2016 (3) TMI 96 - AT - Central Excise

Denial of CENVAT credit - Cenvat Credit on the basis of the invoices issued by M/s. R. K. Enterprises - Held that - In this case, it is no doubt, case has been booked on the statement of Shri R. K. Gupta proprietor of M/s. R. K. Enterprises who initially stated that he has merely issued the cenvitable invoices, on the basis of which respondent has taken the credit. In fact the respondent used to give payment of these invoices through cheques and equivalent amount of cash has been returned. It is also a fact on record an investigation was conducted at the end of the respondent also wherein nothing incrimatory was found. Further, from the proceedings it is revealed that the respondent sought cross examination of Shri R. K. Gupta as well as transporters of the goods but Adjudicating Authority inspite of giving cross examination has gave its finding that charges has been alleged on the basis of corroborative evidence, therefore, no cross examination is to be given. In fact, the statement of Shri R. K. Gupta has been retracted on the first available opportunity before chief metropolitan Magistrate. These things have not been considered by the adjudicating authority while adjudicating the matter. As one of the transporter states that he is having three tempos and when these tempos used to transport the goods either he personally drives the tempos or he will be accompanying the driver of the tempo. No prudent men can drive three tempos at a moment. Moreover, he cannot be present in three tempos at a time. This statement has been relied upon by the Adjudicating Authority in support his case of non receipt of the goods by the respondent. As no cross examination has been awarded to the respondent the Ld. Commissioner (A) has rightly set aside the proceedings initiated in the show cause notice impugned. - Decided against revenue

Summary

Issues:
Appeal against dropped demand by Commissioner (A) - Allegation of receiving only cenvitable invoices - Denial of Cenvat Credit - Adjudication of duty, interest, and penalty - Setting aside of proceedings by Ld. Commissioner (A) - Cross-examination of witnesses - Reliance on corroborative evidence - Transporter's statement as evidence - Upholding of impugned order.

Analysis:
The judgment pertains to an appeal by the Revenue against an order where the Commissioner (A) had dropped the demand against the respondent, a manufacturer of Zinc Oxide. The case originated from an investigation at the supplier's end, M/s. R. K. Enterprise, owned by Shri R. K. Gupta, alleging that the respondent was receiving only cenvitable invoices, not the actual goods. Subsequently, a show cause notice was issued to deny Cenvat Credit based on these invoices, leading to the demand of duty, interest, and penalty. The Ld. Commissioner (A) set aside the proceedings against the respondent, prompting the Revenue's appeal.

During the proceedings, the Ld. AR argued that there was enough corroborative evidence, including statements from transporters and Shri R. K. Gupta, to support the case against the respondent. However, upon examination, it was revealed that while Shri R. K. Gupta initially admitted to issuing cenvitable invoices, the respondent had made payments through cheques, and no incriminating evidence was found during an investigation at the respondent's premises. The respondent had requested cross-examination of witnesses, which was denied by the Adjudicating Authority, despite Shri R. K. Gupta retracting his statement before the Magistrate.

The judgment highlighted discrepancies in the evidence, particularly regarding the transporter's statement, where it was noted that one person could not physically drive three tempos simultaneously, casting doubt on the reliability of the evidence used against the respondent. As the Adjudicating Authority failed to consider crucial aspects and denied the respondent the opportunity for cross-examination, the Ld. Commissioner (A) rightly set aside the proceedings, leading to the upholding of the impugned order by the Tribunal. The appeal by the Revenue was dismissed, emphasizing the lack of merit in their case.

In conclusion, the judgment underscores the importance of considering all evidence, providing opportunities for cross-examination, and ensuring the reliability of corroborative evidence in adjudicating matters related to Cenvat Credit and duty demands, ultimately resulting in the dismissal of the Revenue's appeal.