2023 (3) TMI 690 - AT - Central Excise

Maintainability of the appeal - validity of review order was signed separately by the two members of the Committee of Commissioners - It is submitted that the review order is bad as there is no formation of opinion in terms of section 35B(2) of CEA - CENVAT Credit - passing on the CENVAT Credit to manufacturing units of M.S. Ingots (either directly or through second stage dealers) on the basis of Central excise invoices issued by some non- existing/existing manufacturers - Opportunity of cross-examination not granted - principles of natural justice - HELD THAT - Though at the time of the hearing of the appeal the counsel for the respondent had chosen not to argue this point, however we would like to briefly address this issue as the same stands concluded by the decision of the Larger Bench of the Delhi High Court in COMMISSIONER OF SERVICE TAX VERSUS JAPAN AIRLINES INTERNATIONAL CO. LTD. 2015 (7) TMI 824 - DELHI HIGH COURT . The issue raised therein was identical and the Court concluded that the decision rendered by the Committee of Commissioner is an administrative function and, therefore, a meeting or a consultation is not mandatory so long as each member of the Committee has the requisite material placed before him. It was further observed that the Tribunal while acting as an appellate authority has no jurisdiction to strike down a decision taken by the Committee of Commissioners on the administrative side and the only requirement is to ensure that there is a decision of the Committee of Commissioners to institute an appeal - The objection taken by the respondent in this regard is unsustainable and needs to be rejected. The relied upon documents in the show cause notice are mainly the statements of the manufacturers and dealers including the Director and General Manager of the assessee company which were recorded during the course of investigation - during the adjudication proceedings the assessee requested for cross examination of the persons who made these statements, however, the same was rejected by the adjudicating authority as according to him no evidence has been used against the assessee behind their back as the Director and the General Manager was given ample opportunity to examine the evidences corroborated by the statements recorded by the DGCEI and it is only after perusing the statements placed before them that they gave their testimony and further admitted the facts of wrongly availing the CENVAT credit. In fact they reversed the CENVAT credit of Rs 2,03,000/- and also assured to pay the remaining amount towards the CENVAT credit. The adjudicating authority, therefore concluded that principles of natural justice have been satisfied. In the decision of High Court of Gujarat in COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD - II VERSUS GUJARAT CYPROMET LTD. 2013 (7) TMI 245 - GUJARAT HIGH COURT the revenue had challenged the order of the Tribunal remanding the matter back to the adjudicating authority as no opportunity of cross examination was granted. Thus, in the interest of justice it would be appropriate to remand the matter before the adjudicating authority to grant necessary opportunity in compliance with the provisions of Section 9D of CEA to the respondent to cross examine the witnesses relied upon by the revenue - appeal disposed of by way of remand to the original authority.

Summary

Issues Involved:
1. Maintainability of the appeal.
2. Merits of the matter regarding inadmissible CENVAT credit.
3. Violation of principles of natural justice due to denial of cross-examination.
4. Time-barred demand and liability of manufacturers and suppliers.

Summary:

1. Maintainability of the Appeal:
The respondent raised a preliminary objection regarding the maintainability of the appeal, arguing that the review order was signed separately by the two members of the Committee of Commissioners, which is against Section 35B(2) of the CEA. However, the Tribunal rejected this objection, citing the decision of the Larger Bench of the Delhi High Court in Commissioner of Service Tax Vs Japan Airlines [2015(7) TMI 824], which held that the decision rendered by the Committee of Commissioners is an administrative function and does not require a meeting or consultation.

2. Merits of the Matter:
The case involved an investigation by the DGCEI revealing that certain manufacturers and dealers were non-existent and were issuing fake invoices to pass on CENVAT credit. The adjudicating authority found that the assessee company availed inadmissible CENVAT credit fraudulently. The Commissioner (Appeals) allowed the appeal filed by the assessee, which was challenged by the revenue in the present appeal before the Tribunal. The revenue argued that the Commissioner (Appeals) erred in allowing the credit based on fake invoices and relied on the statements of the Director and General Manager of the assessee company, who admitted to availing the credit wrongly.

3. Violation of Principles of Natural Justice:
The respondent contended that the adjudicating authority violated the principles of natural justice by not granting the opportunity to cross-examine the witnesses whose statements were relied upon. The Tribunal agreed, citing Section 9D of the Central Excise Act and various judgments, including Andaman Timber Industries Vs. CCE, Kolkata [2015(324) ELT 641], which held that denial of cross-examination is a serious flaw. The Tribunal decided to remand the matter back to the adjudicating authority to grant the necessary opportunity for cross-examination.

4. Time-Barred Demand and Liability:
The respondent raised cross-objections, arguing that the Commissioner (Appeals) did not address the issue of the demand being time-barred and that if no fraud was found, the demand should be against the manufacturers and suppliers. The Tribunal did not record any findings on these issues and left them open for the original authority to address upon remand.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter back to the original authority for re-adjudication, ensuring compliance with Section 9D of the CEA and allowing cross-examination of witnesses. The Miscellaneous Application filed by the appellant was dismissed as infructuous. The appeal was disposed of by way of remand without expressing any opinion on the factual matrix of the case.