2024 (6) TMI 908 - HC - Central Excise

Ineligibility for input services credited in terms of the CENVAT Credit Rules, 2004 - credit cannot be denied unless and until the assessment made by the dealer is revised the credit at the recipient s end - sham transactions - HELD THAT - The respondent filed invoices and returns before their jurisdictional offices and paid the service tax arising out of it. The Tribunal clearly held that even in the show-cause notice, there was no allegation that the services rendered under these invoices were not falling within the ambit of Rule 2(l) of the CCR 2004. In absence of making specific allegation in the show-cause notice, the appellant cannot be permitted to make out a new case on facts while passing the final order. The invoices and returns were necessary documents which were admittedly filed before the Jurisdictional Officer. Thus, necessary formalities and compliances were made by the respondent. The impugned order shows that they took U-turn during cross-examination. In that event, if the Tribunal has disbelieved their statements, the Tribunal has taken a plausible view which does not warrant any interference by this Court. In other words, the said contention of the Tribunal is a finding of fact and does not involve any substantial question of law. Appeal dismissed.

Summary

Issues:
1. Appeal under Section 35G of the Central Excise Act, 1944 challenging CESTAT's order.
2. Allegation of sham arrangement in a tripartite settlement between Automobile Companies and Insurance Company.
3. Discrepancy between invoices/returns and actual business transactions.
4. Reliance on recorded statements of dealers and emails as evidence.
5. Disagreement on the eligibility for input services credited under CENVAT Credit Rules, 2004.
6. Dispute over denial of credit at the recipient's end.
7. Interpretation of the Tribunal's findings regarding authenticity of documents and compliance with rules.
8. Tribunal's assessment of the credibility of recorded statements and the Tribunal's view on one-sided action in tripartite settlements.
9. Applicability of judgments from other High Courts on parallel actions in similar cases.

Analysis:
The judgment involves an appeal challenging the order of CESTAT, which was filed under Section 35G of the Central Excise Act, 1944. The appellant alleged a sham arrangement in a tripartite settlement between Automobile Companies and an Insurance Company, claiming discrepancies between invoices/returns and actual business transactions. The appellant relied on recorded statements of dealers and emails to support their case, arguing that the Tribunal erred in relying solely on invoices and returns without considering this evidence.

The appellant contended that the Tribunal incorrectly allowed the assessee's appeal despite questions on input services credited under CENVAT Credit Rules, 2004. Additionally, the appellant disputed the Tribunal's decision that credit at the recipient's end cannot be denied without revising the dealer's assessment. The Tribunal's findings emphasized the authenticity of documents and compliance with rules, stating that the invoices and returns were filed before the Jurisdictional Officer, fulfilling necessary formalities.

The Tribunal's assessment of the credibility of recorded statements of dealers, noting discrepancies and 'U-turns' during cross-examination, was considered plausible. The judgment also addressed the issue of one-sided action in tripartite settlements, referencing judgments from other High Courts on the necessity of parallel actions against all parties involved. Ultimately, the Court dismissed the appeal, stating that no substantial question of law was involved, as the Tribunal's view was deemed plausible based on existing legal precedents.

In conclusion, the judgment provides a detailed analysis of the issues raised in the appeal, focusing on the evidence presented, compliance with regulations, and the interpretation of legal principles from previous judgments. The Court's decision to dismiss the appeal was based on the application of existing legal principles and the Tribunal's findings, highlighting the importance of consistent legal interpretations in similar cases.