2019 (11) TMI 611 - HC - Central Excise

Court Upholds Tribunal's Decision on Cenvat Credit Dispute

The High Court upheld the Customs, Excise and Service Tax Appellate Tribunal's (CESTAT) findings in favor of the assessees regarding alleged errors in ... Reliability of statements - it was contended that the reliance placed upon Production Manager’s statement was unwarranted because firstly, the statement was a subject matter of a previous SCN which had not culminated in final adjudication as such and secondly, the statement was subsequently retracted and lastly, the latter statement was in fact relied upon in the SCN which resulted in an adjudication - HELD THAT:- The statement made by Sh. Shivji Gupta, this Court is of the opinion that the CESTAT’s appreciation of facts on this score are sound and do not call for interference. What is most important and was correctly noticed by the CESTAT is that the statement of 2008 has not resulted in any adverse order on the SCN which culminated immediately thereafter. The present adjudication proceeding is the result of a subsequent SCN as a result of later inspection - The Revenue’s claim, therefore, has no basis on this aspect. Feasibility of the nature of equipment that the assessee possessed at site - HELD THAT:- This Court is of the opinion that the analysis of the CESTAT - i.e. the Judicial Member’s decision which was agreed by the third member to whom the question was referred, is sound and is a plausible one. The Revenue’s disagreement with these findings ipso facto cannot result in substantial question of law. Appeal dismissed. Issues:1. Alleged errors in findings of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on two grounds.2. Claim for Cenvat credit for copper cathodes by the assessees.3. Allegations of fraudulent claims and liability upon the assessees.4. Reliance on statements and expert opinions during the proceedings.5. Feasibility of equipment for carrying out specific operations by the assessee.6. CESTAT's findings and the Revenue's objections.Analysis:1. The Revenue contended that CESTAT's findings were erroneous due to ignoring a prior statement of an employee of one of the assessees, which was retracted later, and the appraisal of technical issues related to slicing or cutting of copper cathodes. The High Court found that the CESTAT's appreciation of facts regarding the retracted statement was sound, as the statement did not result in any adverse order on the Show Cause Notice (SCN) that led to the present adjudication. The Court held that the CESTAT's acceptance of the retraction had a factual basis and did not raise any substantial question of law.2. The assessees had filed claims for Cenvat credit for copper cathodes, leading to investigations and SCNs alleging fraudulent claims. The High Court noted the modus operandi of the assessees in moving input goods to claim Cenvat credits and upheld the CESTAT's decision in favor of the assessees, dismissing the Revenue's objections.3. The SCNs issued to the assessees resulted in liability and penalties, leading to appeals before the CESTAT. The High Court upheld the CESTAT's decision, emphasizing that the Revenue's claims lacked basis and the CESTAT's findings were not erroneous.4. The High Court considered the reliance on statements and expert opinions during the proceedings. It noted that the CESTAT's analysis of the expert opinion and statements was sound and plausible, dismissing the Revenue's disagreement as not raising substantial questions of law.5. The feasibility of the equipment possessed by the assessee for specific operations was a key issue. The High Court analyzed the CESTAT's discussion on this matter, highlighting discrepancies in the Commissioner's findings and the lack of cross-examination of the expert witness. The Court agreed with the CESTAT's decision, finding it reasonable and not warranting interference.6. Overall, the High Court found no merit in the appeals and dismissed them along with pending applications, upholding the CESTAT's findings and rejecting the Revenue's objections on both grounds of error raised.