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Ms. Arjandas Metal Industries Pvt. Ltd. Versus The Commissioner of Central Excise

2015 (5) TMI 376 - BOMBAY HIGH COURT

Waiver of pre deposit - tribunal ordered 50% amount to be deposited - prima facie case - undue hardship - Denial of CENVAT Credit - contravention of the provisions of Rule 4 of the Central Excise Rules, 2002 - Confiscation of goods - Held that:- CESTAT has found some substance in the contention of the appellant and has directed him to predeposit only 50% of the duty demand confirmed against the appellant and not the entire 100% of the amount. It can thus be seen from the facts and circumstances .....

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nce at the hands of this Court as there is no substantial question of law involved in the present appeal for consideration of this Court - Decided against assessee. - Central Excise Appeal No. 169 of 2014 - Dated:- 8-5-2015 - B. R. Gavai And A. S. Gadkari,JJ. For the Appellant : Mr. Vikram Nankani, Senior Counsel a/w Mr Jayesh Motwani i/b Economic Laws Practice For the Respondent : Mr. Y. R. Mishra a/w Mr. Nilesh Kalantri JUDGMENT (Per A. S. Gadkari, J.): 1. The appellant by the present appeal f .....

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sued to the appellant and others dated 8th May 2012 by the Additional Director General, DGCEI, Zonal Unit, Mumbai after it was revealed in the investigation that the appellant received Cenvatable invoices from the Jammu based manufacturers in favour of itself without undertaking delivery of the goods mentioned thereunder. While arriving at the said conclusion, the said authorities recorded the statements of Shri Kevalchand G. Jain (the Noticee No.8 therein) the broker of the appellant, amongst o .....

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llant under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A (4) of the Central Excise Act, 1994. It was further ordered that the appellant is also liable to pay the interest on the amount aforestated. The Commissioner of Central Excise in its order-in-original also imposed a penalty of ₹ 96,31,754/- on the appellant under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1994. The Authority also imposed a penalty .....

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said authority did not impose any redemption fine. The said Authority was further pleased to impose penalty of ₹ 5 lakhs on the Managing Director (the Noticee No.7 therein) of the appellant under Rule 26 of the Central Excise Rules, 2002. 3. The appellant preferred an appeal before the Customs, Excise & Service Tax Appellate Tribunal ( for short CESTAT ), West Zonal Bench, Mumbai against the order-in-original dated 30th September 2013. The appellant also preferred an application for st .....

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d Counsel appearing for the Revenue at length. We have also perused the record annexed to the present appeal. Mr. Nankani, the learned Senior Counsel submits that, the substantial question of law on which the present appeal has been filed are mentioned in para-5 of the appeal memo. The learned Senior Counsel further submits that the Commissioner of Central Excise before passing the order-in-original dated 30th September 2013 ought to have allowed the appellant to cross-examine Mr. Kevalchand G. .....

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he duty demand confirmed against the appellant. He further submitted that as the principles of natural justice, thereby allowing the appellant to cross-examine the necessary witness have not been followed, the present matter requires reconsideration at the hands of the Commissioner of Central Excise before passing the order-in-original and confirming the demand. The learned Senior Counsel in support of his contention relied on the following judgments: (i) Swadeshi Polytex Ltd Vs. Collector of Ce .....

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case, the CESTAT was kind enough to direct the appellant to make only a pre-deposit of 50% of the duty demand. He further submitted that after taking into consideration the malpractice adopted by the appellant, in fact the learned CESTAT ought not have interfered with the directions given in the order-in-original and ought to have directed the appellant to deposit the entire amount as has been directed in the order-in-original. Mr. Mishra further submitted that the appeal arises out of an inter .....

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ant, without undertaking delivery of the goods mentioned thereunder and the appellant used to pay him the amount indicated in these invoices including CE duty, through account payee cheque issued in the name of concerned Jammu based supplier, after such cheques were encashed by them, the concerned Jammu based units deducted and retained 30% of the Cenvat amount and returned the balance cash to him and out of such cash received by him from the said Jammu based units, he deducted his own commissio .....

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manufacturers based at Jammu arranged the transport to deliver the said goods at the factory of the appellant at Mumbai. A finding has been recorded that there is no substance in the contention of the appellant that the production reflected in their balancesheet indicated the receipt of the said goods in their factory premises. That there is no substance in the contention of the appellant that they had discharged the Octrai duty as the investigation has clearly established that neither any of th .....

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o cross-examine the said Mr. Kevalchand G. Jain or a supplier, who facilitated the transactions thereby contending that if the opportunity is not granted, the denial prejudicailly affects the appellant. It has been held that when the matter was verified with the Octrai authorities to ascertain whether the Trucks bearing registration numbers mentioned in the transport documents actually crossed the Octrai check-naka, the Octrai authorities confirmed that the agent appointed by the appellant for c .....

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as therefore recorded a finding that the denial of the cross-examination of the broker or the supplier has not pre-judicially affected the appellant as the case against the appellant is established without these statements. The Tribunal has further come to the conclusion that it is clear that the entire availment of the credit by the appellant is only on the strength of the document without actual receipt of the goods. Therefore, the Tribunal has further recorded a finding that, the appellant ha .....

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hi Vs. State Bank of India & Ors [AIR 1984 SC 273], wherein the Apex Court has held that in quasi-judicial adjudication, neither cross-examination nor opportunity to lead evidence is an integral part of the adjudicating process while arriving at the conclusion by the said authorities. It has been further held by the Apex Court that, it is true that all the actions against a party which involve penal or adverse consequences must be in accordance with the principles of natural justice but whet .....

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it must reiterate again that the rules of natural justice are flexible and cannot be put on any rigid formula. In order to sustain a complaint of violation of principles of natural justice on the ground of absence of opportunity of cross-examination, it has to be established that prejudice has been caused to the appellant by the procedure followed. In the case in hand, we are of the opinion that as alleged Octrai firm through which the appellant cleared the goods by paying the Octrai duty while .....

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ts available before it and therefore the contention of the appellant that it ought to have granted an opportunity to cross-examine said Shri Kevelchand Jain or other suppliers has no substance at all in it. 9. The impugned order dated 10th February 2014 passed by the Tribunal clearly discloses that the Tribunal, after taking into consideration various aspects of the matter, has directed the appellant to make only a predeposit of 50% of the duty demand confirmed and in its discretion has waived t .....

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evenue. A useful reliance can be made at this stage on the judgment of the Apex Court in the case of Benara Valves Ltd Vs. Commissioner of Central Excise, reported in 2006(204) E.L.T. 513 (S.C.), wherein it has been held that on merely establishing a prima facie case, interim order of protection should not be passed. That while dealing with the application twin requirements of consideration i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Reve .....

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n that he is facing financial hardship as his factory is under closure. The learned Tribunal has further held that in the absence of any prima facie case, the interest of Revenue needs to be protected and therefore directed the appellant to make a pre-deposit of 50% of the duty demand confirmed against the appellant within a period of 8 weeks. 10. We are of the considered opinion that the learned CESTAT has recorded the finding correctly on the basis of the material available before it and has a .....

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