2018 (9) TMI 907 - AT - Central Excise

CENVAT Credit - case of appellant is that the impugned order is contrary to the binding judicial precedent and the same is non-speaking and also in violation of the principles of nature justice being passed without considering the submissions made by the appellants - Held that - There is no lapse and violation of any CENVAT Credit Rules in purchasing the material from the registered dealer as the appellants have maintained statutory records and the payments have been made to the suppliers through banking channels and the appellants have paid the duty on the final product which has not been disputed by the department. The cases of the appellants are squarely covered by the decision of the Division Bench of this Tribunal in the case of Shri VK Bhuraria and others 2018 (5) TMI 818 - CESTAT NEW DELHI , where it was held that Department has made out a case of irregular availment of cenvat credit mainly based on the statement of Shri Amit Gupta and transporters, but no cross examination of the witnesses was provided to the appellants. One of the witnesses has retracted his earlier statement. Surprisingly, in the instant case, no inquiry was made from the customers of the appellant company, credit remains allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Appeal against the common impugned order passed by the Commissioner (Appeals) upholding the Order-in-Original and rejecting three appeals.
2. Allegations of passing inadmissible CENVAT credit by registered dealers to manufacturers and dealers without delivering goods.
3. Investigation revealing passing of CENVAT credit to appellants based on invoices from other companies.
4. Ex-parte order by adjudicating authority without supplying relied upon documents or allowing cross-examination.
5. Appellants' contention of no connivance with importer or supplier, proper record-keeping, and compliance with CENVAT Credit Rules.
6. Applicability of judicial precedents and Division Bench decisions in similar cases.

Detailed analysis:
1. The appellants challenged the impugned order that confirmed demand and penalties against them. The investigations revealed the passing of CENVAT credit to the appellants based on invoices from other companies involved in fraudulent activities. The adjudicating authority confirmed the demand without supplying relied upon documents or allowing cross-examination, leading to the appellants' contention of procedural violations and lack of consideration of submissions.

2. The appellants argued that they had no involvement with the fraudulent activities and maintained proper records, including statutory records and payments through banking channels. They contended that discrepancies at the third party end should not affect their CENVAT credit eligibility. The appellants cited judicial precedents supporting their case and highlighted the lack of serious violations against them in the show cause notice.

3. The Tribunal found that the impugned order violated statutory provisions and that decisions relied upon by the appellants were applicable. The Tribunal noted that the appellants had not violated CENVAT Credit Rules, maintained proper records, and paid duties on final products. The Tribunal also observed that the allegations primarily targeted another individual not directly connected to the appellants.

4. Relying on a Division Bench decision, the Tribunal set aside the impugned order, allowing all three appeals filed by the appellants. The Tribunal concluded that the appellants were not liable for the demand and penalties imposed, providing them with consequential relief.

5. The Tribunal's decision was based on the lack of evidence implicating the appellants in fraudulent activities, proper compliance with CENVAT Credit Rules, and the absence of serious violations on their part. The Division Bench decision and subsequent reliance by the Commissioner (Appeals) supported the Tribunal's ruling in favor of the appellants.