Central Excise Appeal No. 91 of 2006 [ 1 ] IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH Central Excise Appeal No. 91 of 2006 Date of Decision: February 9,2010 The Commissioner, Central Excise, Delhi-IV, Faridabad.................................................................. Appellant Versus M/s Rajdoot Cables (P) Ltd., and another ........... Respondents Coram: Hon'ble Mr.Justice Ashutosh Mohunta Hon'ble Mr. Justice Mehinder Singh Sullar Present: Mr. Gurpreet Singh, Sr. Standing Counsel for the appellant. Mr. Avnish Jhingan, Advocate for the respondents. ... ASHUTOSH MOHUNTA, J. The Revenue has filed this appeal under Section 35-G of the Central Excise Act, 1944 impugning the order dated 9.5.2005 (Annexure A- 3) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The brief facts of the case are that respondent No.1-M/s Rajdoot Cables Pvt. Ltd., are engaged in the manufacture of electrical wires and cables and are paying Central Excise duty on the finished products and availing the facility of Cenvat Credits on the inputs used in the manufactured final products. The Revenue gathered information that one M/s R.K.Enterprises is fraudulently passing on Cenvat credit by issuing Central Excise Appeal No. 91 of 2006 [ 2 ] invoices, which are not accompanied by goods. Shri R.K.Gupta, Proprietor of M/s R.K.Enterprises revealed that he passed on Cenvat credit to some manufacturers and dealers without actually transacting goods. Shri R.K.Gupta in his statement recorded under Section 14 of the Central Excise Act, 1944 admitted the bogus transactions committed by his concern. On further scrutiny of records, it was found that respondent No.1 was involved in only one fictitious transaction wherein he had purchased C.C. Copper rods weighing 2335 Kgs valued at Rs.3,60,000/- against invoice No. 230 dated 3.12.2000 from above mentioned M/s R.K.Enterprises and thereby wrongly availed Cenvat Credit amounting to Rs.47,820/- vide entry dated 3.12.2000 in RG Register. The respondents voluntarily debited the amount of Rs.47,820/- as Cenvat Credit had been wrongly availed. The adjudicating authority confirmed the demand of Cenvat Credit of Rs.47820/- and also imposed equivalent penalty alongwith interest and further penalty of Rs.10,000/- was imposed on respondent No.2. The Commissioner (Appeals) also upheld the orders of the adjudicating authority. Aggrieved by the orders of authorities above, the respondents filed appeal before the Tribunal and the Tribunal vide order dated 13.5.2002 set aside the orders of the Commissioner (Appeals) and thereby allowed both the appeals filed by respondent Nos. 1 and 2. Thereupon, the Revenue challenged the Tribunal's orders and filed the instant appeal which was admitted to consider the following substantial question of law:- “Whether the learned tribunal was right and justified in entertaining and appreciating the additional grounds at the appellate stage raised by the respondents for the first time as the same were not before either the adjudicating authority or Central Excise Appeal No. 91 of 2006 [ 3 ] the first appellate court? We have gone through the records and perused the orders passed by the adjudicating authority, Commissioner (Appeals) as well as the Tribunal. We are of the considered opinion that the orders passed by the Tribunal setting aside the order of Commissioner (Appeals) is fully justified. The Tribunal has rightly held that Revenue has solely placed reliance on the statement of Shri R.K.Gupta, Proprietor of M/s R.K.Enterprises and, therefore, the entire statement of Shri R.K.Gupta should be taken into consideration and not only part of it. There is no dispute about the proposition that the Courts can disengage the truth from the falsehood of the statement of a person. The person may speak partly true and partly false. The grain can be separated from the chaff but in the instant case, except for the statement of Shri R.K.Gupta, there is no corroboration by the Revenue during the investigation. The part of the statement of Shri R.K.Gupta is in favour of the Revenue and part of it not. If the statement of Shri R.K.Gupta is to be believed then it has to be believed in entirety. The scrutiny of the statement of Shri R.K.Gupta reveals that he has stated that about 50% of the transactions were bogus and the transactions where Tempo Nos., were same as in the purchase invoices of the same date, the transactions were genuine and actual delivery of goods took place and further, the transactions were genuine where material supplied was less than 6 tons. The respondent No.1 was involved in only one transaction in which the vehicle number and the date is the same and the material supplied is also less than 6 tons. Therefore, the Tribunal was right in coming to the conclusion that even as per the statement of Shri R.K.Gupta, the transaction Central Excise Appeal No. 91 of 2006 [ 4 ] of purchase of copper rod and its receipt in the factory are genuine. Moreover, the Tribunal has given a finding on the question of fact which is plausible. The findings of the Tribunal are based on material on record. In view of the above, the question of law as posed in this appeal is answered against the Revenue and in favour of the assessee. The appeal is accordingly dismissed. ( ASHUTOSH MOHUNTA ) JUDGE 9.2.2010 ( MEHINDER SINGH SULLAR ) Rupi JUDGE