No interference by High Court if Tribunal decided the factual position correctly.

PJ/CASE LAW/2014-15/2518

Case:-COMMISSIONER CENTRAL EXCISE AND CUSTOMS Vs NEW KISHAN CEMENT PVT LTD

Citation:-2015-TIOL-21-HC-AHM-CX

Issue:-No interference by High Court if Tribunal decided the factual position correctly.

Brief Facts:- 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 cancelled 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 re-appreciation 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 26.4.008, 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.

Reasoning of Judgment:- 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.

Decision:-Appeal Dismissed.

Comment:- The essence of the case is that the Tribunal is the last fact finding authority and when it was concluded by the Tribunal that the request of cross examination was mechanically declined and was relevant in the present case, there was no reason for the High Court to interfere. Consequently, the appeals filed by the revenue were dismissed.

Prepared By:Meet Jain

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PJ/CASE LAW/2014-15/2518

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