2024 (2) TMI 770 - AT - Service Tax

CENVAT Credit - credit availed on the strength of bogus invoices raised by M/s Spring Vincom Pvt. Ltd. Kolkata (M/s SVPL) in contravention of Rule 2(l) and Rule 3 of CCR, 2004 - entire case of the Department is based on the statements recorded - Department has failed to make compliance of Section 9D of Central Excise Act, 1944 - levy of penalty - HELD THAT - The proceedings in question are quasi criminal in nature as there is not only the demand of the reversal of cenvat credit, but also the imposition of penalties in question, it is held that Section 9D is to be construed strictly. It is already observed to be mandatory provisions, resultantly, it is held that the statements as were recorded during investigation are not admissible into evidence. Coming to the remaining evidence on record, we observe that to prove its case, the appellant has provided thirteen work orders as were issued to M/s SVPL to seek to receive such services from M/s SVPL as are mentioned in those work orders. The rate of consideration for receiving said services is also mentioned against each work order, a tabulated description of these work orders is also recorded in the Order-in-Original. It is appellant s case that M/s SVPL has executed the aforesaid work orders during the period from December 2010 to March 2011 and there upon has raised thirteen invoices on the appellant on different dates for a total value of Rs. 19,55,61,900/- including the service tax of Rs. 1,82,61,900/- (the amount in question), the appellant has submitted the Chartered Engineer s Certificate certifying the aforesaid contention of the appellant, there is no evidence on record other than the statements which have already been held in admissible, to falsify the said Chartered Engineer s Certificate, it is held that the Adjudicating Authority below has wrongly discarded the said certificate. No other expert opinion has been obtained by the department. The said documentary evidence is held to have wrongly been rejected while giving precedents to the oral evidence. There is no other evidence produced by the department except the statements recorded during investigation apparently and admittedly none of the deponents were allowed to be cross examined by the appellants, there deposition is highly insufficient to preceed over the documentary evidence produced by the appellants. The documentary evidence produced by the appellant is sufficiently proving the element of service tax alongwith on value of services received from M/s SVPL, no question arises to deny him the credit of the said element paid. The findings in the order under challenge, are therefore, not sustainable - the impugned order is set aside - appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the admissibility of statements recorded during investigation, compliance with Section 9D of the Central Excise Act, 1944, and the sufficiency of documentary evidence to prove entitlement to Cenvat credit.

Admissibility of Statements Recorded During Investigation:
The appellant challenged the Department's case based on statements recorded, alleging non-compliance with Section 9D of the Central Excise Act, 1944. The appellant argued that without allowing cross-examination of the individuals whose statements were relied upon, the statements were not admissible as evidence. The Tribunal observed that Section 9D requires strict compliance and that statements recorded during investigation are not admissible unless the deponents are examined as witnesses before the adjudicating authority. Citing the legislative scheme's purpose to prevent coercion or undue influence, the Tribunal held that the statements in question were inadmissible.

Compliance with Section 9D of the Central Excise Act, 1944:
The Tribunal analyzed Section 9D of the Central Excise Act, 1944, which outlines the relevancy of statements made before Central Excise Officers. The Tribunal emphasized that such statements are only admissible as evidence when certain conditions are met, including the examination of the deponents as witnesses before the court. The Tribunal noted that the provision aims to safeguard against coercive practices during investigations and highlighted the importance of allowing cross-examination, as per CBEC Circular No. 1053/2/2017. Given the quasi-criminal nature of the proceedings and the mandatory nature of Section 9D, the Tribunal strictly construed the provision and deemed the recorded statements inadmissible.

Sufficiency of Documentary Evidence for Cenvat Credit Entitlement:
The appellant presented thirteen work orders issued to a service provider to receive construction-related services, supported by a Chartered Engineer's Certificate. The appellant contended that the service provider had executed the work orders and raised corresponding invoices, justifying the Cenvat credit availed. The Tribunal found the documentary evidence sufficient to establish the payment of service tax and the value of services received. In the absence of contradictory evidence or expert opinions, the Tribunal held that the Adjudicating Authority erred in rejecting the documentary evidence. Relying on legal precedents emphasizing the primacy of documentary evidence over oral testimony, the Tribunal allowed the appeal, setting aside the impugned order.