Custom, Excise & Service Tax Tribunal
Jain Metal Rolling Mills vs Commissioner Of Gst&Amp;Cce(Chennai ... on 11 December, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
REGIONAL BENCH - COURT NO. - III
Excise Appeal No. 40437 of 2019
(Arising out of Order-in-Appeal No. 650/2018 (CTA-I) dated 13.12.2018 passed by
the Commissioner of Central Excise (Appeals - I), Chennai)
M/s. Jain Metal Rolling Mills Appellant
No. 200, Madhavaram High Road
Chennai - 600 060.
Vs.
Commissioner of GST & Central Excise Respondent
Chennai North Commissionerate No. 26/1, Mahatma Gandhi Road Chennai - 600 034.
APPEARANCE:
Shri S. Venkatachalam, Advocate for the Appellant Shri Arul C. Durairaj, Superintendent (AR) for the Respondent CORAM Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Final Order No. 41649 / 2019 Date of Hearing: 11.12.2019 Date of Decision: 11.12.2019 Brief facts are that the appellants are engaged in manufacture of copper sheets and circles, brass sheets and circles and are registered with the Central Excise Department. Based on information to DGCEI that one M/s. Star Delta Exim P. Ltd. was issuing invoices without supply of goods, investigation was initiated against the appellant also. Show Cause Notice was issued alleging that the appellant has availed irregular CENVAT credit in respect of two invoices dated 8.11.2012 and 9.11.2012 issued by M/s. Star Delta 2 Exim P. Ltd. After due process of law, the original authority held that appellant has availed credit irregularly as per the invoices and confirmed the demand, interest and imposed penalty. The said decision was upheld by Commissioner (Appeals). Aggrieved by such order, appellant is now before the Tribunal.
2. The learned counsel Shri S. Venkatachalam appeared for the appellant. He submitted that disallowance of credit is only with respect to two invoices issued by M/s. Star Delta Exim P. Ltd. There is no evidence at all adduced by the department to show that the appellant has not received any goods in respect of these invoices. In fact, the investigation was initiated against M/s. Star Delta Exim P. Ltd. and the appellant has not been made a co-noticee in such proceedings. The department has completed the proceedings in respect of M/s. Star Delta Exim P. Ltd. and thereafter relied upon such evidence to issue the Show Cause Notice against the appellant. Though the department alleges that M/s. Star Delta Exim P. Ltd. has issued fictitious invoices without any supply of goods, the said supplier M/s. Star Delta Exim P. Ltd. has not been made a party to the proceedings initiated against appellant. So also the transporter M/s. Happy Transport has not been made a co-noticee.
3. The appellant has rightly availed credit on the goods supplied by M/s. Star Delta Exim P. Ltd. on the invoices issued by them. He referred to the raw material register to show that on the said date of receiving the goods, the appellant had only a quantity of 3050 Kgs. as stock of inputs. After receipt of the goods as per invoices, the same has been recorded in the input register. These goods were then issued for production. The department does not allege that the said 3 quantity of inputs have not been used for manufacture of finished products on which excise duty has been discharged. The statement given by Director Shri Pawan Kumar of M/s. Star Delta Exim P. Ltd. was referred to by the ld. counsel to argue that the said director has stated that fictitious invoices were issued to one M/s. Chandra Proteco Ltd. only. They have not made any mention of the present appellant's name. Further, it has been stated by the said director that goods were genuinely sold to other parties. From such statement itself it can be seen that the goods were supplied to the appellant by the disputed invoices. He referred to para 5 of the Show Cause Notice to argue that after perusing the invoices, transport documents and other materials produced by the appellant along with the reply to the Show Cause Notice, the department has entertained an observation that the availment of credit by the appellant is in order. It is further stated that the proprietor of M/s. Happy Transport deposed that he has not transported the goods alleged in the Show Cause Notice for which reason the notice has been issued to the appellant. The department has issued the Show Cause Notice on presumptions and assumptions without any evidence. Moreover, the appellant had requested for cross-examination of the director as well as other witnesses which was denied by the department stating that the appellant is trying to protract the proceedings. After investigation, the Show Cause Notice was issued with much delay after a period of more than four years and the appellant had filed reply to the Show Cause Notice within 60 days. However the personal hearing was fixed after a period of three months. Thus the department has caused delay in issuing the Show Cause Notice and conducting the 4 proceedings. The request for cross-examination stating that the appellant is trying to protract the proceedings cannot therefore accepted. The decision in the case of G. Tech Industries Vs. Union of India - 2016 (339) ELT 209 (P&H) was taken assistance to argue that without cross-examination the statements cannot be admitted as evidence. He relied upon the decision in the case of Dhakad Metal Corporation Vs. Commissioner of Central Excise - 2015 (330) ELT 561 (Tri. Ahmd.) to argue that unless there is proper evidence the department cannot deny credit availed on the invoices issued by the supplier.
4. The ld. AR Shri Arul C. Durairaj appeared for the department. He adverted to para 25 of Order-in-Original to argue that it is recorded by the original authority that there was absolutely no manufacturing activity carried out by M/s. Star Delta Exim P. Ltd. That the statement recorded would also show that invoices were issued without supply of materials. In the statements of the authorized signatories of M/s. Star Delta Exim P. Ltd., the deponents have categorically stated that invoices were issued without actual movement of goods. The payments for the invoice value had been received in their bank accounts through RTGS but the monies were returned to the concerned persons through non-banking channels after deducting their commission. The statement of the proprietor of Happy Transport also shows that the goods were not delivered as per the invoice. Thus statement gathered during the investigation throws light that the goods have not been supplied to the appellant as per the disputed invoices. He prayed that the order may not be interfered with.
5
5. Heard both sides.
6. The foremost argument put forward by the ld. counsel is that though the investigation is initiated from M/s. Star Delta Exim P. Ltd., the supplier of the goods, he has not been made a party to the present proceedings. The evidence gathered by the department in the investigation done at the end of M/s. Star Delta Exim P. Ltd. has been used to issue a Show Cause Notice to the appellant herein. The appellant cannot have any knowledge of the accounts or the activity of the supplier and would not be in a position to challenge the allegations if the said supplier is not a party to the proceedings initiated against the appellant. Further, the raw material register shows that the appellant has received the goods as per the disputed invoices. The goods have been issued for production on later dates. The department does not have a case that during the said dates the appellant did not manufacture finished goods. In the statement of Shri Pawan Kumar, director of M/s. Star Delta Exim P. Ltd. relied by the department, it is clearly stated that he was issuing fictitious invoices on commission basis to Chandra Proteco Ltd. It is also stated that to the other parties they have supplied the goods since they did not offer any commission. In para 5 of the Show Cause Notice, it is observed by the department that the appellant has furnished all documents regarding availment of credit and that it appears from the documents that the credit availed is in order. The Show Cause Notice has even then been issued merely relying upon the statement of the proprietor of Happy Transport. When the department has relied strongly on the statement of the proprietor of Happy Transport as well as that of Pawan Kumar, Director of M/s. Star Delta Exim P. Ltd., 6 they ought to have given an opportunity for cross-examination of these witnesses. I find no plausible explanation put forward by the adjudicating authority for denying the cross-examination.
7. The Hon'ble High Court of Punjab & Haryana in the case of G- Tech Industries Vs. Union of India - 2016 (339) ELT 209 (P&H) has emphasized the need for cross-examination of the witnesses when the statements are relied by the department. Following the said decision, I am of the view that denial of cross-examination is violation of principles of natural justice and statements cannot be relied or accepted as evidence to confirm the demand or deny CENVAT credit.
8. On going through the raw materials register, invoice and other documents, I find that the credit availed by the appellant is in order. There is no evidence put forward by the department to establish that appellant has availed credit on fictitious invoice. The department has failed to prove the allegations alleged in the Show Cause Notice.
9. After appreciating the facts as well as following the decisions put forward before me, I am of the view that the impugned order cannot sustain. The same is set aside. The appeal is allowed with consequential relief, if any.
(Dictated and pronounced in open court) (SULEKHA BEEVI C.S.) Member (Judicial) Rex