10 June 2024


Customs, Excise and Service Tax Appellate Tribunal

Trishul Metal Industries Ltd. Vs. Commissioner Of Central Goods And Service Tax




There has to be some concrete evidence which would show clandestine manufacture of goods

The Appellants are engaged in the manufacture of copper ingots. A show cause notice was served upon the Appellant proposing the recovery of amount of CENVAT Credit along with the interest of the proportionate penalties upon the Appellants company as well its Managing Director and the authorised signatory. The said proposal was initially confirmed vide Order-in-Original. The appeals thereof have been rejected vide the order under challenge. Being aggrieved the Appellant is before this Tribunal.

The confirmation of demand against the Appellant has been confirmed based on the third party evidence. Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence. It is well settled law that, there has to be some concrete evidence which would show clandestine manufacture of goods, as was reiterated by Tribunal, Delhi in the case of Commissioner of Central Excise & Service Tax, Raipur vs. P.D. Industries Pvt. Ltd.

The document recovered from the Appellant premises shows that, the Appellant had maintained a record about the invoices being received from various companies whereupon the Appellant has availed the Cenvat Credit. Merely because the company issuing invoice was found non-existent, the Appellant could not be denied the availment of Cenvat Credit thereupon unless and until his involvement in terms of his knowledge about such non-existence and about the invoice to be bogus is not proved on record. Otherwise also, there is no denial that, the Appellant has cleared his final product on payment of duty. The allegations based on the statements given by other manufacturers, first or second stage dealers or even by the transporters cannot be read against the Appellant.

It becomes clear that, entire case of the Department is on the basis of statements of witnesses who were never allowed to be cross examined by the present Appellants. There is no other material with the Revenue to justify its findings against the appellants. Withholding the opportunity to cross examination to the Appellants definitely amounts to violation of principles of natural justice and the statutory mandate of section 9D of Central Excise Act, 1944 which becomes another reason for nullifying the impugned order. The procedure prescribed under section 9 D of Central Excise Act is required to be scrupulously followed as was held by Hon'ble Delhi High Court in the case of J K Cigarettes Ltd. vs. CCE. Apex Court has also in the case of Andaman Timber Industries vs. Commissioner of C. Ex., Kolkata-II has held that, non-compliance of the provisions of section 9D and section 33 of Central Excise Act, 1944 nullify the order confirmed in demand. The order under challenge is set aside. Appeals stand allowed.

Tags : Demand Confirmation Legality

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