2011 (3) TMI 1088 - AT - Central Excise

Availment of credit of counterveiling duty paid - allegations and findings that the said inputs were actually not received by the appellants in their factories and the appellants have wrongly shown the receipt and consumption of the same in the manufacture of the final product, which was cleared on payment of duty - said imported ingots stand diverted by the appellants in the open market and instead they have purchased inferior quality goods from the market for replacing the imported inputs and used the same in the manufacture of their final product - Held that - The impugned order of the Commissioner stand passed in violation of principles of natural justice as the appellants, right from the beginning, have been making a prayer to allow cross examination of the witnesses, whose statements are being relied upon by the Revenue to support their allegations. The appellants also prayed for personal hearing and made a request to allow cross examination after which they would file a detailed reply. In our views, if Revenue seeks to rely upon the statements of various persons, it is necessary for them to offer the said deponents for cross examination so as to check the veracity of the same. Such statements of the transporters and other persons were being disputed by the appellant and having produced material evidence on record to doubt the truthfulness of the same, the Revenue was duty bound to offer the said witnesses for cross examination. It is also seen that the adjudicating authority has not taken into account those statements which are not inculpatory and do not admit any divergence of raw materials. As all the evidences in the shape of expert opinion, evidences showing alternative routes and information procured by the appellant under RTI Act, as placed before Commissioner vide their subsequent reply dt.18.12.07, does not stand considered by the adjudicating authority, we think it proper and just to set aside the impugned order and remand the matter to adjudicating authority for fresh decision - appeals are, thus, allowed by way of remand.

Issues Involved:
1. Availment of CENVAT Credit on Countervailing Duty (CVD) paid on imported re-melting copper ingots and wire bars.
2. Alleged non-receipt and diversion of imported inputs by the appellants.
3. Denial of cross-examination of witnesses by the adjudicating authority.
4. Violation of principles of natural justice.

Issue-wise Detailed Analysis:

1. Availment of CENVAT Credit on Countervailing Duty (CVD) Paid on Imported Re-melting Copper Ingots and Wire Bars:
The appellants, engaged in manufacturing copper pipes, flats, and tubes, availed CENVAT Credit on CVD paid on imported re-melting copper ingots and wire bars. The Revenue disputed this credit, alleging that the inputs were not received by the appellants in their factories and were instead diverted to the open market. The appellants were accused of replacing the imported inputs with inferior quality goods from the local market for manufacturing their final product.

2. Alleged Non-receipt and Diversion of Imported Inputs by the Appellants:
The adjudicating authority's findings were based on the absence of check post stamps on lorry receipts and discrepancies in transporter records. The authority concluded that the imported ingots were diverted and not used in manufacturing. However, the appellants contended that the order was based on presumptions and assumptions. They argued that the duty-paid raw material was received, recorded in their CENVAT account, and used in manufacturing the final product, which was cleared on payment of duty. They also highlighted the unreliability of check post records and the absence of evidence regarding the alleged diversion and sale of imported goods.

3. Denial of Cross-examination of Witnesses by the Adjudicating Authority:
The appellants requested cross-examination of witnesses whose statements were relied upon by the Revenue. They argued that the denial of cross-examination violated principles of natural justice. The appellants submitted that the statements relied upon were either retracted or given by individuals not directly involved in the manufacturing process. The Revenue, on the other hand, reiterated the findings of the Commissioner but acknowledged that the written submissions filed by the appellants were not considered by the Commissioner.

4. Violation of Principles of Natural Justice:
The Tribunal found that the impugned order was passed in violation of principles of natural justice. The appellants were not given the opportunity to cross-examine witnesses, and their written submissions were not considered. The Tribunal emphasized the necessity of cross-examination to verify the veracity of statements relied upon by the Revenue. The Tribunal also noted that the adjudicating authority did not consider evidence submitted by the appellants, including expert opinions and information received under the RTI Act, which questioned the authenticity of check post records.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the Commissioner for fresh decision, emphasizing the need to adhere to principles of natural justice. The appellants were to be given the opportunity to cross-examine witnesses and present further evidence. The Tribunal did not express any opinion on the merits of the case but ensured that the appellants could fully present their case in the remanded proceedings. All appeals were allowed by way of remand.

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