AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 809
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....ermint Oil and Menthone. These final products are chargeable to excise duty. The appellant used Menthol as a raw material for the manufacture of Mentha products and availed CENVAT credit of the excise duty paid by the appellant. 3. The appellant purchased one consignment of 5400 Kgs. of Menthol (inputs) from Amarnath Industries, a manufacturer-supplier situated in Jammu, through Invoice No. 09 dated 14.05.2002. According to the appellant this was received in the factory and used for manufacture of the final product. The appellant, therefore, availed CENVAT credit of duty amounting to Rs. 4,00,101/- paid on the said inputs. 4. A show cause notice dated 20.08.2008 was issued to the appellant. This was a common show cause notice issued to as many as eight entities, including the appellant (Noticee No. 5), M/s. Amarnath Industries (Noticee No. 1) and M/s. Sharp Mint Ltd. (Noticee No. 2). The show cause notice called upon the appellant to show cause why CENVAT credit availed by the appellant on Menthol (inputs) purchased from Amarnath Industries through the Invoice dated 14.05.2005 should not be denied and recovered. The relevant paragraphs 87, 88 and 96 of the show cause notice a....
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....at of actually received by them. (b) Rule 9(3) of Cenvat Credit Rules 2004 in as much as they had not taken all reasonable steps with regard to the inputs in which they had taken the Cenvat Credit on the basis of the invoices accompanied the goods. (c) Rule 9(5) of Cenvat Credit Rule 2004 in as much as they had not taken proper care regarding the admissibility of the Cenvat credit in respect of the goods they have received." (emphasis supplied) 5. The extended period of limitation under the proviso to section 11A(1) of the Central Excise Act was also invoked. The relevant paragraph of the show cause notice dealing with this aspect is reproduced below: "It has been conclusively proved that a part manufacturing through freezing process and no manufacturing through distillation process had taken place in M/s. AL. So the receipt of Crude Mentha Oil (Shivalik) and Crude Mentha Oil by M/s SEC and M/s. NE respectively showing them as DFMO (Shivalik) and Menthol have proved the intention of the purchasers only to avail the Cenvat Credit. They have been summoned to appear to explain their stand, which they avoided and simply stated that they had received the....
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....r of the said product; (v) In fact, the monthly returns filed by the supplier- Amarnath Industries, were assessed and that refund of the duty (cash component) paid by them was processed and paid by the department. Therefore, there was absolutely no reason for the appellant to doubt the existence of the supplier and the fact of payment of duty on the goods sold by the supplier-manufacturer to the appellant. Thus, the findings recorded by the Commissioner that the appellant had contravened the provisions of rule 9(3) of the 2004 Credit Rules by not taking reasonable steps with regard to the goods received by the appellant is vitiated; (vi) It is a settled proposition of law that if the buyer has received the goods on a valid and proper invoice and the supplier manufacturer exists, recovery cannot be effected from the buyer; (vii) The statements of various persons are not relevant and inadmissible as they failed to comply with the provisions of section 9D of the Central Excise Act and denial of cross examination of the said persons has vitiated the order. To support this contention learned counsel placed reliance upon the following decisions: (a) Su....
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....or the manufacture of the aforesaid goods, the appellant procured raw material from Amarnath Industries in Jammu which took benefit of the operated the Notification dated 14.11.2002. Under this Notification, the duty paid by Amarnath Industries in cash on the raw materials cleared to the appellant was refunded/granted as self credit to Amarnath Industries. It is on the basis of the invoice issued by Amarnath Industries that CENVAT credit was claimed by the appellant of the duty paid on the raw materials purchased from Amarnath Industries. 12. Learned counsel for the appellant submitted that Amarnath Industries has been granted refunds on the basis of orders passed by the Jurisdictional Assistant Commissioner and these orders were not challenged. The CENVAT credit could not have, therefore, been denied to the appellant. 13. This submission advanced by the learned counsel for the appellant deserves to be accepted in view of the decision of the Gauhati High Court in Commissioner of C. Ex., Shillong vs. Jellalpore Tea Estate [2011 (268) E.L.T. 14 (Gau.)], wherein it was held: "14. Insofar as the present case is concerned, the prescription of law required that the order o....
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....d in accordance with law, we find it not possible to entertain this submission in the facts of the present case since at no point of time the Revenue questioned the applicability of the excise duty at the place outside Goa. Those assessments have been allowed to become final and the goods have been removed from the jurisdiction of the Excise Officer at that place and brought to Goa. Now, in Goa it will not be permissible to allow the Revenue to raise the contention that the assessee in Goa cannot claim Modvat credit in Goa because duty need not be paid outside Goa. 6. As we have observed that the assessment is allowed to be final, it would not be legal and proper to allow the Revenue to raise the question on the basis of Modvat credit. Indeed, now the payment of excise duty must be treated as valid, therefore, the claim of Modvat credit must be treated as excise duty validly paid." (emphasis supplied) 16. The same view was taken by the Bombay High Court in Commissioner of Central Excise, Pune-III vs. Ajinkya Enterprises [2013 (294) E.L.T. 203 (Bom.)]. It was held: "10. Apart from the above, in the present case, the assessment on decoiled HR/CR coils cl....
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....ss-examination for the evidence or statement to be considered." 21. The Punjab and Haryana High Court in Jindal Drugs also observed as follows: "9. A plain reading of sub-section (1) of Section 9D of the Act makes it clear that clauses (a) and (b) of the said sub-section set out the circumstances in which a statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act, shall be relevant, for the purpose of proving the truth of the facts contained therein. 10. Section 9D of the Act came in from detailed consideration and examination, by the Delhi High Court, in J.K. Cigarettes Ltd. v. CCE, 2009 (242) E.L.T. 189 (Del.). Para 12 of the said decision clearly holds that by virtue of sub-section (2) of Section 9D, the provisions of sub-section (1) thereof would extend to adjudication proceedings as well. There can, therefore, be no doubt about the legal position that the procedure prescribed in sub-section (1) of Section 9D is required to be scrupulously followed, as much in adjudication proceedings as in criminal proceedings relating to prosecution. 11. As alrea....
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....summon the person who had made the statement, examine him as witness before him in the adjudication proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. xxxxxxxxxxx 22. Clearly, if this procedure, which is statutorily prescribed by plenary Parliamentary legislation, is not followed, it has to be regarded, that the Revenue has given up the said witnesses, so that the reliance by the CCE, on the said statements, has to be regarded as misguided, and the said statements have to be eschewed from consideration, as they would not be relevant for proving the truth of the contents thereof." (emphasis supplied) 22. The Commissioner found that since the departmental officers had verified the facts which had been declared by the appellant in the statutory records and the test reports also indicated that the goods would be Crude Mint Oils, the genuineness of test report conducted after receipt of the goods from Amarnath Industries, cannot be doubted and so the request for cross examination of departmental officers and other persons should not be granted. The Commissioner a....