2016 (5) TMI 676 - HC - Central Excise

Entitlement to avail Cenvat credit - Invoices issued without actually receiving the goods - Corporation diverted the duty paid brass circles/strips/sheets purchased from M/s Agarwal Metal Works Pvt. Ltd. in the open market - Held that - a perusal of the Tribunal order shows that it does not satisfy the test of a reasoned and speaking order. Further, it was noticed that the case had been booked against the respondent on the ground that the Corporation had diverted the goods as they had altered the description of goods in the invoices issued by them showing the goods supplied by the manufacturer/ supplier. It was only recorded that the revenue had failed to produce corroborative evidence to prove that the respondent had not received the goods against the invoices issued by the Corporation. The Tribunal being a final fact finding authority was required to deal with all aspects of facts and law and then record its conclusions based thereon. No legally justified reasons have been recorded by the Tribunal for dismissing the appeal of the revenue. Therefore, since the tribunal s order does not qualify being a reasoned speaking order as enunciated by the Apex Court in M/s Kranti Associates Pvt. Ltd. and another v. Sh. Masood Ahmed Khan and other 2010 (9) TMI 886 - SUPREME COURT OF INDIA , the same is set aside. - Decided in favour of revenue

Summary

Issues:
1. Delay in filing the appeal
2. Entitlement to Cenvat Credit on invoices without receiving goods
3. Contravention of Cenvat Credit Rules and liability for penalty
4. Suppression of material facts by a party

Delay in filing the appeal:
The High Court condoned a two-day delay in filing the appeal. The revenue filed an appeal under Section 35G of the Central Excise Act, 1944 against an order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The appeal raised substantial questions of law related to the entitlement to Cenvat Credit on invoices issued by a corporation without receiving the goods, contravention of Cenvat Credit Rules, and suppression of material facts by another party.

Entitlement to Cenvat Credit:
The case involved an assessee engaged in manufacturing terminals for wiring harness. The issue arose when it was found that a corporation had altered the description of goods in invoices to facilitate buyers in availing inadmissible Cenvat Credit without actually receiving the goods. The revenue sought recovery of inadmissible Cenvat Credit along with interest and penalty. The Adjudicating Authority confirmed the recovery and imposed penalties. Subsequently, the Commissioner of Central Excise (Appeals) allowed the appeal, setting aside the order of the Adjudicating Authority. The Tribunal dismissed the appeal of the revenue, upholding the order of the Commissioner.

Contravention of Cenvat Credit Rules and Penalty:
The revenue contended that the Tribunal wrongly rejected the appeal without considering relevant arguments and provisions of the law. The Tribunal's order was criticized for not being reasoned and speaking. The Tribunal's decision was based on the lack of corroborative evidence to prove that the assessee had not received the goods against the invoices issued by the corporation. The High Court found the Tribunal's order lacking in legally justified reasons and not meeting the standards set by the Apex Court. Therefore, the High Court allowed the appeal, setting aside the Tribunal's order and remitting the matter for a well-reasoned decision.

Suppression of Material Facts:
The case also involved allegations of suppression of material facts by a party with the intent to avail inadmissible Cenvat Credit. The Tribunal's decision was criticized for not adequately addressing all aspects of facts and law, leading to the High Court setting aside the order and remitting the matter for a fresh decision. The High Court emphasized the importance of reasoned and speaking orders in ensuring transparency, accountability, and fairness in decision-making processes.