2022 (12) TMI 5 - AT - Central Excise

Compliance with the actual user condition - whether the furnace oil supplied by M/s Nayara Energy Limited was received M/s Essar Shipping Limited and used in their four vessels as claimed by the appellant or otherwise and consequently, the actual user condition is complied with or otherwise? - violation of principles of natural justice. HELD THAT - It is found that the case involved mainly the facts that whether the goods supplied by M/s Nayara Energy Limited was received and consumed in the vessels of M/s Essar Shipping Limited. The appellant have submitted various documents which prima facie show that the goods have been delivered to all the four vessels i.e. MV Badri Prasad, MV Mahavir Prasad, MV Chandi Prasad and MV Anassa. The adjudicating authority has discarded all the documents submitted by the appellant during the adjudicating process on the ground that these documents were produced first time before the adjudicating authority and same were not available during the investigation of the case. Even the documents evidencing the payment transaction against the supply of goods was also not considered by the adjudicating authority on the flimsy ground that the same were not signed. In this fact, it is not necessary that all the documents which are allowed to be relied upon for defense of the noticee must be made available during the investigation of the case. Once, its authenticity is proved then the said documents must be considered for a fair adjudication. In the present case, the adjudicating authority without ensuring the authenticity of the documents rejected the same, therefore, same is in gross violation of principles of natural justice. Payment transaction against the supplies made by M/s Nayara Energy Limited to M/s Essar Shipping Limited - statements of payment particulars submitted by the appellant was rejected only on the ground that the said document was not signed - HELD THAT - It is surprising that it is not the statement alone which evidence the payment transaction but the same has to be verified from the books of accounts of the appellant. The adjudicating authority before rejecting such evidence must have verified the books of accounts to check the correctness of the payment transaction between supplier M/s Nayara Energy Limited and purchaser of goods M/s M/s Essar Shipping Limited. By not doing so, the adjudicating authority again violated the principles of natural justice - the matter needs to be reconsidered by the adjudicating authority, after considering all the documents submitted by the appellant whether the same was available at the time of investigation or produced during the adjudication. The adjudicating authority is free to check the correctness and authenticity of the documents produced by the appellants. The matter is remanded to the adjudicating authority for passing a fresh order after observance of principles of natural justice - appeal allowed by way of remand.

Issues:
1. Allegations of violation of actual user condition by M/s Essar Shipping Limited.
2. Adjudicating authority's confirmation of allegations without considering documentary evidence.
3. Discrepancies in the investigation and rejection of documents by the adjudicating authority.
4. Rejection of payment transaction statements on grounds of lack of signature.
5. Violation of principles of natural justice in rejecting documentary evidence.

Analysis:

Issue 1: Allegations of violation of actual user condition by M/s Essar Shipping Limited
The case revolves around the alleged violation of the actual user condition by M/s Essar Shipping Limited in the supply of furnace oil. The Directorate of Revenue Intelligence (DRI) issued a show cause notice contending that the goods cleared against SFIS licenses were diverted/sold in contravention of the Foreign Trade Policy. The central issue is whether the furnace oil supplied was received and used by Essar Shipping Limited in their vessels as claimed by the appellant.

Issue 2: Adjudicating authority's confirmation of allegations without considering documentary evidence
The appellant submitted various documents to establish that the furnace oil was delivered to the vessels of Essar Shipping Limited. However, the adjudicating authority confirmed the allegations without appreciating this evidence. The authority failed to consider crucial documents such as shipping bills, bunker delivery notes, invoices, and statements of facts which indicated the delivery and consumption of furnace oil by the vessels.

Issue 3: Discrepancies in the investigation and rejection of documents
The adjudicating authority rejected the documents submitted by the appellant during adjudication, citing that they were not available during the investigation by DRI. This rejection was deemed a violation of natural justice as the authenticity of the documents was not verified. The authority's dismissal of payment transaction statements due to lack of signature was also criticized for not verifying the transactions from the appellant's books of accounts.

Issue 4: Rejection of payment transaction statements on grounds of lack of signature
The rejection of payment transaction statements solely based on the absence of signatures was seen as unjustified. The adjudicating authority failed to verify the transactions from the appellant's books of accounts, which is essential to establish the correctness of the payment transactions between the parties involved.

Issue 5: Violation of principles of natural justice in rejecting documentary evidence
The Tribunal emphasized the importance of ensuring the authenticity of documents submitted by the appellant and criticized the adjudicating authority for rejecting evidence without proper verification. The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh decision, emphasizing the need to consider all submitted documents and verify their authenticity before reaching a conclusion.

This comprehensive analysis highlights the key legal issues, discrepancies in the adjudication process, and the Tribunal's decision to uphold principles of natural justice in the case.

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