2022 (4) TMI 730 - HC - Central Excise

Violation of the principles of natural justice - Validity of Show Cause notice - only ground raised by the petitioner for invoking Article 226 of the Constitution of India by filing the present writ petition before this Court is that, the documents sought for by the petitioner have not been supplied - HELD THAT - Since the invoice numbers have been given with the suppliers name since those suppliers have claimed to have supplied the input ie., the CRCA Scrap to the petitioner, from them those transactions could very well be verified by the petitioner. Therefore, in this case it cannot be treated that the documents sought for by the petitioner have not been furnished. Moreover, it has been made clear after investigation by the Revenue that, what is the exact raw material which they use and based on which their finished product requires such a raw material as an input claimed to have been purchased from the suppliers were required for manufacturing process itself was unearthed by the Revenue - this Court is of the considered view that, the case projected by the petitioner as if that the documents mainly relied upon by the Revenue, though had been sought for, have not been supplied to the petitioner is not factually correct and it is the case where most of the documents have been supplied to the petitioner and even with regard to the invoices sought for by the petitioner for which the Revenue has given a reply that the numbers of the invoices has been given in the annexure and the same can very well be verified by the petitioner with their suppliers. This kind of gesture shown by the respondent, in the considered view of the matter, cannot be treated as non-supply of documents and therefore, for that reason, it cannot be considered in this case that there has been a violation of principles of natural justice. Therefore, on that ground, the petitioner is not entitled to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. Petition dismissed.

Summary

Issues:
Challenge to Order in Original on grounds of violation of natural justice, judicial discipline, and constitutional provisions.

Analysis:
1. The petitioner, engaged in manufacturing SG Iron Castings, faced allegations of misusing CENVAT Credit due to discrepancies in invoices. The Revenue initiated an investigation based on audit findings, suspecting the misuse of credit by the petitioner.

2. The Revenue alleged that the petitioner procured CRCA Scrap but claimed credit based on invoices showing different materials. The investigation revealed that the petitioner predominantly used CRCA Scrap for SG Castings due to manganese content restrictions, making other types of scrap unsuitable for their products.

3. A show cause notice was issued to the petitioner, questioning the validity of availed CENVAT Credit. The Revenue contended that the goods received were not actual inputs for the final products, rendering the credit inadmissible under CENVAT Credit Rules.

4. The Revenue, after due proceedings, confirmed the demand for recovery of CENVAT Credit and imposed a penalty. The petitioner challenged this order through a writ petition, alleging a violation of natural justice principles.

5. The petitioner argued that crucial invoices from a specific period were not provided by the Revenue, hindering their defense. The petitioner opted for a writ petition instead of an appeal, citing the non-supply of essential documents as a basis for challenging the order.

6. The Court examined the contentions and documents presented. The Revenue asserted that most documents had been provided to the petitioner, and any missing invoices could be obtained from suppliers for verification.

7. The Court noted that while some invoices were not readily available with the petitioner, the suppliers' details were provided in the annexure. The Court emphasized that the petitioner could verify transactions with suppliers to substantiate their claims.

8. The Court found that the Revenue had adequately addressed the petitioner's concerns regarding document supply. It concluded that there was no violation of natural justice principles, rejecting the petitioner's argument for invoking Article 226 of the Constitution.

9. Consequently, the Court dismissed the writ petition, ruling in favor of the Revenue. The petitioner's failure to establish a breach of natural justice led to the dismissal of the petition without costs.