2019 (8) TMI 960 - AT - Central Excise

CENVAT Credit - cenvatable invoices of non ferrous metals to the manufacturers of excisable goods without physical delivery of the goods - HELD THAT - In the present case the Department has simply relied upon the information as received from DRI. The only investigation is the statement of Shri Amit Gupta Director of BCCPL. No other investigation as mentioned in the above decision got conducted. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Recovery of cenvat credit and imposition of penalties on multiple appellants.
2. Allegations of passing inadmissible cenvat credit without physical delivery of goods.
3. Confirmation of observations by adjudicating authorities.
4. Appeal against Orders-in-Original and Orders-in-Appeal.
5. Lack of supporting documents and statements from directors.
6. Cross-examination of witnesses and retraction of statements.
7. Issue of irregular availment of cenvat credit.
8. Department's reliance on information from DRI.
9. Lack of additional investigations beyond statements.

Issue 1: Recovery of Cenvat Credit and Penalties
The judgment pertains to the recovery of cenvat credit amounting to ?1,25,87,331 from the appellant, along with proposed penalties. The order-in-original confirmed this proposal, leading to appeals before the Tribunal by multiple appellants, including directors and a manager of the concerned company.

Issue 2: Passing of Inadmissible Cenvat Credit
The case involves allegations of passing inadmissible cenvat credit on non-ferrous metals without physical delivery of goods to manufacturers, including the appellant company. Specific information from Directorate General of Central Excise Intelligence implicated one of the appellants, leading to investigations and recovery of incriminating documents and unaccounted materials.

Issue 3: Confirmation by Adjudicating Authorities
Adjudicating authorities confirmed observations regarding the alleged availing of cenvat credit without physical receipt of goods by the appellant company. Penalties were imposed on co-appellants based on these findings, prompting the appeals before the Tribunal.

Issue 4: Appeals Against Orders
The appeals challenged the imposition of penalties and recovery of cenvat credit, with one appellant's appeal against the order-in-original being dismissed separately. The Tribunal addressed these grievances collectively in the present judgment.

Issue 5: Lack of Supporting Documents
The appellants argued the absence of documents or statements supporting the allegations of not supplying goods against the invoices. They contended that no inquiries were made at their end or with their customers, urging the setting aside of the orders confirming the demand and penalties.

Issue 6: Cross-Examination and Witness Statements
The Tribunal considered the lack of cross-examination of witnesses, including a retraction of statements by one witness. The case's foundation on statements without thorough investigation, as highlighted in a precedent order, influenced the Tribunal's decision to set aside the impugned orders.

Issue 7: Irregular Availment of Cenvat Credit
The Tribunal noted the department's case primarily relied on witness statements without adequate cross-examination. The lack of inquiries from the appellant's customers and absence of physical stock verification raised doubts about the irregular availment of cenvat credit, leading to the orders being overturned.

Issue 8: Department's Reliance on DRI Information
The Tribunal highlighted the Department's reliance on information from the Directorate of Revenue Intelligence (DRI) and emphasized the need for additional investigations beyond witness statements to substantiate the allegations.

Issue 9: Lack of Additional Investigations
The Tribunal underscored the necessity of conducting comprehensive investigations beyond statements to establish the veracity of allegations, echoing concerns raised in a precedent order. The decision to set aside the impugned orders was influenced by the lack of substantial evidence beyond witness statements.

The judgment by the Appellate Tribunal CESTAT New Delhi addressed multiple issues, including the recovery of cenvat credit and imposition of penalties, allegations of passing inadmissible cenvat credit, confirmation by adjudicating authorities, appeals against orders, lack of supporting documents, cross-examination of witnesses, irregular availment of cenvat credit, department's reliance on DRI information, and the necessity of additional investigations. The Tribunal's decision to set aside the impugned orders was based on the lack of substantial evidence beyond witness statements and the failure to conduct thorough investigations to substantiate the allegations.