Order Date – 16 December 2022

Facts –

• The respondent, M/s. Ashirwad Foundries Private Limited And Another is a manufacturer of castings falling under Chapter 73 of the First Schedule to the Central Excise Tariff Act, 1985.
• A notice to show cause was issued to the respondent alleging that respondent have fraudulently reaped financial gain by availing inadmissible CENVAT Credit of Rs. 5,57,78,466/- on the basis of fake Central Excise invoices issued by fictitious and non-existent manufacturers, during the financial year 2013- 2014 and 2014-2015 and utilized the inadmissible CENVAT Credit for payment of central excise duties against clearances of their final products.
• The said sum has to be recovered from the respondent in terms of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A and Section 11A(4) of the Central Excise Act, 1944 along with appropriate interest. e the said sum has to be recovered from the respondent in terms of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A/Section 11A(4) of the Central Excise Act, 1944 along with appropriate interest.

Issues –

• Whether the Learned Tribunal is right in allowing CENVAT Credit, so availed by the respondents, as eligible/admissible credit on inputs/raw materials as defined under Rule 9(5) of the CENVAT Credit Rules, 2004 when the respondents could not satisfactorily account for the transportation/receipt of such inputs/raw materials to their premises?

Order –

• The Hon’ble High court observed that the department had sufficient material to establish the case of fraudulent availment of credit. The department has discharged the burden of proof cast upon them and thereafter the burden shifts on the respondent to show that the transactions were genuine. The facts of the case clearly demonstrate that the respondent miserably failed to discharge the burden cast upon them. Therefore, the Court of the considered view that the learned tribunal has misconstrued the factual position and applied Section 9D
• A confession statement made before the Customs Officer though retracted within the period of 6 days is an admission and binding since the customs officers are not police officers, and also as could be seen from the language of Section 108 of the Customs Act. 
• The court have gone through the reply dated 15.12.2017 submitted to the show cause notice even in the said reply there is no denial nor any other allegations made against the department while recording the statements.
• Hon’ble Supreme Court in Nirmal Singh Pehlwan Versus Inspector, Customs, Customs House Punjab held that the statements recorded from his client under Section 108 of the Customs Act is not admissible in evidence and the same could not have been used.
• From the above findings the appeal is allowed.