2022 (4) TMI 1615 - AT - Central Excise

Denial of CENVAT Credit - appellant have not received the inputs and taken credit only on the invoice - Manufacturer M/s Suraj has not supplied the goods to M/s Neo therefore there is no possibility of supplying of the goods by M/s Neo to the appellant - entire case was made out on the basis of statements of director and chairman of M/s Neo and M/s Suraj respectively and also of transporter - time limitation. HELD THAT - The Adjudicating Authority has rejected the retraction for one or other reason. In this case it is necessary for the adjudicating authority to allow the cross examination which is mandated under Section 9 D of Central Excise Act, 1944. By not allowing the cross examination the Learned Adjudicating Authority has violated the principles of natural justice. It is also apparent from the records that demand for the period is July 2012- Dec 2013 SCN was issued on 31.10.2017 therefore the part of the demand i.e. July 2012- October 2013 is prima facie barred by limitation being the same is beyond 5 years. The impugned order is set aside - matter remanded to the Adjudicating Authority for passing fresh order - appeal allowed by way of remand.

Summary

Issues involved: Denial of cenvat credit due to non-receipt of inputs from Manufacturer M/s Suraj, rejection of retraction by persons involved in the transaction, violation of principles of natural justice by not allowing cross-examination, demand beyond the limitation period.

Denial of Cenvat Credit:
The appellant's cenvat credit was denied on the basis that they had not received the inputs and had taken credit only on the invoice due to non-supply of goods by Manufacturer M/s Suraj to M/s Neo, thereby preventing the possibility of supplying goods to the appellant. This denial led to the issue at hand.

Retraction Rejection and Cross-Examination:
The appellant's counsel argued that the case against the appellant relied heavily on statements of directors, chairman of M/s Neo and M/s Suraj, and 3 transporters, whose retractions were not accepted by the Adjudicating Authority. The appellant requested cross-examination, which was denied by the Commissioner. The appellant contended that under Section 9D of the Central Excise Act, 1944, cross-examination should have been allowed to challenge the statements, which were the sole evidence in the case.

Limitation Period and Violation of Natural Justice:
The Adjudicating Authority's rejection of retractions without allowing cross-examination was deemed a violation of natural justice. Additionally, it was noted that the demand for the period July 2012 - Dec 2013, with the Show Cause Notice issued on 31.10.2017, included a part beyond the 5-year limitation, specifically July 2012 - October 2013, which was considered prima facie barred by limitation.

Judgment:
After considering the submissions and records, the Hon'ble Member (Judicial) set aside the impugned order and remanded the matter to the Adjudicating Authority for a fresh order. It was emphasized that the appellant should be afforded sufficient opportunity for the de novo adjudication process to ensure fairness and adherence to principles of natural justice.