Statements Recorded by DGCEI not Examined u/s 9D of Central Excise Act cannot be considered as Evidence: CESTAT quashes demand of Cenvat Credit [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed demand of cenvat credit as the statements recorded by the Directorate General of Central Excise Intelligence (DGCEI) not examined under Section 9D of the Central Excise Act, 1944 cannot be considered as evidence.

The Appellants, M/s. Sainath Industries during the period June 2004 to November 2006 availed Cenvat Credit of the Additional Duty of Customs (CVD), Education Cess thereon and Special Additional Duty of Customs (SAD) paid on the inputs viz. Aluminium/Copper/ Brass/ Zinc Scrap imported by them for use in relation to the manufacture of Ingots of Aluminium/Copper/Brass/ Zinc, which were cleared on payment of duty.

In November 2006, the DGCEI initiated investigations in respect of imports of Aluminium/Copper/ Brass/ Zinc Scrap made by the Appellant, M/s. Sainath Industries as well as other importers-manufacturers. It was the case of DGCEI that in all the cases of imports of the scrap by various manufacturers, and part of the consignments of the said Scrap were off-loaded en-route to the factories of the said manufacturers and that the same were disposed of in the local market in cash and that instead of such imported duty paid scrap so disposed of, the said manufacturers procured local non-duty paid Bazaar Scrap.

In the course of the said investigations, the DGCEI recorded statements of many people in connection with the allegation.

The counsel for the appellant submitted that none of the deponents of the Statements recorded by DGCEI have been examined in the adjudication proceedings, as required by Section 9D of the Central Excise Act 1944, no reliance can be placed on the same and that the Show Cause Notice and the Order-in-Original have incorrectly proceeded on the basis that the Appellants could not produce documents to prove transportation up to the factory.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “Since none of the deponents of the Statements recorded by DGCEI have been examined in the adjudication proceedings, as required by Section 9D of the Central Excise Act 1944, the same cannot be considered as evidence.”

“In view of above observations, we are of the view that the revenue could not establish that the appellant has not received the input in their factory, hence the demand of Cenvat credit in the present case is not sustainable. Consequently the penalties are also not sustainable” the Bench noted.

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