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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether CENVAT credit of duty paid on inputs allegedly procured from a supplier was admissible when the department relied on third-party statements and claimed non-receipt of goods, and whether denial of credit could stand in light of cross-examination and independent evidence of the supplier's manufacturing facility.
Analysis: The appeal turned on whether the invoices represented mere paper transactions or actual receipt of duty-paid goods. The evidentiary basis for denial consisted largely of statements of third parties. Where such statements are used against the noticee, cross-examination is necessary before they can be relied upon, and the requirement of fair procedure under Section 9D of the Central Excise Act, 1944 must be satisfied. In the de novo proceedings, cross-examination of only some witnesses was possible, and one cross-examined witness supported receipt of the goods. The record also contained independent material showing that the supplier had installed manufacturing machinery and could manufacture copper ingots. On this material, the finding that the supplier had no facility and that the goods were not received could not be sustained.
Conclusion: Denial of CENVAT credit was unsustainable; the credit was admissible, and the demand and consequential penalties could not survive.
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