Tribunal overturns credit denial and duty demand, dissenting opinion suggests remand for fresh adjudication

The Tribunal set aside the denial of credit on inputs received from Chemplast Sanmar, imported inputs, and inputs transported in own vehicles. The demand of duty on alleged clandestine removal of final products was also dismissed due to lack of evidence. The majority decision allowed the appeals with consequential relief, while a dissenting opinion suggested remanding the matter for fresh adjudication. The impugned order was ultimately set aside, and the appeals were allowed.

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Issues Involved:
1. Denial of credit on inputs received from Chemplast Sanmar.
2. Denial of credit on inputs imported and received from the head office.
3. Denial of credit on inputs transported in own vehicles.
4. Demand of duty on the ground of alleged clandestine removal of final products.

Detailed Analysis:

Issue 1: Denial of Credit on Inputs Received from Chemplast Sanmar
The appellants contested the denial of credit amounting to Rs. 10,29,387 on PVC resin purchased from Chemplast Sanmar. The adjudicating authority held that the transporters’ lorry receipts were fictitious, suggesting the inputs were not received. The appellants argued that the goods were physically received and entered in their records, supported by gate registers, freight bills, and RG 23A Part I register. The transporter’s cross-examination confirmed the delivery. The appellants cited several case laws, including *Neepez Steels Ltd.* and *Pioneer Industries*, to support their contention that credit cannot be denied based on uncorroborated transporter statements. The Tribunal found that no corroborative evidence was presented by the Revenue, and the denial of cross-examination violated principles of natural justice, thus setting aside the demand.

Issue 2: Denial of Credit on Inputs Imported and Received from Head Office
The denial of credit amounting to Rs. 9,17,570 on imported PVC resin was based on the claim that the inputs were not received by the appellant. The appellant provided documentation, including gate registers and RG 23A Part I register, to prove physical receipt. The Tribunal noted that the adjudicating authority denied the cross-examination of the relevant witness, thus violating the principles of natural justice. Consequently, the Tribunal ruled that the credit could not be denied.

Issue 3: Denial of Credit on Inputs Transported in Own Vehicles
The credit of Rs. 1,15,212 was denied on the ground that the inputs transported in the appellant’s own vehicles were not received. The appellant argued that the inputs were indeed received and accounted for in their records. The Tribunal found that the evidence provided by the appellant, such as gate registers and payment records, was sufficient to prove receipt of the inputs. Therefore, the denial of credit was not justified.

Issue 4: Demand of Duty on Alleged Clandestine Removal of Final Products
The demand of Rs. 33,69,797 was based on the allegation of clandestine removal of goods, supported by transporter documents. The appellant argued that the transporter’s statement was unreliable and that no corroborative evidence was provided by the Revenue. The Tribunal noted that the cross-examination of the transporter was denied, which is a gross violation of natural justice. The Tribunal found that the Revenue failed to provide evidence of clandestine manufacture or removal, such as procurement of raw materials or receipt of payment. Therefore, the demand was based on assumptions and was set aside.

Separate Judgments Delivered:
- Majority Decision: The majority held that the credit could not be denied and no demand could be confirmed on account of clandestine removal. The appeals were allowed with consequential relief.
- Dissenting Opinion: One member suggested remanding the matter back to the adjudicating authority for fresh adjudication following the provisions of Section 9D of the Central Excise Act, 1944, arguing that it would be in the interest of justice to give the adjudicating authority a chance to comply with the procedural requirements.

Final Order:
In view of the majority decision, the impugned order was set aside, and the appeals were allowed with consequential relief, if any.

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