2023 (10) TMI 524 - AT - Central Excise

CENVAT Credit - Allegation of non-receipt of material - reliance placed upon the statements of directors - cross examination of witnesses - contravention of Section 9D of Central Excise Act - HELD THAT - In the first instance the impugned order is bad in law because the whole case was built only on the statement of Mr. K.P. Khemka and Mr. Rupesh Bansal and Mr. Yashpal Sharma and no opportunity of cross examination was provided to the appellant despite specific request. The Ld. Commissioner (Appeals) has not considered the evidence namely RG-23C part I and the bank statements showing payment to transporter and the supplier. Further, department has not been able to bring any independent evidence to prove the allegations of non-receipt of goods against the appellant. Besides this, statement of Shri Sushil Jain dated 09.02.2009 and Shri Suresh Sharma, the authorized representative of the transporter has been rejected without any basis. In the case of M/S NIDHI METAL AUTO COMPONENTS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-IV 2015 (4) TMI 649 - CESTAT NEW DELHI and S.K. Foils Ltd. v. Commissioner of Central Excise, Rohtak 2014 (3) TMI 412 - CESTAT NEW DELHI where the manufacturer and first stage dealer were same, relief was granted to the assessee on the observation that allegation had been made on basis of statement of manufacturer, dealer/ supplier of invoice and there is no discrepancy in the invoice and payment has been made through cheque. The appellant has regularly filed the statutory returns on monthly basis and the fact of clearance of goods and availment of credit was duly reflected in the returns but the same has not been examined by the authorities below. The impugned order is not sustainable in law - Appeal allowed.

Summary

Issues:
The issues involved in this case are the confirmation of demand of Cenvat Credit, imposition of penalties under various rules, and the consideration of evidence and statements in the adjudication process.

Confirmation of Demand of Cenvat Credit:
The appellants were engaged in the manufacture of Steel Tubes and were availing Cenvat Credit in respect of duty paid on inputs. Certain cenvatable invoices were recovered from the appellant's premises, which were received from M/s Steel Mongers. However, investigations revealed that the goods were not manufactured and dispatched to the appellant by the entities mentioned in the invoices. The appellant submitted evidence such as goods receipt, daily stock account, and bank statements to prove the delivery of goods.

Imposition of Penalties:
A show cause notice was issued to the appellant based on the allegations. The adjudicating authority confirmed the demand along with penalties, which were upheld by the Commissioner (Appeals). The appellant argued that penalties should not be imposed as they regularly filed statutory returns, reflecting the clearance of goods and credit availed, with no intention to evade payment of duty.

Consideration of Evidence and Statements:
The appellant contended that the impugned orders were not sustainable as they were passed without proper consideration of evidence and decisions cited. They argued that the statements made by relevant individuals were not considered accurately, and the opportunity for cross-examination was denied. The appellant also highlighted that the authorities did not provide independent evidence to prove the allegations of non-receipt of goods. The appellant's submissions were supported by legal precedents emphasizing the importance of following due process and allowing cross-examination.

Conclusion:
After considering the submissions and evidence, it was found that the impugned order was not sustainable in law. The case was primarily built on statements without providing the appellant with the opportunity for cross-examination. The Commissioner (Appeals) did not adequately consider crucial evidence and rejected statements without sufficient basis. Additionally, the regular filing of statutory returns by the appellant was not taken into account. Ultimately, the impugned order was set aside, and both appeals were allowed.