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2024 (12) TMI 73 - AT - Central ExciseCENVAT Credit - availment of credit based on forged invoices without getting material - rejection of cross-examination of witnesses - violation of principles of natural justice - HELD THAT - This Tribunal in the case of M/s Mittal Ceramics 2024 (11) TMI 397 - CESTAT CHANDIGARH arising out of the same investigation, has remanded the matter back to the adjudicating authority for a fresh decision after affording opportunity of cross-examination of the material witnesses after relying upon the decision of the Hon ble Punjab Haryana High Court in the case of Jindal Drugs Pvt. Ltd. Vs UOI 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT as well as by this Tribunal in the case of M/s Lauls Ltd. 2023 (7) TMI 1113 - CESTAT CHANDIGARH and M/s Tibrewala Industries (P) Limited 2023 (7) TMI 1112 - CESTAT CHANDIGARH wherein it was held that the cross-examination of witnesses whose statements were relied upon by the Revenue to make out a case against the assessee has to be allowed. By following the ratio of the above said decisions, the impugned orders are not sustainable and therefore, the same is set aside and the cases remanded back to the Adjudicating Authority for a fresh decision after affording opportunity of cross-examination of the material witnesses and by following the procedure as prescribed in Section 9D of the Central Excise Act. The appellants are directed to cooperate with the Adjudicating Authority for a speedy disposal of the case - appeals are allowed by way of remand.
Issues Involved:
1. Whether the appellants were entitled to CENVAT credit based on the invoices in question. 2. Whether the rejection of cross-examination of witnesses by the adjudicating authority was justified. 3. Whether the impugned orders by the Commissioner (Appeals) were sustainable in law. Detailed Analysis: 1. Entitlement to CENVAT Credit: The primary issue revolves around the allegation that the appellants availed CENVAT credit against forged invoices without actual receipt of material. The investigation conducted by DGGI/DGGSTI revealed that M/s Aryan Enterprises and M/s Labh Hi-Tech Metal, both registered as Central Excise dealers, were involved in fraudulently passing on CENVAT credit of Excise Duty by issuing fake dealer's bills. The appellants contended that they received inputs based on valid invoices and physically received the materials, which were used in manufacturing goods cleared on payment of duty. However, the adjudicating authority disallowed the entire CENVAT credit of Rs. 26,55,997/- and confirmed the demand for Central Excise Duty along with interest and an equal penalty. 2. Rejection of Cross-Examination: The appellants argued that the case against them was built on statements from key individuals, and they requested cross-examination of these witnesses to challenge the veracity of the statements. The adjudicating authority and the Commissioner (Appeals) denied this request, citing a Supreme Court judgment in Kanungo & Co. Vs Collector of Customs, which was deemed not applicable post the introduction of Section 9D of the Central Excise Act. The Tribunal highlighted that the jurisdictional High Court in Jindal Drugs Pvt. Ltd. Vs UOI emphasized the mandatory nature of allowing cross-examination of material witnesses. The Tribunal found that denying cross-examination violated principles of natural justice and rendered the order a nullity. 3. Sustainability of the Impugned Orders: The Tribunal noted that the Commissioner (Appeals) merely reiterated the allegations and grounds from the Show Cause Notice and Order-in-Original without addressing the appellants' contentions adequately. The Tribunal referred to its own decisions in similar cases, such as M/s Lauls Ltd. and Tibrewala Industries (P) Ltd., where it was held that not allowing cross-examination vitiates the proceedings. Consequently, the impugned orders were deemed unsustainable. Conclusion: The Tribunal set aside the impugned orders and remanded the cases back to the Adjudicating Authority for a fresh decision. It directed that the appellants be afforded the opportunity to cross-examine material witnesses, in accordance with the procedure prescribed in Section 9D of the Central Excise Act. The appeals were allowed by way of remand, emphasizing the need for adherence to principles of natural justice and procedural fairness.
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