Nayara Energy Limited Vs C.C.E. & S.T. Rajkot (CESTAT Ahmedabad)
CESTAT Ahmedabad held that adjudicating authority cannot reject the documentary evidence without verifying the authenticity of the same. Rejection of the documents without ensuring the authenticity is gross violation of principle of natural justice which is untenable in law.
Facts-
M/s Nayara Energy Limited (Formerly known as Essar Oil Limited) cleared 2776.19 MT of furnace oil between February 2007 to April 2007 to Essar Shipping Limited. As per the said purchase order, Nayara Energy Limited is supposed to supply 5000 MT of Furnace Oil to vessels of M/s Essar Shipping Limited anchored at Hazira Port. While clearing the said consignments, the central excise duty was discharged by debiting the Served From India Scrips (‘SFIS’) produced by Essar Shipping Limited before the Jurisdictional Central Excise Authorities.
The Directorate of Revenue Intelligence (DRI) has under an investigation, issued a show cause notice dated 06.03.2009 contending inter alia that the factum of supply of furnace oil to the four named vessels of m/s Essar Shipping Limited namely MV Badri Prasad, MV Mahavir Prasad, MV Chandi Prasad and MV Anassa, was not established concerning the discrepancies observed in the documents, during the investigation. The adjudicating authority upheld the allegations made in the show cause notice and confirmed the demand of duty, interest and penalties. Being aggrieved, the present appeal is filed.
Conclusion-
The adjudicating authority cannot reject the documentary evidence without verifying the authenticity of the said documents. If the adjudicating authority has any doubt about such documents produced at the time of adjudication, he is free to ensure the authenticity of the said documents. Once, its authenticity is proved then the said documents must be considered for fair adjudication. In the present case, the adjudicating authority without ensuring the authenticity of the documents rejected the same, therefore same is in gross violation of principles of natural justice.
Held that the adjudicating authority before rejecting such evidence must have verified the books of accounts to check the correctness of the payment transaction between supplier M/s Nayara Energy Limited and purchaser of goods M/s M/s Essar Shipping Limited. By not doing so, the adjudicating authority again violated the principles of natural justice.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that M/s Nayara Energy Limited (Formerly known as Essar Oil Limited) had cleared 2776.19 MT of furnace oil between February 2007 to April 2007 to Essar Shipping Limited. As per the said purchase order, Nayara Energy Limited supposed to supply 5000 MT of Furnace Oil to vessels of M/s Essar Shipping Limited anchored at Hazira Port. While clearing the said consignments, the central excise duty was discharged by debiting the Served From India Scrips (‘SFIS’) produced by Essar Shipping Limited before the Jurisdictional Central Excise Authorities. The Directorate of Revenue Intelligence (DRI) has pursuant to an investigation, issued a show cause notice dated 06.03.2009 contending inter alia that the factum of supply of furnace oil to the four named vessels of m/s Essar Shipping Limited namely MV Badri Prasad, MV Mahavir Prasad, MV Chandi Prasad and MV Anassa, was not established with reference to the discrepancies observed in the documents, during the investigation. Basis the same, the Notice suggested that the actual user condition had been violated by Essar Shipping Ltd. and the goods cleared against the SFIS licenses were diverted / sold in contravention to the provisions of para 3.6.4.6 of the Foreign Trade Policy (FTP). The adjudicating authority vide his order in original dated 14.11.2011 upheld the allegations made in the show cause notice and consequently, confirmed the demand of duty, interest and penalties. Being aggrieved by the said order-in-original, the appellants filed the present appeals.
2. Shri Vishal Agarwal learned counsel along with Ms. Dimple Gohil, Advocate appearing on behalf of the appellant submits that the adjudicating authority confirmed the allegations without taking cognizance of the documentary evidence produced by M/s Nayara Energy Limited / Essar Shipping Limited as also without appreciating that there was no evidence to establish that the actual user condition had been violated as no investigation had been conducted with respect to the use to which the said furnace oil had allegedly been put to. The adjudicating authority has also not taken cognizance of the submission to the effect that the violation of actual user condition, if any, could be a ground for raising a demand against Essar Shipping Limited and not against Nayara Energy Limited who had fulfilled all the conditions precedent to the exemption being available at the time of clearance of the goods. Shri Vishal Agarwal submits that the appellant submitted various documents before the adjudicating authority in support of the contention that furnace oil had been delivered to the four vessels of Essar Shipping Limited. However, the same had not been considered by the adjudicating authority while passing the order. He referred to the said documents as detailed below:
A. Furnace Oil has been supplied to MV Badri Prasad under cover of Shipping Bill C-06 dated 23.02.2007 and C-10 dated 27.02.2007.
i. Arrival Report filed with Surat Customs in respect of barge Hope Island-II dated 22.02.2007 recording that the ships stores (Furnace Oil)-560 MT was carried by it from the Bedi Port
ii. Bunker Delivery Note signed by the Chief Engineer of MV Badri Prasad noting that 558.710 MT of furnace oil had been delivered on 28.02.2007 between 1100 hrs to 1420 hrs. Bunker Delivery Note dated 04.03.2007 recording of delivery of 546 MT of furnace oil to vessel MV Badri Prasad bearing the signature of the Chief Engineer of MV Badri Prasad.
iii. Invoice of ZEE Shipping dated 12.03.2007 in respect of freight charges for of 567 MT furnace oil for MV Badri Prasad from Bedi to Hazira and Hazira jetty to Hazira Anchorage.
iv. Email from the master of the MV Badri Prasad to personnel of Essar Shipping Ltd noting that 546MT of furnace oil had been received by MV Badri Prasad On 04.03.2007, leading of which commenced at 0800 hrs and finished at 1215 hrs.
v. Report of Subhash Chander & Associates, which has recorded that between 01.03.2007 and 03.03.2007, 545.100MT had been received as per Essar Steel Hazira weighbridge, which was transferred to barge Hope Island-II.
vi. The Statement of Facts signed by the Master of MV Badri Prasad recording that furnace oil at the time of arrival was 586 MT while at the time of departure was 1690.7 MT.
B. Furnace Oil has been supplied to MV Mahavir Prasad under cover of Shipping Bill C-07 dated 14.03.2007.
i. Departure Report filed with Surat Customs in respect of barge Hope Island -II dated 19.03.2007 which records that the same had arrived with ships stores (Furnace Oil)-580
ii. Bunker Delivery Note signed by the Chief Engineer of MV Mahavir Prasad noting that 558 MT of furnace oil had been delivered on 20.03.2007. The same also bears a counter signature of the authorized signatory of barge Hope Island-
iii. Invoice of Gujarat Maritime Board (GMB) dated 16.03.2007 on ZEE Shipping in respect of 580 MT of furnace oil carried by barge Hope Island -II.
iv. Invoice of ZEE Shipping dated 23.03.2007 in respect of freight charges for transportation of 558 MT furnace oil for MV Mahavir Prasad from Bedi to Hazira and Hazira jetty to Hazira Anchorage.
v. Email from Zee Shipping services to Port Officer, GMB; Coast Guard; Indian Navy informing them that barge Hope Island -II would call upon Hazira Anchorage between 16/17th March 2007 for supply of bunker to MV Mahavir Prasad.
vi. Oil record book of MV Mahavir Prasad which records that on 20.03.2007, 550MT of furnace oil has been loaded.
vii. The Statement of Facts signed by the Master of MV Mahavir Prasad recording that furnace oil at the time of arrival was 666 MT while at the time of departure was 1224 MT.
C. Furnace Oil has been supplied to MV Chandi Prasad under cover of Shipping Bill C-08 dated 21.03.2007.
i. Arrival Report filed with Surat Customs in respect of barge Hope Island-II dated 05.03.2007 which records that the same had arrived with ships stores (Furnace Oil)-560 MT.
ii. Bunker Delivery Note signed by the Chief Engineer of MV Chandi Prasad noting that 557.290 MT of furnace oil had been delivered on 25.03.2007. The same also bears a counter signature of the authorized signatory of barge Hope Island-II.
iii. Invoice of Gujarat Maritime Board (CMB) dated 23.03.2007 on ZEE Shipping in respect of 560 MT of furnace oil carried by barge Hope Island-II.
iv. Invoice of ZEE Shipping dated 30.03.2007 in respect of freight charges for transportation of 557.290 MT furnace oil for MV Chandi Prasad from Bedi to Hazira and Hazira jetty to Hazira Anchorage.
v. The Statement of Facts signed by the Master of MV Chandi Prasad recording that furnace oil at the time of arrival was 13998 MT while at the time of departure was 1864.5 MT.
D. Furnace Oil has been supplied to MV Anassa under cover of Shipping Bill C-09 dated 23.04.2007.
i. Arrival Report filed with Surat Customs in respect of barge Hope Island-II dated 27.04.2007 which records that the same had arrived with ships stores (Furnace Oil)- 580 MT.
ii. Bunker Delivery Note signed by the Chief Engineer of MV Anassa noting that 557 MT of furnace oil had been delivered on 27.04 2007. The same also bears a counter signature of the authorized signatory of barge Hope Island-II
iii. Invoice of ZEE Shipping dated 02.05.2007 in respect of freight charges for transportation of 557 MT furnace oil for MV Anassa from Bedi to Hazira and Hazira jetty to Hazira Anchorage
iv. Email from Llyods register informing the result of the sample of furnace oil tested by them. One of the vessels which had been tested was 557 MT of furnace oil delivered on 27.042007.
v. Oil record book of MV Anassa which records that 04.2007, 557 MT of furnace oil has been loaded between 0900 hrs and 1400 hrs.
3. He submits that on the basis of numerous documents for each consignment as referred above, it clearly establishes that the furnace oil supplied by the appellant M/s Nayara Energy Limited has been delivered to the vessels of Essar Shipping Limited. Accordingly, the condition of actual user has been scrupulously made by M/s Nayara Energy Limited. He submits that the majority of documentary evidences submitted by the appellant before the adjudicating authority have been discarded by him on the pretext that the said documents were produced at the time of adjudication and the same were not available during investigation by DRI. He submits that without pursuing the authenticity of the documents, he brushed aside the same, which is clearly a violation of principles of natural
justice. He alternatively submits that the appellant M/s Nayara Energy Limited have cleared the goods on the basis of proper SFIS Scrips which is not under dispute, therefore, if at all there is any violation of actual user condition, the demand at the most should have been raised against the recipient of the goods i.e. M/s Essar Shipping Limited. On this ground also the demand is not sustainable. In support of his submission, he placed reliance on the following judgments:
