2023 (9) TMI 64 - AT - Central Excise

Clandestine Removal - fabrication of production records - issuance of bogus invoices without actual production and clearance of goods with an intent to claim inadmissible refund (N/N. 56/2002) /self credit of duty paid through PLA fraudulently - facilitating in availment of inadmissible CENVAT credit to their buyers fraudulently - HELD THAT - As per the allegation in the show cause notice, the investigation were undertaken by the Merrut Commissionerte and it was found that the suppliers of raw- material to the appellant were non-existent. Further, the demands have been confirmed only on the basis that there was no alternative source of electricity generation which is factually incorrect. Further, it is found that on the basis of the same investigation, the demands were confirmed against many parties and some of the decisions have been rendered by this Tribunal on the same allegations and the demands have been dropped. The issue involved in the present appeals is no more res-integra as this Tribunal as well as the Tribunal at Allahabad has consistently set-aside the demands by considering all the evidences produced before them. The impugned order passed without affording an opportunity of cross examining the witnesses in spite of the request made by the appellant for cross examination of the witnesses and in the absence of cross examination, their statements cannot be relied upon as held by the Hon ble Punjab and Haryana High Court in the case of M/S JINDAL DRUGS PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT . The impugned order is not sustainable in law - Appeal allowed.

Summary

Issues Involved:
1. Demand of Central Excise duty on the grounds of non-manufacture and fabrication of records.
2. Validity of the evidence regarding electricity generation and transportation of goods.
3. Legitimacy of the investigation and reliance on assumptions.
4. Opportunity for cross-examination of witnesses.
5. Precedent cases and consistency in Tribunal decisions.

Summary:

The present appeals challenge the impugned order dated 24.06.2016 by the Commissioner of Central Excise, Chandigarh, confirming a demand of Rs. 1,94,93,730/- along with penalty and interest, and imposing penalties on the partners of the appellant firm.

Issue 1: Demand of Central Excise duty on the grounds of non-manufacture and fabrication of records.

The investigation by the Commissionerate of Central Excise, Meerut-II, concluded that the appellant issued bogus invoices without actual production and clearance of goods, intending to fraudulently claim refunds and facilitate ineligible CENVAT credit to buyers. The adjudicating authority confirmed the demand based on the evidence gathered, indicating non-manufacturing and fabrication of records.

Issue 2: Validity of the evidence regarding electricity generation and transportation of goods.

The appellant argued that the demand was wrongly confirmed based on the absence of evidence of alternative electricity generation. The appellant provided evidence of goods being entered at the Lakhanpur Toll Post, which was not considered by the Commissioner. The Tribunal found that the department failed to produce evidence of electricity disconnection or alternative transportation of goods.

Issue 3: Legitimacy of the investigation and reliance on assumptions.

The appellant contended that the show cause notice and impugned order were based on presumptions and assumptions without proper investigation at the appellant's end. The Tribunal noted that the investigation did not conclusively prove non-manufacture, and the appellant's evidence of toll post entries and manufacturing activities was not adequately considered.

Issue 4: Opportunity for cross-examination of witnesses.

The appellant argued that the impugned order violated principles of natural justice by denying the opportunity to cross-examine witnesses whose statements were relied upon. The Tribunal agreed, citing that statements cannot be relied upon without cross-examination, as held by the Hon'ble Punjab and Haryana High Court.

Issue 5: Precedent cases and consistency in Tribunal decisions.

The appellant cited several Tribunal decisions where similar demands were set aside, and the department's appeals were dismissed by higher courts. The Tribunal found that the issue was no longer res-integra, as previous decisions consistently set aside similar demands, and no contrary appellate decisions were produced by the department.

Based on these findings, the Tribunal concluded that the impugned order was unsustainable in law and allowed the appeals, setting aside the demand and penalties.