9911796707
TMI Blog2024 (10) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts are chargeable to excise duty. The appellant used Menthol as a raw material for the manufacture of Mentha products and availed CENVAT credit of the excise duty paid by the appellant. 3. The appellant purchased one consignment of 5400 Kgs. of Menthol (inputs) from Amarnath Industries, a manufacturer-supplier situated in Jammu, through Invoice No. 09 dated 14.05.2002. According to the appellant this was received in the factory and used for manufacture of the final product. The appellant, therefore, availed CENVAT credit of duty amounting to Rs. 4,00,101/- paid on the said inputs. 4. A show cause notice dated 20.08.2008 was issued to the appellant. This was a common show cause notice issued to as many as eight entities, including the appellant (Noticee No. 5), M/s. Amarnath Industries (Noticee No. 1) and M/s. Sharp Mint Ltd. (Noticee No. 2). The show cause notice called upon the appellant to show cause why CENVAT credit availed by the appellant on Menthol (inputs) purchased from Amarnath Industries through the Invoice dated 14.05.2005 should not be denied and recovered. The relevant paragraphs 87, 88 and 96 of the show cause notice are reproduced below: "87. The investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable steps with regard to the inputs in which they had taken the Cenvat Credit on the basis of the invoices accompanied the goods. (c) Rule 9(5) of Cenvat Credit Rule 2004 in as much as they had not taken proper care regarding the admissibility of the Cenvat credit in respect of the goods they have received." (emphasis supplied) 5. The extended period of limitation under the proviso to section 11A(1) of the Central Excise Act was also invoked. The relevant paragraph of the show cause notice dealing with this aspect is reproduced below: "It has been conclusively proved that a part manufacturing through freezing process and no manufacturing through distillation process had taken place in M/s. AL. So the receipt of Crude Mentha Oil (Shivalik) and Crude Mentha Oil by M/s SEC and M/s. NE respectively showing them as DFMO (Shivalik) and Menthol have proved the intention of the purchasers only to avail the Cenvat Credit. They have been summoned to appear to explain their stand, which they avoided and simply stated that they had received the DFMO (Shivalik) and Menthol. This avoidance to explain amounts to an intention not to disclose the fact before the investigating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was processed and paid by the department. Therefore, there was absolutely no reason for the appellant to doubt the existence of the supplier and the fact of payment of duty on the goods sold by the supplier-manufacturer to the appellant. Thus, the findings recorded by the Commissioner that the appellant had contravened the provisions of rule 9(3) of the 2004 Credit Rules by not taking reasonable steps with regard to the goods received by the appellant is vitiated; (vi) It is a settled proposition of law that if the buyer has received the goods on a valid and proper invoice and the supplier manufacturer exists, recovery cannot be effected from the buyer; (vii) The statements of various persons are not relevant and inadmissible as they failed to comply with the provisions of section 9D of the Central Excise Act and denial of cross examination of the said persons has vitiated the order. To support this contention learned counsel placed reliance upon the following decisions: (a) Sukhwant Singh vs. State of Punjab [1995 (3) TMI 468 - Supreme Court]; (b) Commissioner of Central Excise, Meerut-I vs. Parmarth Iron Pvt. Ltd. [2010 (260) E.L.T. 514 (All.)]; (c) Jindal Drugs Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the appellant was refunded/granted as self credit to Amarnath Industries. It is on the basis of the invoice issued by Amarnath Industries that CENVAT credit was claimed by the appellant of the duty paid on the raw materials purchased from Amarnath Industries. 12. Learned counsel for the appellant submitted that Amarnath Industries has been granted refunds on the basis of orders passed by the Jurisdictional Assistant Commissioner and these orders were not challenged. The CENVAT credit could not have, therefore, been denied to the appellant. 13. This submission advanced by the learned counsel for the appellant deserves to be accepted in view of the decision of the Gauhati High Court in Commissioner of C. Ex., Shillong vs. Jellalpore Tea Estate [2011 (268) E.L.T. 14 (Gau.)], wherein it was held: "14. Insofar as the present case is concerned, the prescription of law required that the order of the Assistant Commissioner passed on 29-4-2002 could be challenged only by resorting to Section 35-E of the Act. The Revenue could not initiate collateral proceedings to set aside the order dated 30-4-2002 by resorting to the enabling power under Section 11A of the Act. 15. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moved from the jurisdiction of the Excise Officer at that place and brought to Goa. Now, in Goa it will not be permissible to allow the Revenue to raise the contention that the assessee in Goa cannot claim Modvat credit in Goa because duty need not be paid outside Goa. 6. As we have observed that the assessment is allowed to be final, it would not be legal and proper to allow the Revenue to raise the question on the basis of Modvat credit. Indeed, now the payment of excise duty must be treated as valid, therefore, the claim of Modvat credit must be treated as excise duty validly paid." (emphasis supplied) 16. The same view was taken by the Bombay High Court in Commissioner of Central Excise, Pune-III vs. Ajinkya Enterprises [2013 (294) E.L.T. 203 (Bom.)]. It was held: "10. Apart from the above, in the present case, the assessment on decoiled HR/CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it is held that the assessee is entitled to refund of duty paid at the time of clearing the decoiled HR/CR coils. In these circumstances, the CESTAT following its decision in the case of Ashok Enterprises - 2008 (221) E.L.T. 586 (T), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 10. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 11. As already noticed hereinabove, sub-section (1) of Section 9D sets out the circumstances in which a statement, made and signed before a gazetted Central Excise Officer, shall be relevant for the purpose of proving the truth of the facts contained therein. If these circumstances are absent, the statement, which has been made during inquiry/investigation, before a G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof." (emphasis supplied) 22. The Commissioner found that since the departmental officers had verified the facts which had been declared by the appellant in the statutory records and the test reports also indicated that the goods would be Crude Mint Oils, the genuineness of test report conducted after receipt of the goods from Amarnath Industries, cannot be doubted and so the request for cross examination of departmental officers and other persons should not be granted. The Commissioner also observed that the case against the appellant is not only on the basis of statements of employees of Amarnath Industries, but also on circumstantial test reports and, therefore, denying the right of cross examination would not be violative of principle of natural justice. 23. These observations made by the Commissioner in the impugned order are clearly contrary to the principles enu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
