[Order per : H.K. Thakur, Member (T)]. - These appeals have been filed by the appellants against OIO No. 16/MP/Vapi/2012, dated 23-8-2012 passed by the Commissioner of Central Excise & Service Tax, Vapi. Main appellant M/s. Chandan Steel Limited has filed appeal against confirmation of demand of Rs. 1,20,49,724/- as inadmissible credit along with interest and demand of Rs. 12,43,861/- for clandestine removal of goods. The main appellant has also been visited with penalties of Rs. 1,20,49,724/- under Rule 15 of the Cenvat Credit Rules, 2004 and a penalty of Rs. 12,43,861/- under Section 11AC of the Central Excise Act, 1944. Penalties of Rs. 10 Lakh and Rs. 2 Lakh under Rule 26 of the Central Excise Rules, 2002 and Rule 15 of the Cenvat Credit Rules, 2004 have been imposed upon Shri Dilipbhai C. Jain, Vice-President of the main appellant. Penalties of Rs. 5 Lakh, Rs. One lakh and Rs. 50,000/- have been imposed respectively upon Shri Kamlesh Manohar Kanoongo, Director of M/s. Sikkim Ferro Alloys Limited, Shri Praveen C. Jain, Director of main appellant and Shri Omprakash Sharma, Proprietor of M/s. Carrier Corporation of India, Delhi, under Rule 26 of the Central Excise Rules, 2002.

2. Brief facts of the case are that the main appellant is manufacturer of S.S. Billets, S.S. Angles, S.S. Flats, S.S. Round Bars and S.S. Bright Bars, etc. Appellants are holding one common Central Excise records for three premises and are maintaining common Central Excise records in one common premises. On the basis of intelligence that main appellant is indulging in clandestine removal of the finished goods, the officers of Central Excise conducted their search of all the premises of the appellant on 8-7-2006 and the residence of Shri Praveen C. Jain, Vice-President and also found shortage of certain finished goods on which duty involved was Rs. 12,43,861/-. The shortage was recorded during the drawal of Panchnama and appellant paid Rs. 12,43,861/- by Cenvat account Entry No. 1000, dated 9-7-2006. Further records were also drawn under Panchnama dated 8/9-7-2006 for investigation.

2.1 During the course of further investigation it was observed by the officers that appellant has availed Cenvat credit of CVD amounting to Rs. 1,14,16,691/- and Education Cess of Rs. 2,04,598/- on imported Nickel Cathodes which were purchased by them on high sea sale basis and cleared through ICD, Tughlakabad without actual receipt of the material in their factory premises. It was alleged by Revenue that imported consignments of Nickel were originally destined for Nhava Sheva Port but were got transported by Shipping liners for clearance at ICD, Tughlakabad. The bills of shipping Liners were paid by M/s. Metal Linkers International Limited and M/s. Metal Traders (India) Private Limited in spite of the fact that goods were sold on high sea sale basis to the appellant. Investigations also revealed that containers were de-stuffed in same warehouse in Tughlakabad after Customs clearance. Investigations conducted at the CHA end revealed that imported goods were arranged to be sent to local godowns in Tughlakabad as per the instructions of high sea sale and that M/s. Metal Liner International, Delhi has approached CHA for clearance of goods on high sea sale basis on behalf of the appellant and after investigations as per Paras 6.2, 6.3.1, 6.4, 7.1 to 8.1, 9, 10.1, 12.1 and 13 of the Order-in-Original dated 23-8-2012 it appeared to the Revenue that Nickel purchased on high sea sale cleared from ICD, Tughlakabad never reached appellants factory premises and was diverted in and around Delhi.

Accordingly, a show cause notice dated 2-8-2010 was issued to the main appellant and others which culminated into OIO against which appellants have filed these appeals.

3. Shri V.M. Doiphode, learned advocate appearing on behalf of all the appellants made following arguments :-

(i)      That demand of Rs. 12,43,861/- on the shortages occurred due to illicit clearances of finished goods on cash sale basis as per the statement dated 9-7-2006 of Shri Praveen C. Jain, Vice-President of the main appellant but the same was retracted on 10-7-2006, along with affidavit dated 9-7-2006, addressed to Commissioner of Central Excise. It was also argued that both the Panchas have also filed affidavits for either not being present throughout the Panchnama period or that English was not known to them.

(ii)    That appellant requires Nickel for manufacture of different grades of SS Products where Nickel contents vary from 4.5 to 14% as per the requirement of the customers. That Nickel was purchased by the appellant from M/s. Metal Liner International Limited, New Delhi and M/s. Metal Traders (India) Private Limited, Delhi under nine bills of entry as follows :-

(iii)   That during physical stock taking of appellants units no shortage of raw materials received was noticed.

(iv)   That as per certificate dated 27-8-2007 issued by Aviro Consultant, Ahmedabad, appellants have used 150.038 MT of Nickel during 2005-06 and 184.389 MT during 2006-07, and adjudicating authority is wrong in his findings that Nickel is not required by the appellants.

(v)     Appellant made following submissions for correctly availing the Cenvat credit :-

(a)      B/E No. 499373 (Cenvat credit of Rs. 19,28,404/-) and B/E No. 512682 (Cenvat credit of Rs. 16,50,842/-) transported by Shri Rama Krishna Carrying Corporation. The demand is confirmed on the ground that no transportation company is in existence, as summons sent by the department were returned undelivered. However, the demand cannot be sustained on this ground in the absence of any other evidence regarding non-receipt of inputs by the appellants, particularly when the Director Shri Dilip Chandan in his statement dated 5-9-2006 and 1-12-2009 has confirmed the receipt of inputs in their factory and the transporters was paid charges by cheque as well as cash after deduction of TDS and payment of Service Tax. In respect of second B/E where transporter is M/s. Suraj Transport Roadways Pvt. Limited, the Cenvat credit is denial on the basis of statement of Shri Mukesh Kumar Verma dated 17-8-2006. That Shri Mukesh Kumar has retracted his statement on 18-8-2006 and appellants have paid freight after deducting TDS, Service Tax was paid and appellants’ Director has confirmed the receipt of the goods.

(b)      B/E No. 509796, Cenvat credit of Rs. 11,80,254/- where the transporter is M/s. Delite Cargo Carriers. In this case, statements are favourable to the appellants and M/s. Rajputana Transport Company vide their letter dated 7-6-2006 has confirmed the vehicle had broken down and the goods were transported in another Lorry No. MH04AL-6272 from Bhiwandi to Umbergaon.

(c)      That B/E No. 474719 (Cenvat credit of Rs. 6,40,607/-) demand is confirmed on the basis of statement of Shri Tanwinder Singh Dhody, Prop. of M/s. Dhody Goods Carrier (pg. 443-436). There is a contradiction regarding place of delivery at Gulabi Baug at New Delhi, whereas Shri Qumruzzan Khan stated that the goods were delivered at Anand Parbat.

(d)     That appellant’s Director and Vice-President in their statement dated 5-9-2006, 1-12-2009, 9-7-2006 and 21-8-2006 have confirmed receipt of inputs.

(e)      That for B/E No. 502842 (Cenvat credit of Rs. 18,89,822/-) and B/E No. 509803 (Cenvat credit of Rs. 8,87,935/-) transported M/s. Suraj Transport Roadways and Carrier Corporation of India, the show cause notice relied upon report received from Transport Commissioner of Gujarat. However, as per information obtained under RTI by the appellant’s Director there was no entry at the RTO check posts in respect of 14 trucks used for transporting inputs and the capital goods of the appellants from outside Gujarat State and there is no objection from the department about availing Cenvat and that RTO reports are neither authentic nor reliable. That the transporters have deposed that goods were neither received in their transport company nor they have arranged for the transport of goods, however, it is evident from the seized documents that the transportation was undertaken by them. In respect of M/s. Suraj Transport Roadways, consignment note No. 15086, dated 7-6-2009, the documents seized from them show that the receipt of cheque and lorry Challan No. 1894 shows transport of nickel to the appellants, apart from other consignments transported to others. Form No. 47A is issued by transport department in respect of Truck No. HR69-5794 by paying Rs. 5,000/- to Transport Commissioner and deposit slip of cheque given by the appellants in Vijaya Bank for Rs. 8,329/- and clearance of the cheque from Bank of Baroda.

(f)       That for B/E No. 484579, 484580 and 487242 where the transporter is M/s. Fast Track Logistics (Cenvat credit of Rs. 34,23,416/-) the demand is confirmed on the ground that the transporter is non-existence and therefore inputs were not received. However, the appellants have paid freight under vouchers and appellants Director and Vice-President have confirmed the receipt of inputs. Appellants have paid freight charges of Rs. 18,935/- to M/s. Fast Track Logistics by deducting TDS of Rs. 435/- and another Rs. 19,246/- after deducting TDS of Rs. 442/- and Rs. 19,066/- after deducting of TDS Rs. 438/-. Appellants have also paid Service Tax as evident from documents.

(vi)   That for demand of Rs. 4,28,435/- involved on indigenously procured goods as detailed in Annexure-C to the show cause notice, RTO verification was done and only in respect of vehicle No. GJ12X9569 RTO informed that the vehicle number is not correct and appellants had explained with supporting documents (Form No. 45A), Tax invoices, copy of LR challan, Cenvat invoices, Transporter’s invoice, party’s letter, RTO letter, PUC certificate and insurance certificate and overloading that the department has not informed the correct no. of vehicle to the RTO.

(vii)  That appellants sought cross-examination of transporters, however, the learned Commissioner did not permit cross-examination of main witnesses i.e. Shri Om Prakash Sharma, Shri Mukesh Verma and Shri Arun Kumar B. Singh and authors of letter submitted by M/s. Delite Cargo Carriers and others, though he agreed and granted cross-examination of other witnesses, who were not important. As the entire case of non-receipt of duty paid inputs is based on statements of transporters whose cross-examination was not given by the learned Commissioner contrary to the ratio of the judgment of Allahabad High Court in the case of CCE, Meerut v. Parmarth Iron Pvt. Limited reported in [ (All.)], therefore, the learned Commissioner could not have relied upon the statement of transporters to confirm the demand raised against the appellants. Further, it is well settled law that the learned Commissioner could not have relied upon the statement of Shri Pravin Jain who in the same proceedings is co-noticee in the absence of any corroborative evidence as held by Hon’ble Supreme Court in the case of Mohte Sham Ismail reported in [ (S.C.)]

(viii) That in view of the following case laws there is no evidence on records that Nickel was diverted and not received in their factory :-

(a)      Commissioner v. Dhanlaxmi Tubes & Metal Industries [ (Guj.)]

(b)      Monarch Metals (P) Limited v. CCE, Ahmd. [ (Tri.-Ahmd.)]

3. Shri S.K. Mall learned AR appearing on behalf of the Revenue argued that main appellant in connivance with other appellants has not taken imported Nickel to their factory premises. He also emphasised that if the inputs were meant to be taken to appellant’s factory then clearance should have been affected only at Nhava Sheva port and there was no need to bring the material to ICD, Tughlakabad. Imported Nickel was brought to ICD Delhi only for its diversion in and around Delhi. It was his argument that some of the transporters claimed to be used for transporting imported Nickel were found to be non-existing. It was also argued that none of the check post stamps from Delhi to appellant’s factory are appearing on the transport documents. He highlighted the statement of Shri Mahavir Prasad Agarwal, proprietor of M/s. Mahavir Prasad Agarwal & Co. given in Paras 6.3.1 and 42.1 of the OIO dated 22-8-2012 that this unit has the facility, inter alia, to cut Nickel for the customers situated in Anand Parbat Industrial Area, Delhi and that he has not taken any job work for a party from outside Delhi. That Shri Agarwal perused the statements dated 23-9-2006 of Shri Qumruzzan Khan of UBS Cargo Services and statement dated 15-9-2006 of Shri Tanvinder Pal Singh Dhody of M/s. Dhody Goods Carrier, Delhi. That statements of Shri Qumruzzan Khan and Shri Tanvinder Pal Singh indicated the consignments were delivered in Anand Parbat Industrial Area, Anand Parbat, New Delhi and that they provided only local transport.

4. Heard both sides and perused the case records. The case of the Revenue in the present proceedings is based on two areas of activities. First issue is that on the date of visit by the officer of Central Excise to the factory premises of the appellant on 8-7-2006, there was shortage of finished goods involving Central Excise duty of Rs. 12,43,861/-. On the date of visit the short levy was admitted but later on 10-7-2006, the statement admitting shortage of goods was retracted by an affidavit of Shri Pravin C. Jain, Vice-President of the main appellant. From the facts available on records, it is observed that stock taking of the finished goods was undertaken by the officers in the presence of appellants and appellant never raised any objection to the method of stock taking. Any representation made afterwards has to be considered only as an afterthought when the duty liability, worked out on the shortage of finished goods manufactured and cleared by the appellants, was voluntarily paid without protest. Duty demand of Rs. 12,43,861/- has, therefore, been correctly confirmed by the appellant along with imposing penalty equivalent to the duty involved.

5. The second issue is regarding admissibility of Cenvat credit of Rs. 1,16,21,289/-, with respect to imported Nickel cathodes purchased by the main appellant on high sea sale basis which has been held by the adjudicating authority as not admissible. It is the case of the Revenue that Nickel cathodes were cleared from ICD, Tughlakabad and sold in and around Delhi and only Cenvat credit was taken by the appellant on the basis of the bills of entry but no inputs were actually received in appellant’s factory. Revenue has relied upon the statement of CHA, local transporters engaged at Delhi, statements of the transporters engaged by the appellant, etc., to bring home the point that Nickel cathodes were not received at appellant’s factory. Certain enquiries were also undertaken from the Road Check Posts between Delhi and appellant’s factory to suggest that inputs never reached appellant’s factory. The main appellant on the other hand has argued that local transporters at Delhi were only used to take the goods from ICD, Tughlakabad to a godown where the imported Nickel cathodes are segregated party-wise and sent to their unit by a separate vehicle. Revenue has relied upon the statement of one Shri Mahavir Prasad Agarwal of M/s. Mahavir Prasad Agarwal & Co., Anand Parbat, New Delhi, who is doing sheering and cutting of MS Sheets, SS Sheets and Nickel Sheets. He was shown certain container numbers and vehicle numbers (as per question Nos. 12, 13 & 14 of his statement dated 15-12-2006) which he has confirmed to have processed on job work basis and sent to units in Anand Parbat area. It was also confirmed by him that all the orders are received over phone and no details of the parties who get the job work done as indicated in the cash memos mentioned by them. He also confirmed that no vehicle numbers were mentioned in cash memos as parties getting the job work done insist that no details of their identity should be mentioned in the cash memos. It is surprising that Shri Mahavir Prasad Agarwal remembers the name of the customers and the vehicles in which the imported Nickel cathodes were brought, from his memory when no details are maintained in his cash memos (as per his answers to question Nos. 19 & 20 of his statement dated 15-12-2006) but he is not able to give the names and addresses of the units who got the job work done from him. But surprisingly he is very sharp in his memory and confirms that he does not know M/s. Chandan Steel Limited, Umbergaon, M/s. Nice Extrusion Private Limited, Silavasa and M/s. Nitin Alloys Global Limited, Silvasa. He has also stated in his statement that one container may have materials of more than one party, which could mean that material belonging to the appellant was removed in the local godowns & materials of other parties of Delhi was only sent to M/s. Mahavir Prasad Agarwal & Co. The statement dated 15-11-2006 of Mahavir Prasad is thus full of contradictions pointed out above and is not reliable. Further, appellant’s asking for his cross-examination, vide letter dated 26-11-2010 written to the adjudicating authority, was not allowed.

6. For the second line of investigation, with respect to the transporters engaged by the appellant, it was concluded by the adjudicating authority that the vehicles mentioned in the documents do not show the movements on the important check posts between Delhi and appellant’s factory and accordingly, held that inputs were never received in their factory. It was the argument of the advocate of the appellant that dates mentioned at the check posts by the concerned authority are not reliable. To bring out this point appellant’s advocate made us go through pages 222 to 232 of the appeal which is the information obtained under RTI from the State Public Information Officer, office of Transport Commission, Gandhinagar, Gujarat. It was his case that the vehicle number mentioned in the transport documents does not show the entries in the records of Transport Commissioner adjacent to the days when appellant received the consignments of Nickel cathode. It is observed from the information relied upon by appellant that very first vehicle No. DN-09-9568 during the period 25-5-2006 to 29-6-2006 is alternately showing as ‘I’ (in) or ‘O’ (out), but between 9-4-2006 to 23-5-2006 entries against this vehicle only indicated as ‘O’ from Bhilad check post. Same is true of all the vehicles mentioned in the RTI information obtained by the appellant. As the ‘in’ & ‘out’ entries in Transport Commissioner’s do not alternate it indicates that there are either alternate routes between Delhi and appellant’s factory or the check post records are not reliable. Therefore, these records showing dates mentioned by the Gujarat Transport Commission may not be a proof whether any vehicle has moved between Delhi and appellant’s factory. Appellant has made the payment of freights through cheques and also paid the GTA service tax on the freights so paid. Further the inputs Nickel has been reflected in appellant’s statutory records and the same has not been disputed by the Revenue. Further during stock taking also no shortage of Nickel cathodes was detected when shortage of only finished goods was noticed. In the entire proceedings no seizure of inputs cleared as such from the factory or diverted en-route from Delhi to Appellant’s factory has been made. In the absence of these corroborative evidences, recording statements of the transporters that appellants have not transported imported Nickel cathodes to appellant’s factory does not establish diversion of the same in and around Delhi, when the cross-examination of the transporters, whose statement’s were relied upon in the show cause notice, have not been made available to the appellant during adjudication.

7. Learned AR relied upon the following case laws in support of Revenue’s claim that inputs did not reach appellants factory :-

(a)     Devi Das Garg v. CCE, Delhi [ (Tri.-Del.)]

(b)     Viraj Alloys Limited v. CCE, Thane [ (Tri.-Mum.)]

(c)     CCE, Ludhiana v. Deepak Roadways [ (P&H)]

(d)    Shalini Steels Private Limited v. Commissioner of Cus. & Central Excise, Hyderabad [ (A.P.)]

(e)     Bhagwati Steel Cast Limited v. CCE, Nashik [ (Tri.-Mum.)]

(f)      Order No. A/10539 to 10552/WZB/AHD/2013, dated 20-11-2012/18-4-2013 passed by Ahmedabad Bench in the case of M/s. Agarwal Metals & Alloys v. CCE, Surat.

7.1 It was his argument that in view of the above case laws, Revenue is not required to establish an offence case with mathematical precision but preponderance of probability if established, will clinch the issue in favour of the Revenue.

7.2 Learned Advocate appearing on behalf of the appellants relied upon the following case laws and argued that jurisdictional High Court has already settled this issue in favour of the assessee :-

(a)     Commissioner v. Dhanlaxmi Tubes & Metal Industries [ (Guj.)]

(b)     Monarch Metals Private Limited v. CCE, Ahmd. [ (Tri.-Ahmd.)].

8. It is no doubt a settled law that Revenue need not establish an offence case with mathematical precision required in a criminal case but preponderance of probability is also sufficient in Revenue’s case. But it does not mean that creating a suspicion is sufficient to hold that preponderance of probability is in favour of the Revenue. In the present proceedings, there is no statement of any person confirming that imported Nickel cathodes have been diverted or sold to any other person. For creating preponderance of probability also there should be some incriminating statement or document. For example, if the entire freight and purchase of goods were made by appellant in cash and transporters also confirm that no goods were transported. In the absence of these indicators, it cannot be said that preponderance of probability is in favour of the Revenue that Nickel cathodes have not reached its destination. It is also an established fact that the suspicion, whosoever grave it may be, cannot take the place of documentary evidence. Statements recorded and relied upon by the Revenue cannot be considered to be conclusive piece of evidence without the appellant being given an opportunity to cross-examination. There is no positive statement in the present proceeding which convincingly convey that appellant has sold/diverted the imported goods to any other person and accordingly the case laws relied upon by the Revenue are not applicable to the fact and circumstances of this case.

9. Further, Hon’ble High Court of Gujarat, in the case of Commissioner v. Dhanlaxmi Tubes & Metal Industries (supra), framed the following questions :-

“(i)    Whether provisions of Rule 3 and Rule 9 provides for availing Cenvat credit on the basis of invoices only when such invoices are accompanied by same corresponding goods or credit is available even if some other goods, other than shown in the invoices, are received in the factory?

(ii)     Whether the CESTAT was correct to allow a Cenvat credit on the basis of invoices when investigations have, on the basis of documentary evidences, established that the inputs for which such invoices were issued have not been transported to the factory?

(iii)    Whether CESTAT is correct in holding that the goods were received by the assessee when the evidences are clearly indicting that the registered dealer has not received the goods under the invoices against which he has issued invoices?

(iv)    Whether CESTAT is correct in allowing the credit to the manufacturer on the basis of invoice issued by the dealer showing the reference of suppliers invoice wherein the goods mentioned in the suppliers invoices has not been received by the dealer?

(v)     Whether CESTAT is right in holding that the manufacturer can take credit wrongly passed on by the dealer on the basis of documents received by him from the supplier without receipt of the goods mentioned therein?”

9.1 After hearing rival submissions in the above case the following was held by the jurisdictional High Court :-

“4. A perusal of the record of the case shows that the detailed facts as regards the investigation carried out by the Department are set out in the show cause notice dated 11-1-2008. Upon going through the lengthy show cause notice in its entirety, the Court finds that though on the face of it, it appears that ample evidence has been collected during the course of investigation, in fact, the evidence collected against the assessee is to the effect that the record of the transporters shows that the vehicles through which the copper ingots/wire scrap were stated to have been sent, had actually transported goods other than copper ingots/wire scraps to the manufacturers at Gujarat, Daman or Silvassa. The entire case of the Department is based on the record of the transporters without the support of any other evidence. The record indicates that there is no dispute that copper ingots purchased from units located at Jammu were transported by trucks from Jammu to Delhi. After transshipment at Delhi, they were shown to be transported from Delhi to the premises of M/s. Pranav Metal Mart, at Nadiad. According to M/s. Pranav Metal Mart, the goods so transported have in fact been received by it under proper invoices. It is also the say of M/s. Pranav Metal Mart that the goods were sold to the assessee and it is the case of the assessee that such goods were received by it along with invoices.

5. A perusal of the order passed by the adjudicating authority indicates that the officers at the check post had entered the receipt of copper ingots in their record. Thus, even the official records maintained at the check post indicate receipt of copper. Merely because in the record of the transporter, two types of LRs had been issued in respect of the goods carried/transported by M/s. Singal Road Carriers which indicated transportation of miscellaneous goods and the other which indicated transportation of copper ingots/wire brass, the Department has jumped to the conclusion that copper ingots had not actually been transported. Except for the aforesaid evidence, there is no evidence whatsoever to indicate that M/s. Pranav Metal Mart, Nadiad had not received copper ingots or that the respondent assessee had not received the ingots along with the invoices. The statement of Shri Atul Navrattan Lal Sharma, Proprietor of M/s. Singal Road Carriers indicates that it is the categorical case of the said party that it had received raw material at its premises along with the LRs and other documents. The statement of the partner of the assessee, Shri Umesh Shah, also indicates that it was the categorical case of the assessee that it had received central excise invoices issued by the dealers through the truck driver who brought the consignments to its premises. In fact, from the statement of Shri Heda, it is apparent that M/s. Pranav Metal Mart, Nadiad, had even shown receipts of copper consignments and entered such receipts in the RG-23D registers. Likewise, the assessee had also recorded receipts of the raw materials in RG-23A Part-I record.

6. A bare perusal of the orders made by the adjudicating authority as well as the appellate authority clearly indicates that neither of the said authorities have discussed the evidence in detail and have merely placed reliance upon the report of the transporter for the purpose of holding that the assessee had in fact not received the goods referred to in the invoices and that only invoices had been issued to it and, therefore, the credit was not admissible to the assessee.

7. As can be seen from the impugned order of the Tribunal, the Tribunal after appreciating the evidence on record has recorded that there is no evidence to reflect upon the fact that the inputs were not actually received by the assessee; there was no dispute that the LRs were issued by the transporter showing that the assessee is the consignee of the goods; the case of Revenue was based on the goods registers maintained by the transporter which indicates the description of the goods as “miscellaneous”. According to the Tribunal, this fact, by itself, could not be held to be sufficient for arriving at the conclusion that the inputs were never transported to the assessee’s factory. The Tribunal found as a matter of fact that all documentary evidence on record supported the assessee’s case about the receipt of inputs, whereas there was no independent corroborative evidence produced on record by the Revenue in support of its case.

8. From the facts noted hereinabove, it is apparent that the Tribunal has appreciated the facts of the present case in proper perspective and upon appreciating the evidence on record, has as a matter offset, recorded that except for the goods registers maintained by the transporter, there is no other evidence on record to indicate that the assessee has in fact not received the goods in question. In the circumstances, in the absence of any evidence to the contrary being pointed out on behalf of the Revenue, the conclusion arrived at by the Tribunal being based upon findings of fact recorded by it upon proper appreciation of the evidence on record, cannot be said to be unreasonable or perverse.

9. For the foregoing reasons, there being no infirmity in the impugned order of the Tribunal, the same does not give rise to any question of law, as proposed or otherwise, much less a substantial question of law so as to warrant interference. The appeal is, accordingly, dismissed.”

10. The facts of the case before the Hon’ble High Court in Dhanlaxmi Tubes & Metal Industries case (supra) were almost similar to the facts of the present case, therefore, ratio of the above case law will be squarely applicable to the facts of the present case, as there is no independent positive documentary evidence/statement confirming that imported Nickel has in fact has been diverted elsewhere and has not reached appellant’s factory.

11. Another important fact has been brought on record by the appellant that as per certificate dated 27-8-2007 from Metallurgy Expert, Aviro Consultant, Ahmedabad to the effect that the finished stainless steel products manufactured by appellant contains Nickel percentage from 4 to 18.5% whereas the scrap of stainless steel used by them is containing Nickel from 8 to 10% and that pure Nickel is needed to be added to the molten stainless steel as scrap used by appellant does not contain adequate percentage required in the finished stainless steel. It was also contained in this certificate that during 2005 to 2007 M/s. Chandan Steel Limited has supplemented and consumed 334.917 MT of Nickel cathode and 1257.876 MT of Ferro-Nickel. This fact was also brought to the notice of the adjudicating authority as per Para 16 of their letter dated 2-4-2011, in reply to the show cause notice. Therefore, findings of the adjudicating authority in Para 57.12(a) of the OIO that appellant can manufacture their products without adding Nickel in question is not acceptable. It is not understood as to how adjudicating authority has arrived at the said findings. It is clear from the certificate dated 27-8-2007 from a Metallurgist that scrap used by the appellant has Nickel in the range of 4 to 10% whereas the final product has Nickel in the range of 8 to 10%. It is a mathematical calculation that from scrap containing 10% Nickel, if appellant wants to manufacture a stainless steel product having Nickel content of more than 10%, then he has to use additional Nickel. That is precisely the document of metallurgist conveys that to supplement higher percentage of Nickel in the finished product appellant has used 334.917 MT of Nickel cathode and 1267.876 MT of Ferro Nickel. Therefore, a finding of the adjudicating authority that no additional Nickel is required by the appellant is factually incorrect. It cannot be appreciated that when such large quantities of Nickel are required by the appellant, he will divert the Nickel purchased at Delhi for only to get cenvatable documents and fulfil his requirement of Nickel by procuring nickel from other sources without payment of duty to cover the cenvatable documents acquired by him. In view of the above observations and the fact that no Nickel was found short at the time of stock taking by the visiting officers of Central Excise and no quantity of allegedly diverted, Nickel was seized anywhere in the proceedings, it cannot be appreciated that imported Nickel was diverted in and around Delhi.

12. In view of the above, it has to be held that Cenvat credit with respect to imported Nickel was correctly availed by the appellant as their duty paid character and use in the manufacture of end-product has been established by the records maintained by the appellant along with their confirming statements that inputs have been used for the manufacture of the finished goods, and appeal to that extent is allowed.

13. So far as imposition of penalties upon the appellants is concerned, as the credit with respect to Nickel has been held to be admissible, personal penalties imposed upon all the appellants under Rule 15 of the Cenvat Credit Rules, 2004 are set aside and corresponding equal penalty imposed under Section 11AC read with Rule 15(2) of the Cenvat Credit Rules, 2004 is also set aside. However, for clandestine removal of finished goods, involving Central Excise duty of Rs. 12,43,861/- mentioned in Para 4 above, personal penalties are required to be imposed upon Shri Dilipbhai C. Chandan, Director of the main appellant and Shri Praveen C. Jain, Vice-President of the main appellant, under Rule 26 of the Central Excise Rules, 2002 as they could not satisfactorily explain the shortages/clandestine removals. However, looking to the amount of duty evaded, penalties of Rs. 10,00,000/- (Rupees ten lakh only) and Rs. 2,00,000/- (Rupees two lakh only) imposed upon Shri Dilipbhai C. Chandan and Shri Praveen C. Jain seem excessive and are reduced to Rs. 2,00,000/- (Rupees two lakh only) and Rs. 50,000/- (Rupees fifty thousand only) respectively.

14. Appeals of the appellants are allowed to the extent indicated herein above, in Paras 12 & 13.

(Pronounced in the Court on 10-10-2013)