AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 1825
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....nd it was observed that it was engaged in passing on fraudulent cenvat credit by issuing forged dealer invoices to various furnace units. M/s Mahadev Alloys had passed on this fraudulent Cenvat credit after showing fake purchases of duty paid excisable goods viz. MS scrap from a Raipur based Central Excise dealer firm viz (i) Prakash Enterprises, Block No. 10, Plot No. W- 1/166, Rawabhata Transport Nagar, Raipur (herein after referred to as Prakash) and (ii) Shri Ram Power & Steel Pvt. Limited (Unit-II), Khata No. 198/300, Plot No. 200, Village Bonggabar, Ramgarh (hereinafter referred to as "SRPSPL"). During investigation of Prakash, it was revealed that Prakash had neither shown purchase nor sale of any excisable goods at any time during central excise regime. 2.1. On scrutinizing the sale/purchase records of Mahadev for F.Y. 2016-17, it was revealed that although Mahadev had never made any transactions (viz. purchase of excisable goods) with both the dealer firms viz. Prakash and SRPSPL, but Mahadev was found to have passed on fraudulent Cenvat credit to various furnace units of Punjab. It was also revealed that Mahadev had shown fraudulent purchase of exc....
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....e appellant no. 1. From the scrutiny of records of M/s Durga Concast Pvt. Ltd. and from the statement of Kulbhushan Jain, Director, DCPL, it appeared that DCPL had indulged in only paper transactions and had received fake cenvatable invoices only without receipt of any goods. It was found that Appellant no. 1 had taken Cenvat Credit in a fraudulent manner through the invoices of Mahadev showing purchase of MS Scrap from Prakash and SRPSPL. Selling of scrap was at a price much lesser than the rate of their purchase price. This itself showed that the seller and the purchaser were working against the basic principles of business, i.e., profitability. The same procedure was followed not only in one consignment but in all the consignments. 2.3. Shri Kulbhushan Jain, Director, DCPL (herein after referred to as the appellant no. 2) was looking after all the sale purchase and overall working of DCPL since 2015 Investigation revealed that DCPL had indulged in only paper transactions and had received fake cenvetable invoices only without receipt of any goods. When the dealer firms viz. Prakash & SRPSPL had never purchased any excisable goods from the source manufacturer at any time, the q....
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....d circumstances of the case, it is a fit case for allowing cross-examination. He further submits that cross-examination was rejected by both the authorities on the basis of the judgment of Hon'ble Supreme Court in the case of Kanungo & Co. Vs Collector of Customs, Calcutta and others - 1983 (13) ELT 1483 (SC). He further submits that the said decision is not applicable in the facts and circumstances of the case because the judgment in the said case was delivered prior to the introduction of Section 9D of the Central Excise Act. He further submits that this Tribunal has consistently been holding on the basis of the judgment of Hon'ble jurisdictional High court, in the case of Jindal Drugs Pvt. Ltd. Vs UOI - 2016 (340) ELT 67 (P&H) and has remanded the case back to the Adjudicating Authority for the purpose of granting cross-examination of the material witnesses. In support of his submission, learned counsel relied upon the following decisions: * M/s Mittal Ceramics -Final Order No. 60593/2024 dated 07.11.2024 * Madhav Alloys Pvt. Ltd. Vs Commissioner of CGST, Ludhiana (Final Order No. 60627-60632/2024 dated 28.11.2024), * Regal Alloys Pvt. Ltd. Vs. Commiss....
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....ot accepted the request. Adjudicating Authority finds that: M/s Lauls Ltd, Faridabad (Noticee No. 1) in their reply dated 30.9.2009 had asked for cross-examination of the witnesses whose statements had been relied upon in the show cause notice, but thereafter they did not stress for cross-examination of said witnesses. Even during the personal hearing held on 23.11.2009 before the then Commissioner of Central Excise, Delhi-IV, Faridabad, no such request for cross-examination of witnesses was stressed either by the Advocate or S/Shri Sudhir Gupta and Abhay Gupta, Directors of Noticee No. 1, who had appeared for personal hearing for and on behalf of M/s Lauls Ltd and Noticee No. 2-Shri Abhay Gupta. However, the Noticee No. 1 again made the request for cross-examination of witnesses during the course of personal hearing held on 25.5.2011, which was the IVth date of hearing and the Noticee No. 1 had already been specifically informed vide office letter C. No. V(72)15/Commr/CE/2008/4027-28 dated 16.5.2011 that 25.5.2011 was the last and final date of hearing and accordingly the Counsel of Noticee No.1 as well as S/Shri Abhay Gupta and Sudhir Gupta, Directors of Noticee No.1 who had appe....
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....rom the exercise of such discretion, i.e., the order which would be passed, by the adjudicating authority under Section 9D, if he chooses to invoke clause (a) of sub-section (1) thereof, would be pregnable to challenge. While the judgment of the Delhi High Court in J&K Cigarettes Ltd. (supra) holds that the said challenge could be ventilated in appeal, the petitioners have also invited attention to an unreported short order of the Supreme Court in UOI and Another v. GTC India and Others in SLP (C) No. 2183/1994, dated 3-1-1995 wherein it was held that the order passed by the adjudicating authority under Section 9D of the Act could be challenged in writ proceedings as well. Therefore, it is clear that the adjudicating authority cannot invoke Section 9D(1)(a) of the Act without passing a reasoned and speaking order in that regard, which is amenable to challenge by the assessee, if aggrieved thereby. 16.If none of the circumstances contemplated by clause (a) of Section 9D(1) exists, clause (b) of Section 9D(1) comes into operation. The said clause prescribes a specific procedure to be followed before the statement can be admitted in evidence. Under this procedure, two steps a....
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....corded during investigation/inquiry before the Gazetted Central Excise Officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to 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. 20.In fact, Section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede cross-examination, and cross-examination has to precede re-examination. 21.It is only, therefore, - (i) after the person whose statement has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the stat....
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....of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-32005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 12. With due difference to the Hon'ble Supreme Court and Hon'ble High Court of (Punjab & Haryana), we find that not allowing the cross-examination of key witnesses vitiates the proceedings even under the quasi-judicial proceedings. Therefore, as requested by the learned Counsel for the appellants, we are inclined to accept the contention and the request of learned Counsel for the appellants that the interest of justice would be properly served if the case goes back to the Adjudicating Authority to adjudicate the case afresh after giving the opportunity to the appellants to cross-examine the key witnesses whose statements have been relied upon by the....