2024 (9) TMI 176 - AT - Central Excise

Seeking to deny and recover Cenvat Credit - entire proceedings have been taken up without any proper verification and investigation and hence the demand itself is on assumptions and presumptions basis - suppression of facts or not - Extended period of Limitation. The first submission of the appellant is that while the demand is in account of 245 transactions, the investigation was taken up for only 67 transactions - HELD THAT - The allegation can sustain only on such invoices on which the investigation has taken place and non-receipt if conclusively proved. The investigation in respect of 67 invoices about 27% of the total 245 , even wherein the appellant has pointed several anomalies, cannot be generalized to simply interpolate same allegation for the balance 178 about 73% in order to make the demand. This is serious a flaw in the investigation process. Without doubt this action of the Revenue clearly vitiates the proceedings in respect of these 178 Invoices. Hence, there are no legal provision for confirmation of the demand of Rs.1,00,55,148 - appeal allowed. Demand confirmed in respect of 32 Invoices, wherein statements have been recorded from the owners of the Vehicles - HELD THAT - When the statement itself is recorded after about 1 to 5 years of the transaction, how far their statement can be relied on is doubtful. It is also on record that the appellant has sought cross-examination of many of the persons, which has not been granted by the Adjudicating authority for which he has come out with some justification. But Section 9D requires the recorded statement before the investigation officer to be once again reiterated before the Adjudicating authority for having been given without any coercion or force, before the same can be admitted as evidence. This has not bee done in this case. Normally in such cases, the matter remanded to the Adjudicating authority to produce these persons for Cross-examination - in the present case, the Statement itself was recorded much later in July to September 2013. Now asking the adjudicating authority to follow this procedure after another 11 years, will not serve any purpose, since the persons giving the statement are not from any Corporate or big companies. They were all vehicle owners and the ownership would changed several hands by now - the confirmed demand of Rs.18,69,286 set aside - appeal allowed. Demand confirmed on account of the information obtained from the Vahan Dept. - HELD THAT - The Dept. cannot come to a conclusion that the vehicle in question could not have been used for delivery of the goods. Again in respect of the vehicles which are recorded as banned vehicles , the possibility of such vehicles still being used for delivery cannot be ruled out. This leaves out a few more cases where the vehicle numbers pertain to non-transport goods. There may be a possibility that such numbers are used by vehicle owners in order to avoid payment of Road and other taxes. But no definite conclusions can be arrived at. Extended period of limitation - HELD THAT - The appellant is an assessee with the Dept. They have been taking the Cenvat Credit and also filing their Returns. It is not the case of the Dept. that any private records have been recovered towards the cash transactions. The Dept. has not brought in any evidence to the effect that any suppression has taken place from the appellant s side. Hence, the confirmed demand for the extended period is legally sustainable on account of time bar. Appeal allowed.

Summary

Issues Involved:
1. Legality of demand and recovery of Cenvat Credit for 178 invoices without investigation.
2. Validity of Cenvat denial based on statements of vehicle owners for 32 invoices.
3. Legitimacy of Cenvat denial due to discrepancies in vehicle registration for 35 invoices.
4. Sufficiency of evidence provided by the appellant regarding receipt and use of goods.
5. Applicability of extended period for issuing the Show Cause Notice (SCN).

Detailed Analysis:

1. Legality of demand and recovery of Cenvat Credit for 178 invoices without investigation:
The appellants argued that no investigation or verification was conducted for 178 out of the 245 invoices, making the demand of Rs.1,00,55,148 legally unsustainable. The tribunal agreed, noting, "The allegation can sustain only on such invoices on which the investigation has taken place and non-receipt is conclusively proved." Therefore, the demand related to these invoices was set aside.

2. Validity of Cenvat denial based on statements of vehicle owners for 32 invoices:
The appellant contended that the statements from vehicle owners were recorded 2-5 years after the transactions, making them unreliable. Additionally, the statements were not reiterated before the Adjudicating authority as required by Section 9D of the CEA 1944. The tribunal found that, "When the statement itself is recorded after about 1 to 5 years of the transaction, how far their statement can be relied on is doubtful." Consequently, the demand of Rs.18,69,286 was set aside.

3. Legitimacy of Cenvat denial due to discrepancies in vehicle registration for 35 invoices:
The tribunal found inconsistencies in the Vahan Department's records, such as vehicles being banned or no records existing. The tribunal ruled, "In some cases, the vehicles have been said to be banned. If the vehicle owner still operates the banned vehicle and delivers the goods at his risk, how is the appellant expected to know or stop the same?" Thus, the demand of Rs.19,87,697 was set aside.

4. Sufficiency of evidence provided by the appellant regarding receipt and use of goods:
The appellant provided freight vouchers, bank statements, and ledger copies as evidence of the transactions. The tribunal noted, "The purchase transaction of 5759.70 MT on payment through banking channel to the extent of Rs.14.91 crores cannot be simply brushed aside." The tribunal found that the Revenue failed to properly investigate and consider this factual evidence, leading to the conclusion that the confirmed demand was not legally sustainable.

5. Applicability of extended period for issuing the Show Cause Notice (SCN):
The appellant argued that all transactions were recorded in statutory books and monthly returns, with no evidence of suppression. The tribunal agreed, stating, "The Dept. has not brought in any evidence to the effect that any suppression has taken place from the appellant's side." Thus, the confirmed demand for the extended period was held to be time-barred.

Conclusion:
The tribunal allowed the appeals both on merits and on account of limitation, stating, "The appellant would be eligible for consequential relief, if any, as per law." The confirmed demands were set aside due to lack of thorough investigation, unreliable evidence, and the time-barred nature of the SCN.