Vimal Alloys Pvt. Ltd. Vs Commissioner of Central Excise and Service Tax (CESTAT Chandigarh)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh disposed of nine appeals arising from a common investigation by the Directorate General of GST Intelligence (DGGI) alleging fraudulent availment of CENVAT credit through forged invoices without actual receipt of goods. The investigation concerned four Delhi-based units alleged to be non-functional entities without manufacturing facilities, purchases, or electricity consumption. Searches were conducted at various premises, incriminating documents were seized, and statements of several persons connected with the transactions were recorded. Based on these statements and documents, the Department concluded that fake invoices had been issued for passing inadmissible CENVAT credit to furnace units in Punjab. The adjudicating authorities confirmed duty demands and penalties against the appellants.
The appellants challenged the orders mainly on the ground that statements of various persons were heavily relied upon, but despite repeated requests, no opportunity was granted to cross-examine those witnesses. The appellants argued that denial of cross-examination violated Section 9D of the Central Excise Act and principles of natural justice. They submitted that the authorities wrongly relied upon the Supreme Court decision in Kanungo & Co. v. Collector of Customs, even though that judgment was delivered before insertion of Section 9D into the Central Excise Act. The appellants relied upon several decisions, including Jindal Drugs Pvt. Ltd. v. UOI, where the Punjab and Haryana High Court held that cross-examination of material witnesses whose statements are relied upon is mandatory.
