The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) held that statements collected without following rule 9D of the Cenvat Credit Rule (CCR) are irrelevant.
M/s Bonafide Arsts Pvt Ltd., the respondent is a manufacturer of MS billets falling under Chapter Heading 720 71920 of the First Schedule of the Central Excise Tariff Act, 1985. It avails CENVAT credit on the inputs which it receives and uses in the manufacture of the final products. Based on an investigation report of the Directorate General of Central Excise Intelligence dated 17.07.2015 and an alert notice dated 05.1.2016, officers of the Central Excise Commissionerate.
Jaipur initiated enquiries from the second-stage dealer of Jaipur M/s Shree Mahalaxmi Scrap Trading Company who had supplied scrap to the respondent to ascertain the names of the first-stage dealers from whom M/s Shree Mahalaxmi purchased the goods and also the names of the manufacturers whose goods were supplied.
Statements were recorded and after completing the investigation, a show cause notice dated 13.02.2018 was issued to the respondent proposing to recover CENVAT credit of Rs. 89,91,247/- under rule 14 of the CENVAT Credit Rules, 2004 read with section 11A (4) of the Central Excise Act, 1944.
Interest was also proposed to be recovered under rule 14 of CCR read with section 11 AA of the Act. The penalty was proposed to be imposed under rule 15 (2) of CCR read with section 11AC of the Act. On appeal, the Commissioner (Appeals), by the impugned order, set aside the O-I-O.
The Revenue stated that the respondent received cenvetable invoices based on which it had taken CENVAT credit, but it had not received under the goods. It was alleged that goods were never supplied at all. The respondent explains that the goods were sent directly to their premises without first transporting them to the premises of the second-stage dealer.
Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. vs. CCE, wherein held that by sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well.
A two-member bench of Justice Dilip Gupta, President and Mr P V Subba Rao, Member ( Technical ) observed that in the absence of the circumstances specified in Section 9D(1), the statement cannot be true. Further held that “Examining the records of each of the individual companies/ firms and recording their statements can only reveal the complete truth. If such an investigation requires statements to be recorded and if revenue proposes to use such statements in the proceedings against the assessee the procedure prescribed under the section 9D has to be followed. Otherwise, such statements are not only NOT admissible but are not even relevant to the proceedings. In this case, all the statements are rendered irrelevant as the Adjudicating Authority had not followed the procedure prescribed under section 9D.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
