By TIOL News Service

MUMBAI, APRIL 27, 2017: DEMAND confirmed by the CCE, Thane-I on 30.04.2008 was upheld by the CESTAT on 24.03.2014.

This order is challenged by the assessee before the Bombay High Court.

At the outset, the High Court remarked that the appeal does not raise any substantial questions of law and the appeal is an attempt to seek a re-appreciation and reappraisal of the factual findings.

On the first question that there is an alleged violation of the principles of natural justice by not allowing the cross-examination of the supplier/manufacturer/dealer/transporters whose statements were relied upon while adjudicating the show cause notice, the High Court noted -

+ A vague plea without any specific statement or the maker thereof being named, we do not think that the Tribunal was in error in rejecting such ground. The Tribunal has found that beyond making a vague and general statement in the written statement (reply) to the show cause notice, the record of the proceedings before the adjudicating authority would indicate that at no stage any request was made to summon a particular person for cross-examination whose statement was attempted to be used by the Revenue. In such circumstances, the reasons assigned so as to confirm the finding of the adjudicating authority cannot be termed as perverse or vitiated by any error of law apparent on the face of the record.

Insofar as the alleged wrongly availment of cenvat credit is concerned, the appellant submitted that they did not play any role inasmuch as scrap was purchased from a third party.

The High Court observed -

++ The appellant had availed credit on the strength of 124 invoices issued by a registered dealer (STI) and who, in turn, allegedly purchased the scrap from one M/s. New Siddhivinayak Rerolling Mills. On investigation, it was found that M/s. New Siddhivinayak Rerolling Mills stopped manufacturing activities in June 2001 due to disconnection of electric supply. Despite this, they issued only invoices to registered dealer and on the strength of these invoices the registered dealer further issued invoices to the appellant. Local scrap which is non-duty paid was purchased from the open market and was supplied to the appellant. The inputs covered under the invoices on the strength of which credit was claimed were never received in the factory of the appellant. The Tribunal, as a finding of fact, observed that the invoices of M/s. STI were recovered from the office of the appellant. They were accompanied with the challans of local scrap suppliers and weigh bridge slips of various weigh bridges located in Bhiwandi and Ulhasnagar, etc. All such local scrap dealers disclosed that they were approached by the representative of M/s. STI to supply bazaar scrap to the appellant. These statements were not retracted at any stage. It is in these circumstances that the appellant's role has been pinpointed and with specific details.

Holding that no substantial questions of law arise, the High Court concluded thus -

"…We have outlined the clear role of the appellant in not accounting for those inputs which are mentioned in the invoices while availing of the cenvat credit. The bazaar scrap was passed off as those inputs covered by the invoices. This was a systematic fraud and detected during the course of the investigation in which the appellant was clearly involved. The role was clearly spelt out. In such circumstances, we do not think that the findings of fact are perverse or vitiated by any error of law apparent on the face of the record raising any substantial question of law."

After distinguishing the Allahabad High Court judgment relied upon by the appellant, the appeal was dismissed as being devoid of merits.

(See 2017-TIOL-803-HC-MUM-CX)