Full Judgment
Priyanka Metals in respect of copper bars, whereas no copper bars were physically issued and actually received by them; that these documents were sold by them in the open market and on the strength of these documents the appellants availed the Modvat credit. It is further stated in the show cause notice that Shri Sunil Kejriwal, partner of M/s. Kejriwal Enterprises in his statement dated 18-8-1993 and 16-9-1993 admitted that the factories were not engaged in any manufacturing activity since the previous 21/2 years; that the copper bars purchased by them from M/s. H.C.L. and M/s. M.M.T.C. were sold in the open market to different buyers on cash payment; that he used to issue Rule 57F(2) challans to different rolling mills to enable them to cover the accountal of raw material and removal of finished goods from these units to their destinations; that the sale of finished product was shown on paper to some other parties whereas no goods were actually sent, to enable such manufacturers to avail the Modvat credit on the strength of such GP-1s. Similarly, Shri K.C. Kejriwal, authorized signatory of M/s. Priyanka Metals in his statement dt. 10-8-1993 admitted that this unit used to procure copper bars from M/s. H.C.L.
and M/s. M.M.T.C. and these were sold in the open market without manufacturing activity and without bringing them in the factory premises; that this was being done for the previous 2 years; that they used to take Modvat credit of duty paid on the goods in RG 23A Part I and Part II whereas actually no goods were received in the factory; that they used to issue bogus GP-1s to parties who wanted to avail Modvat credit of excise duty without actually purchasing the raw material; that they used to issue false challans under Rule 57F(2) to different rolling/re-rolling mills to enable them for the accountal of their unaccounted goods; that the unaccounted copper bars were rolled by the rolling mills and their despatch to market/any other destinations were covered by these challans; that no material ever accompanied the Rule 57F(2) challans from M/s. Priyanka Metals. It is further alleged that the investigations were also conducted at the transporter's end who were shown to have transported the copper rods from rollers to various units floated by Shri Sunil Kejriwal. It was revealed that none of them had ever transported the copper rods to the aforesaid units of M/s. Kejriwal Enterprises and M/s. Priyanka Metals.
This corroborated the confessions made by Shri Sunil Kejriwal and Shri K.C. Kejriwal. Accordingly, it is alleged that the Modvat credit availed on the strength of GP-1s issued by these two parties was inadmissable since the goods covered by them were never received and used in the manufacture of final product in violation of Rule 57F(1) and Rule 57G(2). The appellants were therefore called upon to show cause why the wrong availment of Modvat credit amounting to Rs. 3,50,342.87 on winding wires which were neither received in the factory nor used in the manufacture of final products should not be disallowed and recovered from them under the provisions of Rule 57-I(1) of Central Excise Rules, 1944 and why a penalty should not be imposed on them under Rule 173(bb). Shri G.D. Arora, partner of the noticee party is called upon to show cause why a penalty should not be imposed on him under Rule 209A. In their reply dt. 8-4-1996 to the above show cause notice, the appellants denied the allegations levelled against them and requested that they may be allowed to inspect the documents referred to in the show cause notice, as no copies had been furnished and supplied along with show cause notice. They further requested to take photocopies of the documents. The appellant further sent their detailed reply dt. 15-2-1999 to show cause notice wherein they specifically asked for the copies of the following documents: (3) Investigation reports pertaining to the transporters as referred to in the show cause notice and (4) Any other document or record on which the department intended to proceed against them.
In the same letter, they stated that since the statements on which the reliance is placed were recorded and investigations were made at their back they should also be allowed to cross-examine the concerned persons.
3. The Addl. Commissioner of Central Excise however passed an Order dated 22-6-1999 in which he confirmed the demand of Rs. 3,50,342.87 on the appellants under Rule 57-I. He further imposed a penalty of Rs. 3,50,000/- on them under Rule 173Q(bb). He also imposed a penalty of Rs. 50,000/- on Shri G.D. Arora under Rule 209A. The Addl. Commissioner in his order with regard to the request for the cross-examination of Shri Sunil Kejriwal and Shri K.C Kejriwal by the appellants observed that the same had already been done in another linked case and it had been established that they had been issuing bogus Gp-1s. The adjudicating authority has further observed that the repetition of the process will be a loss of time as well as blockage of revenue which otherwise is recoverable from the party; that the party at this juncture, after about 21/2 years of the issue of show cause notice was asking for relied upon documents which could have been obtained by them much earlier; that this is nothing but dilatory tactics adopted by the party and therefore he would adjudicate the case on its merit.
Consequently, he has held that the allegations levelled against the party and the person mentioned in the show cause notice are found correct.
4. The appellants filed appeals. The Commissioner (Appeals), New Delhi vide his order dt. 11-1-2002 but for quashing the penalty of Rs. 50,000/-imposed on Shri G.D. Arora, otherwise rejected the appeal of the party.
5. This is a Stay Petition against the impugned order of Commissioner (Appeals). I have heard Shri L.P. Asthana, Advocate for the appellants and Shri A.S. Bedi, SDR for the respondents. I have considered the submissions made before me. I find the adjudication order passed by the Addl. Commissioner is a non-speaking order and without proper analysis of the facts involved in the case. Admittedly the copies of the statements of Shri Sunil Kejriwal and Shri K.C. Kejriwal which implicate the appellants have not been supplied to them much less any cross-examination of these witnesses allowed to them even on their specific request. The adjudicating authority says that their cross-examination had already been done in another linked case and the repetition of the same process will be a loss of time as well as blockage of revenue. This observation is against the principles of natural justice and the Rule of law. The cross-examination of the same witnesses in some other proceedings in which the present appellants are not one of the party would not extinguish their right of cross-examination of the witnesses who have implicated them. In the result, the present orders against the appellants cannot be sustained.
The appellants are therefore granted the stay, the impugned order of Commissioner (Appeals) is set aside and the matter is remanded to the original Authority for de novo proceedings. The appellants should be provided with the copies of the statements of Shri Sunil Kejriwal and Shri K.C. Kejriwal relied upon by the Revenue in the show cause notice and any other documents on Which the reliance is placed by the department in the show cause notice. If asked for, the department shall also afford a reasonable opportunity of cross-examination of the witnesses who have implicated the appellants.
6. The Stay Petition and the Appeal - both are disposed of in the above terms.