2019 (4) TMI 1149 - AT - Central Excise

Short payment of duty - receipt of inputs or not - demand based on statements of the suppliers of the inputs - cross-examination not allowed - HELD THAT - Hon'ble Supreme Court in a catena of case including the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II 2015 (10) TMI 442 - SUPREME COURT has held that If the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show-Cause Notice. The matter is remanded to the adjudicating authority to allow cross-examination of the witnesses as requested by the appellants.

Summary

Issues:
- Denial of CENVAT credit and short payment of duty.
- Allegation of wrong availment of credit based on non-receipt of inputs.
- Lack of cross-examination of witnesses leading to violation of natural justice.
- Dispute regarding receipt of inputs/raw materials against multiple invoices.
- Need for remand to allow cross-examination and scrutiny of evidence.

Analysis:
The case involved appeals against an Order-in-Original passed by the Commissioner of Central Excise, Raigad, alleging the wrong availment of CENVAT credit and short payment of duty by the appellants, who were engaged in the manufacture of Ferro Aluminium Alloy products. The denial of CENVAT credit was linked to 579 invoices from 86 suppliers, including Bills of Entry for imported goods. The appellants contested the non-receipt of inputs/raw materials, emphasizing the lack of cross-examination of witnesses and violation of natural justice. They argued that certain suppliers confirmed the supply of materials, contradicting the Commissioner's findings. The Revenue, however, maintained that evidence showed the appellants used invoices for paper credit without receiving materials for manufacturing finished products.

The Tribunal deliberated on whether the appellants received inputs/raw materials against the invoices and if there was a short payment of duty. While acknowledging the importance of cross-examination per legal precedents, the Tribunal disagreed with the appellants' request to decide the case without remanding for further scrutiny. Citing the judgment of the Hon'ble Supreme Court in Andaman Timber Industries Vs. Commissioner of Central Excise, the Tribunal emphasized the need for cross-examination to establish facts. Consequently, the impugned orders were set aside, and the matter was remanded to the adjudicating authority for allowing cross-examination of witnesses as requested, keeping all issues open and ensuring a fair hearing for the appellants.

Both parties agreed on fixing a time frame for the de novo proceedings, aiming for completion within four months from the date of the order communication. This decision aimed to expedite the adjudication process and ensure timely resolution of the case, which originated in 1998. The Tribunal's ruling focused on upholding principles of natural justice, fair procedure, and thorough examination of evidence to reach a just decision regarding the denial of CENVAT credit and alleged wrong availment of credit by the appellants.