2011 (12) TMI 440 - AT - Central Excise

Availment of fraudulent Cenvat credit - Credit of duty paid on copper ingots which will account for about 12% by weight of the products manufactured by them whereas for manufacturing stainless steel copper is needed to a maximum extent of 2% or so - Held that - The appellants have been asking for inspection of the investigation file also. The investigating authority has refused it. This gives rise for an argument that there is something in the investigation file which is favourable to the appellant. It may be noted that after Right to Information Act has been enacted there is hardly anything available in a government file which cannot be disclosed. So the adjudicating authority may note that any information that cannot be denied under provisions of the RTI Act cannot be refused to an appellant who is being proceeded against. So if the request is being refused reasons should be recorded - The impugned order is set aside and the matter is remanded to the adjudicating authority for de novo adjudication - Decided in favour of assessee.

Summary

Issues:
Fraudulent Cenvat credit on copper ingots, Compliance with principles of natural justice, Supply of relied upon documents, Violation of Rule 24A of Central Excise Rules, Delaying tactics by the appellant, Evasion of duty suspicion, Guidelines for natural justice compliance, Return of seized records, Inspection of investigation file, De novo adjudication.

Analysis:
1. Fraudulent Cenvat credit on copper ingots: The appellants, manufacturers of stainless steel and alloy steel ingots, were accused of taking fraudulent Cenvat credit on copper ingots not used in their final products. Revenue issued a show cause notice for recovery of Rs. 2,57,94,584/- along with interest and penalties for the period 31-12-2004 to 25-2-2008.

2. Compliance with principles of natural justice: The Tribunal found the impugned order was passed without complying with principles of natural justice. Therefore, the requirement of pre-deposit of dues was waived to hear the appeal and proceed with its disposal.

3. Supply of relied upon documents: The appellants argued that despite repeated requests, not all relied upon documents were supplied to them. They highlighted the non-compliance with Rule 24A of the Central Excise Rules, stating that documents recovered from their premises were not returned even after the show cause notice was issued.

4. Violation of Rule 24A of Central Excise Rules: The Tribunal noted that the Revenue officers were not willing to comply with Rule 24A of the Central Excise Rules, leading to a lack of access to essential documents for the appellants to furnish a timely reply. This was seen as a violation of natural justice principles.

5. Delaying tactics by the appellant: The Revenue contended that the appellants were deliberately adopting delaying tactics by continuously requesting more documents and not furnishing a reply. However, the Tribunal observed that the appellants' requests were justified due to the non-compliance with Rule 24A by the adjudicating authority.

6. Evasion of duty suspicion: The facts presented in the show cause notice raised suspicions of substantial duty evasion by the appellant. The Tribunal emphasized the need for Revenue to proceed systematically and promptly in such cases to ensure effective adjudication proceedings.

7. Guidelines for natural justice compliance: Specific guidelines were laid down for complying with principles of natural justice. These included furnishing all relied upon documents, returning seized records, informing about tested samples, and allowing inspection of the investigation file.

8. De novo adjudication: The impugned order was set aside, and the matter was remanded to the adjudicating authority for de novo adjudication after ensuring compliance with the prescribed guidelines. The appellants were given two months to furnish a reply following the compliance steps.

9. Conclusion: The Tribunal disposed of both the stay petition and appeal, emphasizing the importance of adhering to natural justice principles and ensuring a fair and transparent adjudication process.

Judgment Delivery: The operative portion of the judgment was pronounced in Court on 9-12-2011 by the Tribunal.