In a recent ruling, the Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) directed a re-trial in the CENVAT credit case involving alleged fake invoices and misuse of excise duty claims and ordered cross-examination of material evidence under Section 9D of the Central Excise Act, 1944.
M/s Mittal Ceramics and its partner, Shri Karan Goel, both appellants, challenged an order dated 25-07-2023 from the Commissioner (Appeals), CGST, in which the order upheld the findings of the adjudicating authority, which had confirmed the recovery of inadmissible Cenvat credit amounting to Rs. 5,20,512 along with penalties imposed on both appellants.
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In this case, during the investigation proceedings carried out by the Directorate General of Goods and Services Tax Intelligence (DGGI) officers, it was found out that M/s Labh Hi-Tech Metal, run by Vishal Batta in the name of an employee, had issued invoices for duty-paid MS scrap that was never actually supplied. The source manufacturer, M/s Gopal Industries, denied issuance of any invoices for such transactions, which led the authorities to believe that the credit taken by M/s Mittal Ceramics was fraudulent.
The adjudicating authority confirmed the demand for inadmissible Cenvat credit of Rs 5,20,512 under Rule 14 of the Cenvat Credit Rules, 2004, with interest under Section 11AA of the Central Excise Act, 1944. Penalties of Rs 5,20,512 each were imposed on appellant No.1 under Rule 15(2) read with Section 11AC and on appellant No.2 under Rule 26 of the Central Excise Rules, 2002.
The counsel on behalf of the appellant contended that the appellant prayed for cross-examination of those witnesses on the basis of which the entire case has been built but that cross-examination was refused by both authorities without any cogent reason.
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The CESTAT found that similar issues were decided by the Punjab & Haryana High Court in the Jindal Drugs Pvt. Ltd. case and by the Tribunal in the cases of M/s Lauls Ltd. and M/s Tibrewala Industries (P) Limited. These cases held that the Revenue must allow the cross-examination of witnesses.
The bench set aside the impugned order and remanded the cases to the adjudicating authority for a fresh decision, ensuring cross-examination of witnesses as per Section 9D of the Central Excise Act, 1944.
The CESTAT bench, comprising Mr. S. S Garg ( Judicial Member ) allowed the appeal by the way of remand.
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