2015 (11) TMI 663 - AT - Central Excise

Denial of CENVAT Credit - Issue of invoices without actual supply of goods - Held that - Material which shown to have been cleared under the bill of entry have not been received by the M/s. Nakoda Trading Corporation. Therefore M/s. Nakoda Trading Corporation could not have passed on credit of CVD paid on material which has not been sold to appellant. However, it is observed that no much investigation has been carried out regarding supply of goods from M/s. Nakoda Trading Corporation to the appellant. The appellant has produced all the records to establish that irrespective of any discrepancy at stage of transportation of the goods from ICD Tughlakabad to their supplier but the appellant has received material may not be same material which was cleared from ICD Tughlakabad. - If the appellant has received material, statement of Shri. Ugamraj Jain, who stated that material has not been delivered to the appellant, his cross examination should be allowed. I am therefore of the view that there is contradiction between entire facts as appeared from the records of the appellant and the facts stated by Shri. Ugamraj Jain, therefore cross examination should be allowed. The adjudicating authority as well as first appellate authority irrespective of any conclusion must consider the records of the appellant which was failed to do so. In view of the above discussions, I am of the view that adjudicating authority has violated principle of natural justice inasmuch as not considered request of the appellant for cross examination of Shri. Ugamraj Jain and also in not considering all the documents of the appellant. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Denial of Cenvat Credit based on non-receipt of goods by the supplier.
2. Lack of investigation regarding the supply of goods from the supplier to the appellant.
3. Violation of principles of natural justice by not allowing cross-examination and considering all documents.

Analysis:
1. The case involved appeals against an order where the denial of Cenvat Credit to the appellant was upheld due to non-receipt of goods by the supplier, M/s. Nakoda Trading Corporation. The investigation revealed discrepancies in the delivery of goods from ICD Tughlakabad to the supplier, leading to the denial of credit. The appellant contended that although goods were not received by the supplier, they had received inputs under registered dealer's invoices and had provided evidence of payment and usage in production. The appellant argued for cross-examination of a witness and emphasized the need to consider all documents. The Tribunal found a lack of investigation into the supply of goods to the appellant and remanded the matter for further examination, highlighting the violation of natural justice in not allowing cross-examination and document consideration.

2. The Tribunal noted that while the non-receipt of goods by the supplier was established, insufficient investigation was conducted regarding the supply of goods from the supplier to the appellant. The appellant had presented records indicating receipt, payment, and usage of materials, suggesting that they had received goods, albeit possibly different from those cleared from ICD Tughlakabad. The Tribunal emphasized the importance of examining the supply of goods to the appellant based on the available records. Cross-examination of a witness was deemed necessary to address contradictions between the appellant's records and the witness's statement, underscoring the need for a comprehensive evaluation of all evidence.

3. The Tribunal criticized the lower authorities for not allowing cross-examination and disregarding the appellant's documents, highlighting a violation of natural justice. The adjudicating authority was instructed to reconsider the case, permit cross-examination, and thoroughly review all appellant records before issuing a fresh order. The Tribunal emphasized the independence of the adjudicating authority's decision-making process and directed completion of the denovo adjudication within three months, keeping all issues open, including limitation. The appellants were instructed to cooperate in the process, and the appeals were disposed of by remanding the case to the original authority for further examination.