, Panchnath Plot, Harihar Chowk, Rajkot 360 001

15 M/s. Pyramid Portland Private Limited, 303, Lotus Arcade, Opp. Automotive Bajaj, Gondal Road, Rajkot 360 002

16 M/s. Om Sai Ram Transport, 105, Maruti Complex, Nagnath Gate Circle, Jamnagar 361 001

17 Shri Pravin Bhanderi, Managing Director, M/s. Pyramid Portland Pvt Limited, 303, Lotus Arcade, Opp. Automotive Bajaj, Gondal Road, Rajkot 360 002

18 M/s Partham Transport, Flat No: 12, Rangoli Apartments, Street No: 3, Patel Colony, Jamnagar.

19 M/s. Nilkanth Concrete Private Limited, 3rd floor, Omega Complex, Gondal Road, Rajkot.

20 M/s. Kailash Cement Industries / Kaveri Cement, Plot No: G-1935/4-5, GIDC, Lodhika, AT: Metoda, Tal: Lodhika, Dist: Rajkot

21 M/s. Tapee Cement Industries, Plot No: 2758/59/60/61/62/63/74/75, Metoda GIDC, Kalawad Road, Dist: Rajkot.

22 M/s. Khodidas D. Sojitra, Director, M/s. Nilkanth Concrete Private Limited,3rd floor, Omega Complex, Gondal Road,Rajkot

23 Shri Arvind Gangdas Sakhiya, Partner, M/s. Tapee Cement Industries, Plot No: 2758/59/60/61/62/63/74/75, Metoda GIDC, Kalawad Road, Dist: Rajkot.

24 Shri Dhiraj Rangani, Partner, M/s. Kailash Cement Industries / Kaveri Cement, Plot No: G-1935/4-5, GIDC, Lodhika, AT: Metoda, Tal: Lodhika, Dist: Rajkot.

25 Shri Sashikant Koticha, Director, M/s. Jayshree Vypar Limited, Jayshree Vyapar Bhavan, Near Shivalik-5, Gondal Road,Rajkot 360 002.

26 Shri Gautam J. Patel, Partner, M/s. Karan Marketing, 408, Balleshwar Avenue, Opp. Rajpath Club, S.G. Road, Ahmedabad 380 015.




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27 Shri Chandrakant J. Patel, Partner, Karan Chemicals, 408, Balleshwar Avenue, Opp. Rajpath Club, S.G. Road, Ahmedabad 380 015.

Copy to:

1. The Chief Commissioner, Central Excise, Ahmedabad. 2. The Assistant Commissioner (AE), Central Excise, Rajkot. 3. The Assistant Commissioner (RRA), Central Excise, Rajkot. 4. The Assistant Commissioner (Legal), Central Excise, Rajkot. 5. The Assistant Commissioner, Central Excise, Division-II, Rajkot. 6. The Superintendent of Central Excise, A.R.: Shapar. 7. F. No: V.25/15-18/Adj/2011. 8. Guard File.

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