2018 (4) TMI 832 - AT - Central Excise

CENVAT Credit - rejected goods - Rule 16 (1) and (2) of Central Excise Rules, 2002 - entire case of the Revenue is based upon the statements of the appellant s buyers, who have returned the attachments to the appellant - Held that - As the Revenue has exclusively relied upon the statements of various purchasers, it is felt that their cross examination was necessary so as to test the veracity of the said statement, especially when the appellants have maintained all the records including filing of D-3 returns and entering the goods in their statutory records. Hon ble Punjab & Haryana High Court in the case of Jindal Drugs Pvt. Ltd. vs. Union of India 2016 (6) TMI 956 - PUNJAB & HARYANA HIGH COURT held that statements cannot be relied upon straight way by the Adjudicating Authority, without following the procedure prescribed in Section 9D of the Central Excise Act. The deponent of various statements were required to be produced for their cross examination as also examination in chief for which purpose the matter is being remanded to the Original Adjudicating Authority - appeal allowed by way of remand.

Summary

Issues:
1. Availment of Cenvat credit on returned goods under Rule 16 of Central Excise Rules, 2002.
2. Reliance on statements of buyers without cross-examination.
3. Applicability of legal precedents regarding reliance on statements.

Analysis:
1. The case involved the appellant availing Cenvat credit on Diamond Impregnated Segments & Circular Saw Blades under Rule 16 of Central Excise Rules, 2002. The Central Excise Officers alleged that the goods returned by buyers were either short received or reduced to scrap, not qualifying for credit. The adjudicating authority confirmed a demand of ?8,94,691/-, imposing penalties under Rule 14 of Cenvat Credit Rules, 2004 and Section 11AC of the Central Excise Act, 1994.

2. The Commissioner (Appeals) upheld the decision, leading to the present appeal. The appellate tribunal noted that the Revenue's case heavily relied on statements of buyers without allowing cross-examination by the appellant. The tribunal emphasized the necessity of testing the veracity of such statements through cross-examination, citing legal precedents emphasizing the importance of following procedural requirements before relying on statements against an assessee.

3. Referring to judgments like Jindal Drugs Pvt. Ltd. vs. Union of India, Basudev Garg vs. CC, Mahek Glazes Pvt. Ltd. vs. Union of India, and Andaman Timber Industries vs. CCE, Kolkata - II, the tribunal emphasized the need for producing deponents for cross-examination to ensure fairness in the adjudication process. Consequently, the tribunal remanded the matter to the Original Adjudicating Authority for proper examination and cross-examination of the deponents. The appeal was disposed of accordingly on 04/04/2018.