As a relief to Nayara Energy Limited, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) observed that the rejection of Evidence on payment of transaction without verifying is invalid and held that duty not demandable.
M/s Nayara Energy Limited (Formerly known as Essar Oil Limited) cleared 2776.19 MT of furnace oil between February 2007 to April 2007 to Essar Shipping Limited. As per the said purchase order, Nayara Energy Limited is supposed to supply 5000 MT of Furnace Oil to vessels of M/s Essar Shipping Limited anchored at Hazira Port. While clearing the said consignments, the central excise duty was discharged by debiting the Served From India Scrips (‘SFIS’) produced by Essar Shipping Limited before the Jurisdictional Central ExciseAuthorities.
The Directorate of Revenue Intelligence (DRI) has under an investigation, issued a show cause notice dated 06.03.2009 contending inter alia that the factum of supply of furnace oil to the four named vessels of m/s Essar Shipping Limited namely MV Badri Prasad, MV Mahavir Prasad, MV Chandi Prasad and MV Anassa, was not established concerning the discrepancies observed in the documents, during the investigation. The adjudicating authority upheld the allegations made in the show cause notice andconfirmed the demand of duty, interest and penalties.
Shri Vishal Agarwal’counsel along with Ms Dimple Gohil, Advocate appeared on behalf of the appellant submitted that the adjudicating authority confirmed the allegations without taking cognizance of the documentary evidence produced by M/s Nayara Energy Limited / Essar Shipping Limited also without appreciating that there was no evidence to establish that the actual user condition had been violated as no investigation had been conducted concerning the use to which the said furnace oil had allegedly been put to. Shri Kalpesh P. Shah, Superintendent (Authorized Representative) appeared on behalf of the Revenue and reiterates the findings of the impugned order.
It was observed that the adjudicating authority cannot reject the documentary evidence without verifying the authenticity of the said documents. If the adjudicating authority has any doubt about such documents produced at the time of adjudication, he is free to ensure the authenticity of the said documents. Once, its authenticity is proved then the said documents must be considered for fair adjudication.
The CESTAT bench consisting of Mr Ramesh Nair, member (judicial), and Mr Raju, member (technical) observed that “the adjudicating authority before rejecting such evidence must have verified the books of accounts to check the correctness of the payment transaction between supplier M/s Nayara Energy Limited and purchaser of goods M/s M/s Essar Shipping Limited. By not doing so, the adjudicating authority again violated the principles of natural justice. “
While allowing the appeal filed by the assessee, the Tribunal set aside the impugned order and remand the matter to the adjudicating authority for passing a fresh order after the observance of principles of natural justice.
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