Twenty First Century Wire Rods Ltd. vs Union of India

All these three appeals have been filed by the appellant u/s 35G of the Central Excise Act, 1944 (the Act), challenging two orders dated 10 September, 2012 and one order dated 8 April, 2013 of the Customs, Excise & Service Tax Appellate Tribunal (Tribunal), All the above three impugned orders have been passed on application for dispensing with pre-deposit of duty and penalty as confirmed by the adjudicating authorities. So far as Appeal No. 2 of 2013 is concerned, it is an appeal filed in respect of the appellant''s Goa Unit and deals with the impugned order dated 8 April, 2013 of the Tribunal. This appeal was admitted on 3 July, 2013 by the Goa Bench of this Court on the following substantial question of law:

"Whether the Appellate Tribunal erred in directing pre-deposit of 50% of demand relying upon statements of suppliers, who did not turn up for cross-examination?"

The above Appeal No. 2 of 2013 was transferred to Bombay when the other two appeals viz.: Appeal Nos. 133 of 2012 and 134 of 2012 challenging two separate orders dated 10 September, 2012 of the Tribunal came up for admission. This was for the reason that it was urged on behalf of the appellant that the issues arising in all the three appeals are identical. The Appeal Nos. 133 of 2012 and 134 of 2012 emanate from appellant''s factory at Silvassa while Appeal No. 2 of 2013 from appellant''s factory at Goa.

In both its factories at Silvassa and Goa, the appellant is engaged in manufacturing M.S. Ingots. For the purpose of manufacturing its final product, the appellant uses inputs in the form of Sponge Iron, M.S. Scrap, etc., and avail of Cenvat credit of duty paid on inputs by the suppliers thereof.

In all the three appeals, the appellant was denied Cenvat credit availed on the inputs on the basis that same was taken on the basis of bogus invoices. In fact, the suppliers of the inputs have made statements that they have not supplied raw materials/inputs to the appellant and that the invoices produced do not belong to them. The appellant sought cross-examination of the suppliers, but the same was not granted by the adjudicating authorities. However, during the course of investigation, the Director of the appellant in Appeal Nos. 133 of 2012 and 134 of 2012 and the authorized representative of the Director in case of Appeal No. 2 of 2013 admitted that the invoices were not genuine invoices to the extent invoices were shown to them. Besides, other employees of the appellant also admitted in their statement that no inputs were received on the basis of the invoices shown to them. On the basis of the statements of the Director and the employees of the appellant, the adjudicating authorities by three separate orders confirmed the show cause notices and also imposed equal penalty.

Being aggrieved, the appellant carried all the three orders in appeal to the Tribunal and also sought dispensation with the pre-deposit of duty, penalty and interest for the purposes of their appeal being entertained on merits. The Tribunal in its order dated 8 April, 2013 (being Appeal No. 2 of 2013) directed the appellant to deposit an amount of 50% of Rs. 4.49 Crores of duty demanded. While the Tribunal in its order dated 10 September, 2012 (Appeal No. 134 of 2013) directed the appellant to pre-deposit Rs. 5 Crores out of Rs. 7.61 Crores payable after holding that the demand to the extent of Rs. 11.21 Crores is unsustainable. While in the other order dated 10 September, 2012 (Appeal No. 133 of 2013) directed the appellant to deposit a sum of Rs. 1 Crore out of the demand of Rs. 1.47 Crores.

Grievance of the appellant is that no reliance can be placed upon the statement of the supplier in the absence of the supplier being put to the test of the cross-examination. In view thereof, the Tribunal ought to have discarded the demand attributable to supplier''s statement that no inputs were supplied by them to the appellant. Therefore, the appellant should be asked to pre-deposit only such amounts which have been admitted by the Director or its authorized representative specifically when Invoices were shown to them.

We find at the prima facie stage, there is no reason to interfere with the order of the Tribunal in view of the fact that there is an admission by the director/its authorized representative as well as by employees pointing out that the inputs were not received under the invoices shown to them. If the appellant succeed at the final hearing in its contention that the evidence of the supplier cannot be relied upon in the absence of cross-examination, then entire demand attributable to the supplier''s statement may be set aside. However, in view of statement of Director and suppliers at this prima facie stage, we see no reason to interfere with the orders of the Tribunal.

One more fact to be noted is that the Tribunal in its order dated 8 April, 2013 (Appeal No. 2 of 2013) records that there is cash balance available with the appellant of Rs. 6.70 Crores in its books as reflected in its Balance Sheet dated 31 December, 2012. In these circumstances, this is one more reason not to interfere with the impugned orders dated 10 September, 2012 (two orders) and 8 April, 2013 passed by the Tribunal. Accordingly, all three appeals are dismissed. However, the time to deposit the amounts as directed by the Tribunal in its three impugned orders is extended up to 15 December, 2013.