2018 (10) TMI 888 - AT - Central Excise

Tribunal rules in favor of manufacturer, highlights importance of evidence and procedure

Nectar Lifesciences Limited, Narbada Industries, Sanjiv Goyal Managing Director Versus C.C.E. & S.T. -Chandigarh-ii

The tribunal concluded that M/s Narbada Industries was indeed a manufacturer during the impugned period and paid duty on the goods manufactured. ... CENVAT Credit - farmers from whom the inputs were purchased were non-existence - fake invoices - it was alleged that the appellants were not the manufacturer and issued cenvatable invoices enabling to their buyers to avail inadmissible cenvat credit - principles of natural justice - Held that:- The investigation was not conducted at the end of the appellants and whole case has been based on the investigation conducted at Commissioner Central Excise, Merrut-II. Without investigation, it cannot be held that the appellants were not manufacturer during the impugned period. Moreover, the entries of vehicles at the toll barriers also certified that the movements of raw material and finished goods - During the course of investigation, itself shows that the allegation is only on the basis of the assumption and presumption, therefore, it cannot be held that the appellants were not manufactured the goods during the impugned period. The appellant (M/s Narbada) was manufacturer during the impugned period and paid the duty on the goods manufactured by them, therefore, duty cannot be demanded on the allegation that the appellant was not a manufacturer - M/s Narbada was the manufacturer of the goods and supplied to M/s Nector, therefore, cenvat credit cannot be denied to M/s Nector - appeal allowed - decided in favor of appellant. Issues Involved:1. Allegation of non-manufacture by M/s Narbada Industries.2. Denial of Cenvat credit to M/s Nectar Lifesciences Ltd.3. Validity of the investigation conducted by the Commissioner of Central Excise, Meerut-II.4. Compliance with procedural requirements under Section 9-D of the Central Excise Act.5. Invocation of extended period of limitation.6. Reliance on previous tribunal decisions and reports.Detailed Analysis:1. Allegation of Non-Manufacture by M/s Narbada Industries:The primary issue was the allegation that M/s Narbada Industries did not manufacture the goods but issued cenvatable invoices, enabling buyers to avail inadmissible Cenvat credit. The investigation by the Commissioner of Central Excise, Meerut-II, concluded that the farmers supplying raw materials were non-existent, implying that the commission agents did not supply inputs to M/s Narbada, thus questioning the manufacturing activity.2. Denial of Cenvat Credit to M/s Nectar Lifesciences Ltd.:The denial of Cenvat credit to M/s Nectar was based on the premise that M/s Narbada did not manufacture the goods. The tribunal found that M/s Nectar had correctly availed Cenvat credit on invoices issued by M/s Narbada, who were proven to be the manufacturers during the impugned period.3. Validity of the Investigation Conducted by the Commissioner of Central Excise, Meerut-II:The tribunal noted that the investigation was not conducted at the appellants' end but was based on assumptions and presumptions from the Meerut-II Commissionerate. The tribunal highlighted that entries of vehicles at toll barriers and various certificates and permissions indicated that M/s Narbada was indeed manufacturing goods.4. Compliance with Procedural Requirements under Section 9-D of the Central Excise Act:The tribunal observed that the adjudicating authority did not follow the procedure under Section 9-D, which requires witnesses to be called for examination in chief and cross-examination. The failure to comply with this procedure rendered the demand of duty unsustainable.5. Invocation of Extended Period of Limitation:The tribunal found that the show cause notice was issued by invoking the extended period of limitation, which was not sustainable given the lack of concrete evidence against the appellants.6. Reliance on Previous Tribunal Decisions and Reports:The tribunal referred to similar cases, such as Nanda Mint and Pine Chemicals Ltd., where the allegations were dismissed based on similar grounds. The tribunal emphasized the need for concrete evidence and corroborated the appellants' claims with various certificates, permissions, and reports from different departments.Conclusion:The tribunal concluded that M/s Narbada Industries was indeed a manufacturer during the impugned period and paid the duty on the goods manufactured. Consequently, the duty could not be demanded on the allegation of non-manufacture. Since M/s Narbada was the manufacturer, M/s Nectar was entitled to avail Cenvat credit. The tribunal set aside the impugned orders and allowed the appeals with consequential relief.Final Judgment:The appeals were allowed, and the impugned orders were set aside, providing consequential relief to the appellants. The tribunal emphasized the importance of concrete evidence and proper procedural compliance in adjudicating such cases.