2017 (11) TMI 336 - AT - Central Excise

CENVAT credit - fake invoices - appellant s submission is that they were not provided documents asked for during adjudication and cross examination was also not allowed - natural justice - Held that - Though the case is prima facie against the appellant, but despite this principle of natural justice has to be complied with. I am therefore of the view that one opportunity can be given to the appellant. The adjudicating authority shall provide the documents as asked for by the appellant and also allow the cross examination of the persons wherever possible - appeal allowed by way of remand.

Summary

Issues: Alleged fraudulent Cenvat credit availed by the appellant based on invoices from registered dealers; Violation of natural justice in adjudication process.

Issue 1: Alleged fraudulent Cenvat credit availed by the appellant based on invoices from registered dealers.
The investigation revealed that the appellant was availing fraudulent Cenvat credit on invoices issued by registered dealers, namely M/s. Parmeshwari Steels, M/s. Indian Steel Company, and M/s. Jai Ambe Multi Trade Pvt Ltd. However, it was found that the goods covered under these invoices were not supplied to the appellant. Instead, Bazar scrap was purchased by the appellant. Various statements were recorded, and documents from the registered dealers were recovered to confirm the demand against the appellant. The adjudicating authority imposed penalties on the appellants based on the evidence gathered. The Commissioner(Appeals) affirmed the order, leading the appellants to approach the Tribunal.

Issue 2: Violation of natural justice in the adjudication process.
During the proceedings, the appellant argued that the lower authorities violated the principle of natural justice by basing the entire demand on statements of third parties without allowing cross-examination. The appellant requested documents for an effective defense, which were not provided to them. The appellant contended that the orders passed were in gross violation of natural justice. On the contrary, the Revenue representative reiterated the findings of the impugned order and stated that cross-examination and document provision would not serve any purpose due to a common investigation involving other cases of fraudulent Cenvat credit.

Upon careful consideration, the Tribunal noted a similar case where Cenvat credit was fraudulently availed by another party based on invoices from the same registered dealer. However, the Tribunal found that the principle of natural justice was violated in the present case as the appellant was not provided with requested documents and cross-examination was not allowed. Despite the prima facie case against the appellant, the Tribunal emphasized the importance of complying with the principle of natural justice. Consequently, the Tribunal set aside the impugned order and allowed the appeals by remanding the case to the adjudicating authority for a denovo adjudication order after ensuring the principle of natural justice is followed.