TaxTMI 
TaxTMI 
2026 (9) TMI 1913
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....nfirmed the interest and penalty imposed against the Appellant. 2. The facts of the case are that, on the basis of specific intelligence investigation was initiated against the Appellant, wherein it was found that the Appellant had fraudulently taken and utilized Cenvat credit amounting to Rs 8,20,552/- during the month of April 2014 to March 2015 in contravention of provisions of Rule 3,4 and 9 of the Cenvat Credit Rules 2004, on strength of 10 invoices issued by M/s Shree Balajee Enterprises (herein after referred to as 'SBE') a Dealer. The allegation against the Appellant is that they have availed Cenvat credit of Rs 8,20,552/- without receiving the goods namely 'Sponge Iron' in their factory premises and utilised the same for payment of Central Excise duty on clearance of their final products. The Appellants have also availed and utilised the Cenvat credit of Service Tax amounting to Rs 3445/-. 2.1. On the basis of the said allegations, a Show cause Notice was issued to the Appellant proposing to deny the Cenvat credit of Rs 8,20,552/- and recover the same along with interest under the provision of Rule 14 of CCR'2004 read with Section 11A and Section ....
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....y availed the Cenvat credits on the basis of the said invoices issued by SBE in terms of Rule 9(1)(iv) of CCR'2004. 3.2. The appellant submits that they have purchased the impugned raw materials and received the same in their factory, recorded in RG-23A Part-I and books of accounts and made payments to the suppliers through proper banking channel. These facts are not in dispute. The dealers are registered under Central Excise Rules, 2002 and their registration were valid and active during the material period. The Appellant submits that the Purchases are covered under valid Excise Invoices evidencing supply of impugned goods to the Appellant. The Quantity of impugned goods received are recorded in RG-23A-Part-I; Entry Book of Duty Credit is duly recorded in RG-23A-Part-II; Claim of CENVAT Credit is regularly disclosed in monthly ER-1 returns; No investigation is carried out at the factory of the Appellant. No case of excess/shortage of raw materials/finished goods is made out; The receipt of impugned goods are duly recorded in Gate Register, and Goods Receipt Note, etc. maintained at the factory; Payment have been made to Suppliers through proper banking channel; There is no ....
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.... statements, Shri Amit Agrawal has stated that the money was received from the customers through cheques/RTGS and the same was deposited in the-account of SBE. He disclosed various names of iron & steel manufacturers to whom fake central excise invoices were issued. However, the name of the Appellant was not figuring in the said list. Thus, the Appellant submits that the allegation against them is not substantiated with any evidence. 3.6. The Appellant submits that they have purchased the impugned goods from the Dealers who are registered with the department. The Purchases were covered under valid Excise Invoices evidencing supply of impugned goods. If some of the Dealers were not found in the addresses mentioned in the Registration, it is the duty of the duty of the department to ascertain the whereabouts of such Dealers; it is only the department who can enforce proper compliance of law and proper documentation by the registered dealer and the appellant cannot ensure the same. Thus, the Appellant submits that the disallowance of Cenvat credit availed by them on the basis of valid documents issued by the Registered Dealers, is legally not sustainable. 3.7. The Appellant furt....
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....ved in their factory in RG-23A Part-I. It is on record that the Appellant have made payments to the suppliers through proper banking channels. These facts are not in dispute. We find that the dealers are registered under Central Excise Rules, 2002 and their registration were valid and active during the material period. We also find that the Purchases are covered under valid Excise Invoices. We find that the Appellant has recorded the Quantity of impugned goods received in the RG-23A-Part-I and the Duty Credit availed has also been duly recorded in RG-23A-Part-II; It is on record that the CENVAT Credit availed and utilized by the Appellant has been regularly disclosed in monthly ER-1 returns. We find that there is no case of excess/shortage of raw materials/finished goods has been made out. The receipt of impugned goods are duly recorded in Gate Register, and Goods Receipt Note, etc. maintained at the factory. Further, payments to Suppliers have been made through proper banking channel. There is no evidence of refund of any cash to the Appellant by the dealers. However, we find that no investigation has been carried out at the factory of the Appellant to ascertain the above said fac....
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....inable. 6.4. We find that the impugned order has relied mainly on the Statements of some supplier of the raw materials and Transporters. However, we find that these statements have not been tested by conducting the Examination-in-Chief, as required under Section 9D of the Central Excise Act, 1944. Hence, these statements cannot be relied upon against the Appellant. In support of this claim, we rely on the decision of the Hon'ble Punjab and Haryana High Court in the case of M/s. Ambika International vs. Union of India [2018 (361) E.L.T. 90 (P&H)], wherein it has been held as under: - "21. Once discretion, to be judicially exercised is, thus conferred, by Section 9D, on the adjudicating authority, it is self-evident inference that the decision flowing from 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 ....
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....o be recorded before the adjudication authority, as, in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned. 25. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a gazetted Central Excise Officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded 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....
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....ing that attendance of the makers of the said statements could not be obtained for any of the reasons contemplated by the said clause. That being so, it was not open to respondent No. 2 to rely on the said statements, without following the mandatory procedure contemplated by clause (b) of the said subsection. The Orders-in-Original dated 19-52016 and 1-6-2016, having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, it has to be held that said Orders-in-Original stand vitiated thereby." 6.5. The same view has been held in the case of G.Tech Industries Vs. UOI reported in 2016 (339) E.L.T. 209 (P & H). 6.6. Thus, by relying on the ratio of the decisions cited supra, we hold that the above statements have no evidentiary value against the Appellants and hence the demands cannot be confirmed only on the basis of these statements. 6.7. We find that this Tribunal while dealing with similar issue arising out of same common investigation has set aside the demand/disallowance of CENVAT Credit in the case of M/s Globe Steel & Alloys Pvt. Ltd. Vs. Principal Commissioner reported in 2025 (10) TMI 609-CESTAT- KOLKATA the present case is di....