2011 (10) TMI 121 - AT - Central Excise

Fraudulently availing modvat credi - invoices issued by the registered dealers, wherein description of inputs is mentioned as SS Coils - Revenue contended that respondents were showing in their records consumption of the superior quality of stainless steel, whereas they were actually using the inferior quality, thereby they are ineligible for taking cenvat credit - As decided in the case Sunrise Structurals & Engg. Limited 2002 (6) TMI 136 - CEGAT, MUMBAI - evidence required to substantiate the grave allegation of substitution of such large quantity of material has to be more convincing and direct in nature - denial of cross examination has resulted in the violation of principles of natural justice to the manufacturer - Hence appeal of revenue is rejected accordingly.

Summary

Issues:
1. Alleged fraudulent availing of modvat credit based on invoices.
2. Cross-objections filed in support of the impugned order.
3. Denial of cross-examination and violation of principles of natural justice.
4. Judicial discipline in following Tribunal orders.
5. Appeal against Tribunal's order pending before High Court.
6. Decision based on Tribunal's precedent.

Analysis:
1. The case involved allegations of the respondents fraudulently availing modvat credit based on invoices showing superior quality stainless steel coils, while actually using inferior quality. The Revenue contended that the respondents were ineligible for cenvat credit due to this discrepancy.

2. Cross-objections filed by the respondents in support of the impugned order were dismissed as they did not contain any adverse findings against the respondents. The impugned order set aside the demand confirmed by the adjudicating authority.

3. The issue of denial of cross-examination was raised, highlighting a violation of principles of natural justice. The Commissioner's finding on this matter, along with the non-supply of required documents to the defense, was considered as grounds for setting aside the order for re-adjudication.

4. The Commissioner (Appeals) demonstrated judicial discipline by referencing Tribunal orders in a similar investigation involving the respondent's group units in Mumbai. This was seen as a proper application of legal principles and did not exhibit any infirmity or illegality.

5. Both parties acknowledged that an appeal against a Tribunal order dated 25.5.2005 was pending before the High Court of Bombay. Since the issue in the current case was covered by the Tribunal's decision, and there was no stay by the High Court, the impugned orders were deemed correct and legal.

6. The decision in the present case was based on following the Tribunal's precedent, which was considered appropriate given the absence of any stay by the High Court. Consequently, the appeals filed by the Revenue were rejected, and the matter was disposed of accordingly.