2017 (8) TMI 1101 - AT - Central Excise

CENVAT credit - fake invoices - case of Revenue is that The AIPL have not supplied the goods to the appellant but only invoices were raised - request for cross-examination denied - Natural justice - Held that - the request of the appellant for cross examination of the witnesses should have been considered and the cross examination should have been allowed. When the statements of 3rd party are relied upon by the adjudicating authority and if the person against whom the said statements are used denied those statements it is obligatory on the part of the adjudicating authority to conduct cross examination in terms of Section 9(d) of the Central Excise Act 1944. Even if the cross examination is not asked for and adjudicating authority wants to rely upon the 3rd party statements then also the said statements cannot be used unless witnesses who have given statements are cross examined - In view of this statutory provision the adjudicating authority must have allowed the cross examination of the witnesses which he failed to do so - in the present case the adjudicating authority has not followed the principles of natural justice therefore matter needs to be remanded to the adjudicating authority for passing afresh order - appeal allowed by way of remand.

Summary

Issues:
- Admissibility of Cenvat credit on invoices issued by M/s. Annapurna Impex Pvt Limited.
- Denial of Cenvat credit by lower authorities.
- Request for cross-examination of witnesses.
- Violation of principles of natural justice.
- Appeal by M/s. Star Metal & Tubes Corporation.
- Role of various individuals in the case.
- Legal precedents cited by the appellant.
- Arguments presented by both sides.

Admissibility of Cenvat Credit:
The case revolved around the appellant availing Cenvat credit on copper ingots based on invoices from M/s. Annapurna Impex Pvt Limited (AIPL). The lower authorities denied the credit, stating that AIPL did not supply the goods, only raising invoices. The appellant argued that they received goods from AIPL under duty paid invoices, which were then sent to Star Metal & Tubes Corporation, without any violation of laws. They emphasized the lack of incriminating documents or confessional statements against them.

Request for Cross-Examination:
The appellant requested cross-examination of various witnesses, including Shri. Purshottam Lal, Shri. Ashok Bafna, Shri. Arvind Jain, Shri. Jaswantlal Shah, and Shri. Kishor Bajaj. However, the adjudicating authority did not grant this request, leading to a violation of principles of natural justice. The appellant's partner denied any fraudulent credit in his statement, highlighting the importance of cross-examining witnesses when their statements are used against a party.

Violation of Natural Justice:
The Tribunal found that relying on third-party statements without allowing cross-examination violated the principles of natural justice. The adjudicating authority failed to follow statutory provisions requiring the cross-examination of witnesses when their statements were used in proceedings. Consequently, the matter was remanded to the adjudicating authority for a fresh order after conducting cross-examination of witnesses to ensure a fair process.

Appeal by M/s. Star Metal & Tubes Corporation:
M/s. Star Metal & Tubes Corporation, represented by Shri. L.V. Pai, argued that they were not involved in availing credit or paying duty but were only carrying out job work for Mars International. They contended that no admission of fraudulent credit was made by Shri. Jaswantlal Shah, the manager of SMTPL. Citing legal precedents, the appellant sought the appeal's allowance based on decisions in similar cases by the Tribunal.

Final Decision:
The Tribunal allowed the appeals by way of remand due to the adjudicating authority's failure to follow the principles of natural justice. The matter was directed to be remanded for a fresh order after conducting cross-examination of witnesses. An adjournment request for one of the appeals was also granted, and the original adjudicating authority was instructed to pass a denovo adjudication order within four months from the date of the Tribunal's order.