Bolpur vs M/S. Jai Balaji Industries ...
2022 Latest Caselaw 630 Cal/2

OD-16

                                     CEXA/13/2021
                                    IA No.GA/2/2021

                         IN THE HIGH COURT AT CALCUTTA
                              Special Jurisdiction
                                  ORIGINAL SIDE


                                           COMMISSIONER OF CENTRAL EXCISE,
                                           BOLPUR
                                                    -Versus-

                                           M/S. JAI BALAJI INDUSTRIES LIMITED

                                                                         Appearance:
                                                           Mr. Somnath Ganguli, Adv.
                                                              Mr. Tapan Bhanja, Adv.
                                                               ...for the appellant.

                                                         Mr. Agnibesh Sengupta, Adv.
                                                                Ms. Swapna Das, Adv.
                                                             ...for the respondents.

BEFORE:

The Hon'ble JUSTICE T.S. SIVAGNANAM

-And-

The Hon'ble JUSTICE HIRANMAY BHATTACHARYYA

Date : 23rd February, 2022.

The Court : This appeal filed by the revenue under

Section 35G of the Central Excise Act, 1944 (the 'Act' in brevity)

is directed against the final order No.75111/2020 dated 15th

January, 2020 passed by the Customs, Excise and Service Tax

Appellate Tribunal, Kolkata (in short the 'Tribunal') in Excise

Appeal No.2224 of 2010.

The revenue has raised the following substantial

questions of law for consideration :

"I) Whether the Learned Tribunal is right and justified in allowing the appeal of the assessee by relying upon the order No.77032/2019 dated 25.10.2019 and overlooking the fact that Cenvat Credit availed under Rule 4(2)(a) of the Cenvat Credit Rules, 2004 is not available to the respondent company as M/s. AESPL issued only invoices without supply of any excisable goods, since the said M/s. AESPL did not have any manufacturing capacity?

II) Whether the Learned Tribunal acted in breach of natural justice by not considering the report of the Registered Chartered Engineer and also failed to provide proper reasoning and/or independent findings while disagreeing with the findings of the adjudicating authority?

III) Whether the assessee is entitled to avail Cenvat Credit under Rule 4(2)(a) of the Cenvat Credit Rules, 2004 on the strength of invoices issued by M/s. AESPL, when M/s. AESPL is not authorised to issue Central Excise Invoices under Rule 11 of the Central Excise Rules, 2002?

          IV)     Whether       the     Learned      Tribunal             is     justified     in
                  allowing       the     appeal          of     the       assessee      without

considering the provisions of Rule 3, 4 and 7 of the Cenvat Credit Rules, 2002/Rules 3, 4 and 9 of the Cenvat Credit Rules, 2004?

          V)      Whether the order passed by the Learned Tribunal is
                  perverse       and     contrary        to     the       findings      of    the

adjudicating authority and a reasonable one?"

The respondent/assessee was issued a show cause notice

dated 4th December, 2008 alleging that the respondents have

wilfully and deliberately indulged in suppression of material

facts from the department of non-receipt of capital goods namely,

machine & mechanical appliances from the so called manufacturer-

supplier, M/s. Ashok Electrical Stampings (P) Ltd. (M/s. AES) who

had actually never manufactured or supplied the same which,

according to the department, was evident from the investigation

carried out by the concerned jurisdictional unit. Further, the

show cause referred to a statement given by the Project Manager of

the assessee on 28th November, 2008 recorded under Section 14 of

the Act with regard to the entries made for the period 2003-04,

2005-06, 2006-07 and 2008-09 confirming that they have wrongly

availed Cenvat Credit on the strength of the invoices issued by

M/s. AES through which capital goods were shown to have

purchased/procured by the assessee. Further reference has also

been made to other statements given by the Project Manager.

Further, the show cause notice stated that the Central Excise

registration of M/s. AES was suspended by order dated 10th August,

2007 and the fact of procurement of 30 bogus invoices by the

assessee during the period includes the period during which the

registration of M/s. AES was suspended. Therefore, the assessee

was called upon to show cause as to why the Cenvat Credit of

Rs.3,07,48,020/- wrongly availed shall not be denied and recovered

in terms of Rule 12 of the Cenvat Credit Rules, 2002/Rule 14 of

Cenvat Credit Rules, 2004; why penalty shall not be imposed upon

them in terms of Rule 13/Rule 15 read with Section 11AC of the Act

and why interest at appropriate rate should not be charged under

Rule 12/Rule 14 of the Rules read with Section 11AB on the amount

demanded.

The assessee had submitted their reply firstly contending

that the case is barred by time under Section 11A of the Act and

in the absence of suppression/misstatement having not been

established, extended period of limitation cannot be invoked.

Further it was stated that the items which have been procured from

M/s. AES were received under duly authorized document and used in

the assessee's factor for production and manufacture of final

products and collateral evidence including the payment particulars

through cheques were reflected in the Party-Ledger have been

produced at the time when summons was issued to the assessee.

Further, it was stated that before the assessee placed supply of

purchase orders with M/s. AES, a thorough due diligence was done

and only after verification orders were placed. Further, what is

required to be seen is whether the assessee had produced documents

as specified in Rule 9 of the Rules irrespective of whether the

supplier had committed some error or mistake and for which the

assessee should not be penalised. Several other accounts and

factual details were placed in the reply to the show cause notice

and decisions were also referred to in support of their stand.

The reply given by the assessee was not accepted by the

adjudicating authority and by order dated 31st December, 2009

confirmed the proposal in the show cause notice. Challenging the

said order, the assessee filed appeal before the tribunal. The

appeal has been allowed by following another decision of the

tribunal in respect of the assessee's another unit in final order

no.77032/2019 dated 25th October, 2019. Aggrieved by such order,

the revenue is before us.

We have heard Mr. Somnath Ganguli, learned Counsel

assisted by Mr. Tapan Bhanja, learned Advocate for the

appellant/revenue and Mr. Agnibesh Sengupta, leaned Counsel

assisted by Ms. Swapna Das, learned Advocates for the

respondent/assessee.

On a reading of the impugned order we find that the

tribunal has not specifically recorded as to how and in what

circumstances the decision of the tribunal dated 25th October, 2019

in respect of another unit of the assessee covers the issue on

hand. To be noted that the appeal was filed by the

respondent/assessee on 6th April, 2010 and, obviously, on the said

date the assessee could not have referred to the decision of the

tribunal in respect of the assessee's another unit because the

said decision was rendered by the tribunal almost nine years after

the appeal was presented i.e., on 25th October, 2019. Thus, it is

evidently clear that for the first time when the matter was heard

before the tribunal, submission of the assessee was that the issue

is covered by the order of the tribunal dated 25th October, 2019.

If such was the factual position, in our considered view, the duty

cast upon the Court is to examine as to in what manner the

decision covers the case before the concerned Court. The Court

will be justified in following the earlier decision if the

contesting respondent agrees to the same. However, in the

impugned order we find that the revenue has not acceded or

accepted that the decision dated 25th October, 2019 of the tribunal

covers the present case. In such circumstances, it goes without

saying that the tribunal has to record reasons as to how the

decision would cover the case before it. Having failed to do so

we would be well justified in setting aside the order. That

apart, we find that the memorandum of appeal presented by the

assessee before the tribunal is a very elaborate memorandum

running to nearly 25 pages. The assessee prima facie focussed on

factual issues as to how they have bona fide effected the purchase

and utilised those products for manufacture of finished goods.

Several documents, records, particulars regarding payments made

through banking channel etc. were produced. The assessee also

relied upon various decisions of the Court, some of which,

according to the assessee, would apply to the facts of the case

and other decisions on how and when the extended period of

limitation under Section 11AC could be invoked. However, the

tribunal has not discussed any of those grounds and as observed

earlier, the tribunal was required to examine the grounds more

particularly when the revenue seeks to sustain the order in

original and the department representative is shown to have

reiterated the findings rendered by the adjudicating authority in

the order in original. Therefore, we hold that the order impugned

to be devoid of reasons and consequently calls for interference.

The learned counsel appearing for the appellant submitted

that the decision of the tribunal dated 25th October, 2019 in

respect of another unit of the respondent would not apply on

facts, but however, the department did not prefer any appeal

before this Court under Section 35G on account of low tax effect.

If such is the situation, the duty of the Court, while examining

the appeal under Section 35G has to be looked into.

We are required to examine as to whether any substantial

question of law arises for consideration. The tribunal has not

given any reasons as to why the decision dated 25th October, 2019

would apply to the case on hand. Therefore, if we are called upon

the adjudicate the correctness of the order, we would have to

examine as to whether the Commissioner of Central Excise has

rendered a proper finding in the order in original. This is not

the scope of the appeal under Section 35G of the Act. This is one

more reason as to why the order impugned has to be set aside and

the matter to be remanded for fresh consideration.

Learned counsel for the respondent/assessee expresses

apprehension that when the matter is sent back to the tribunal,

this judgment should not have an impact on the fresh decision that

the tribunal is required to take. It is elementary legal

principle that in case of open remand, all issues are left open

and if any observations are made touching the merits of the

matter, they have to be regarded as observation for setting aside

the order of the tribunal and justifying as to why the case should

be remanded. Therefore, the respondent/assessee need not have any

apprehension in this regard and they will be free to raise all

factual and legal issues before the tribunal.

For all the above reasons, the appeal is allowed and the

impugned order is set aside and the matter is remanded to the

tribunal for fresh consideration on merits and in accordance with

law. Consequently, the substantial questions of law are left

open.

With the disposal of the appeal, the connected

application for stay stands closed.

(T.S. SIVAGNANAM, J.)

(HIRANMAY BHATTACHARYYA, J.)

S.DasA/s.