Tribunal overturns penalty for enabling CENVAT credit without goods, cites procedural fairness

The Tribunal set aside the penalty imposed on the appellant under rule 26(2) of the Central Excise Rules, 2002, for allegedly enabling CENVAT credit without supplying goods. The Tribunal remanded the matter back to the original authority, directing reconsideration of the appellant's request for cross-examination to uphold procedural fairness and comply with principles of natural justice.

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Issues: Challenge of penalty imposition under rule 26(2) of Central Excise Rules, 2002 for enabling CENVAT credit without supplying goods. Request for cross-examination of witnesses denied.

In this case, the appellant challenged the penalty imposed under rule 26(2) of the Central Excise Rules, 2002, for allegedly enabling another party to avail CENVAT credit without actually supplying goods. The main noticee, against whom the demand was confirmed, did not appeal, leaving the appellant contesting the penalty. The appellant argued that they had indeed supplied the goods, as reflected in the invoices issued by them. They claimed that the allegations lacked material evidence or corroboration, and their request for cross-examination of witnesses was denied, which they contended was a violation of their rights.

The Tribunal observed that the original authority had rejected the request for cross-examination on the basis that the statements were not relied upon as documents. However, it is established legal principle that the evidence of witnesses must be subject to proof during adjudication proceedings. Therefore, the Tribunal set aside the impugned order to the extent of the penalty imposed on the appellant and remanded the matter back to the original authority. The original authority was directed to reconsider the appellant's request for cross-examination to ensure procedural fairness and compliance with the principles of natural justice.

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