2014 (11) TMI 458 - HC - Central Excise

Waiver of pre deposit - Denial of CENVAT Credit - Bogus invoices - Whether the Appellate Tribunal erred in directing pre-deposit of 50% of demand relying upon statements of suppliers, who did not turn up for cross-examination - Held that - there is an admission by the director/its authorized representative as well as by employees pointing out that the inputs were not received under the invoices shown to them. If the appellant succeed at the final hearing in its contention that the evidence of the supplier cannot be relied upon in the absence of cross-examination, then entire demand attributable to the supplier s statement may be set aside. However, in view of statement of Director and suppliers at this prima facie stage, we see no reason to interfere with the orders of the Tribunal. - Decided against assessee.

Issues:
Challenging orders of Customs, Excise & Service Tax Appellate Tribunal under Section 35G of the Central Excise Act, 1944 regarding pre-deposit of duty and penalty based on Cenvat credit availed on inputs through alleged bogus invoices.

Analysis:
1. Admission of Appeals:
The appellant filed three appeals challenging orders of the Tribunal dated 10 September, 2012, and 8 April, 2013, under Section 35G of the Central Excise Act, 1944. The appeals questioned the requirement of pre-deposit of duty and penalty confirmed by the adjudicating authorities.

2. Substantial Question of Law:
Appeal No. 2 of 2013 pertains to the Goa Unit of the appellant and questions the Tribunal's decision to direct a pre-deposit of 50% of demand based on statements of suppliers who did not appear for cross-examination. This issue was admitted by the Goa Bench of the Court for consideration.

3. Identity of Issues:
The appeals from the appellant's factories in Silvassa and Goa were considered together as they raised similar issues regarding the denial of Cenvat credit on inputs due to alleged use of bogus invoices. The appellant's Goa Unit appeal was transferred to Bombay for consolidated adjudication.

4. Bogus Invoices Allegation:
The appellant, engaged in manufacturing M. S. Ingots in Silvassa and Goa, faced denial of Cenvat credit on inputs due to alleged use of bogus invoices. Suppliers denied supplying raw materials to the appellant, leading to confirmation of show cause notices and imposition of penalties based on statements from the appellant's Director and employees.

5. Tribunal's Orders on Pre-Deposit:
The Tribunal directed the appellant to pre-deposit varying amounts of duty demanded in each appeal. The appellant contested the reliance on supplier statements without cross-examination and argued for pre-deposit only on admitted amounts. However, the Tribunal upheld the pre-deposit orders based on prima facie evidence of non-receipt of inputs as per invoices.

6. Prima Facie Evidence and Cash Balance:
The Court found no reason to interfere with the Tribunal's orders, considering admissions by the appellant's Director and employees regarding non-receipt of inputs as per invoices. Additionally, the Tribunal noted a substantial cash balance with the appellant, further supporting the decision not to alter the impugned orders.

7. Dismissal of Appeals:
Ultimately, all three appeals were dismissed, and the deadline for depositing the amounts directed by the Tribunal was extended. The Court emphasized the importance of prima facie evidence and the appellant's financial position in upholding the Tribunal's decisions on pre-deposit requirements.

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