Commissioner Central Excise and Customs vs New Kishan Cement Private Limited

Akil Abdul Hamid Kureshi, J.—Draft amendments in all the appeals are allowed.

These appeals arise out of a common judgment of the Customs, Excise and Service Tax Appellate Tribunal (''the Tribunal'' for short). Briefly

stated, the issue pertain to sale of pet coke by the manufacturers of cement who are the respondents in Tax Appeal Nos. 1226 of 2014 and 1228

of 2014. The case of the Revenue is that such purchasers had not purchased pet coke which had been duty paid resulting into cenvat credit. The

respondents erroneously claimed cenvat credit on such goods. The Commissioner had declined cenvat credit and ordered recoveries with penalty

and interest. Tax appeal Nos. 1231 and 1233 of 2014 pertain to the Directors of these companies who have been visited with personal penalties.

Remaining four appeals involved the suppliers whose registrations have been canceled for such alleged misdemeanor. According to the

department, the said assessees had not supplied pet coke on which cenvat credit was paid, fabricated invoices were credited to enable the

purchasers to claim cenvat credit without payment of duty. On such basis, show cause notices came to be issued. The Commissioner confirmed

duty, penalty and interest demands upon which all the aggrieved parties appealed before the Tribunal. The Tribunal by the impugned judgment

allowed all the appeals. The Tribunal noted that the samples were actually drawn on 26.4.08 under a panchnama drawn on the same date. The test

report, however, was not produced on record. The Tribunal believed that this would lead to the inference that the test report was not favourable to

the department and therefore not produced. This impression of the Tribunal was further amplified when it noticed that initially in the show cause

notice, reference was made to samples of 26.4.08, however, later on a corrigendum was issued deleting reference to such samples.

The department relied on the report of the samples drawn on 3.5.08 from a private laboratory to suggest that the goods tested did not conform

to the specifications of pet coke. The Tribunal noted that when reputed Government laboratories were available, there was no reason for the

department to send the report to NSIC laboratory. The department could not render any reasonable explanation for this. The purchasers had also

disputed the methodology for drawing of the samples as well as in testing the samples. It was pointed out before the Tribunal that the minimum

standard specified for drawing of the samples of pet coke were not followed. The Tribunal gave detailed reasons to come to the conclusion that

the test report dated 7.5.2008 was not reliable.

With respect to the other evidence, the Tribunal came to two fold conclusions. Firstly, that the persons whose statements were relied upon by

the department were not offered for cross-examination though specific request in this regard was made. The Tribunal was of the opinion that such

statements could not have been relied under such circumstances. Reliance in this respect was placed in the case of Swadeshi Polytex Ltd. v. CCE,

Meerut, 2000 (122) ELT 641 (SC). Heavy reliance was placed on the statement of one Bhavin Mahendrabhai Pabari in which statement he had

admitted to the practice of diversion of the goods only for 15 trucks. He had not made any further statement with respect to any other

consignments. The Tribunal even otherwise, took a detailed and painstaking reappreciation of the evidence to come to the conclusion that the

Commissioner had committed a serious error.

In view of such findings of the Tribunal, we are of the opinion that the entire issue is based on appreciation of evidence and the materials on

record. The issues are primarily in the realm of factual findings. Even if the case of the department, as put forth before us through the Senior

Counsel was that no samples were drawn on 26.4.2008, it remains established that thus no chemical analysis of the materials seized from the

purchasers of the goods was available on record. If, on the other hand, the presumption as drawn by the Tribunal that such samples were drawn

but the test reports were not placed on record is correct, the situation would be much worse for the department. In either case, the materials at the

end of the purchasers could not be established through any reliable evidence of not being pet coke.

Right from the beginning the assessees had been asking for cross-examination of large number of the witnesses whose statements the

department sought to rely upon. There were as many as 24 such witnesses. The assessee had also asked for the cross-examination of the chemical

analyzer of the laboratory carrying out the test report. After a long period of time of about two years, the Commissioner rejected such request. It

may be that in a given situation, cross-examination of a witness may be declined after recording proper reasons. However, when the Commissioner

mechanically declined cross-examination of the witnesses whose statements were relied upon and when the Tribunal found that this would have a

material effect on the conduct of the inquiry, we see no reason to interfere with the factual findings of the Tribunal.

In the result, all the Tax Appeals are dismissed.