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2026 Supreme(Online)(CESTAT) 1903
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Rachna Gupta, Judicial Member
Ghankun Steels Pvt. Ltd. – Appellant
Versus
Commissioner of CGST & Central Excise-Raipur – Respondent
Excise Appeal No. 50156 of 2019 | Excise Appeal No. 50157 of 2019
For the Appellants/Petitioners: Parul Sachdeva, Prerna Jain Kala
For the Respondents: Anand Narayan
Cenvat credit cannot be denied solely based on third-party statements or invoices of non-existent suppliers without independent corroborative evidence of clandestine removal, and specifically requires adherence to Section 9D of the Central Excise Act regarding the cross-examination of witnesses.
Headnote:The dispute involved the denial of Cenvat credit to the appellants based on allegations that the suppliers of raw materials were non-existent entities and the invoices issued were bogus. The Revenue placed reliance on third-party evidence, specifically statements recorded under Section 14 of the Central Excise Act, 1944. The Court observed that the department failed to follow the mandatory procedure under Section 9D of the Act for admitting such statements as evidence and denied the appellants an opportunity for cross-examination, which is a fundamental requirement of justice. Following the principles established in various precedents, the Court addressed whether third-party evidence, without corroborative proof of clandestine manufacture and disposal, could sustain a demand for recovery. It held that the Revenue must provide tangible evidence regarding the flow back of funds, excess raw material purchase, and electricity consumption to prove clandestine removal. The Court reasoned that an assessee cannot be burdened with verifying the existence of every supplier if they have acted with reasonable diligence per the Cenvat Credit Rules. The final verdict resulted in the order being set aside, with the conclusion that the department failed to prove allegations of improper Cenvat credit availment, thereby allowing the appeals.
| Table of Content |
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| 1. overview of allegations concerning non-existent suppliers and cenvat credit disputes. (Para 1) |
| 2. arguments addressing the admissibility of third-party evidence and statement reliability. (Para 3 , 4) |
| 3. legal standard for cross-examination and requirement for concrete corroborative evidence in clandestine removal cases. (Para 5) |
| 4. final ruling determining the insufficiency of evidence for denial of credit. (Para 6) |
Ms. Parul Sachdeva and Ms. Prerna Jain Kala, Advocates of the Appellant Shri Anand Narayan, Authorised Representative for the Respondent CORAM:HON’BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL)
DATE OF HEARING: 20.01.2026 DATE OF DECISION: 19.05.2026 FINAL ORDER No. 50945-50946/2026 DR. RACHNA GUPTA Present order disposes of two appeals arising out of the same order. One appellant being company and another its proprietor. M/s. Ghankun Steels Pvt. Ltd., the appellant herein is engaged for manufacture of Sponge Iron and M.S. Ingots with Shri Bimal Kishore Khetan and Shri Ankit Chopudhary, the directors thereof. Appellants are using Iron ore, coal, Sponge Iron, Pig Iron, Dolomite, MS Waste & Scrap and Silico Manganese as major raw materials/inputs for manufacturing of their final product. The Revenue got a specific information that the raw material suppliers of the appellant were not found in existence and were found to have taken and utilized huge amount of Cenvat credit without manufacturing any goods during the year 2012-13 and 2013-14. The co-noticees namely, M/s. Rakti Trading Pvt. Ltd., M/s. Yes Commtrade (India) Pvt. Ltd., M/s. Supreme Multi Trade Pvt. Ltd. and M/s. Singh Mineral & Infra Tech, are such non-existing entities. 1.1 The information was received pursuant to the investigation on the premise that certain registered manufacturing entities like M/s. High Tide Infra Project Pvt. Ltd., M/s. Supreme Multi Trade Pvt. Ltd., M/s. Singh Mineral & Infra Tech, co-noticees, are not genuine entities. These entities have been alleged to have issued Cenvatable invoices without actual goods being supplied to the first and second stage dealers in Raipur such as M/s. Rakti Trading Pvt. Ltd. and M/s. Yes Commtrade (India) Pvt. Ltd. The transaction found to be managed by Shri Pradeep Kumar Agrawal, the Proprietor of M/s. Supreme Multi Trade Pvt. Ltd., Raipur, (the another co-noticee) and Shri Rajendra Manohar Soni, the Director of M/s. Supreme Multi Trade Pvt. Ltd. with their facilitator Shri Rajesh Agrawal, the co-noticee. The notice has not been served to M/s. Rajendra Manohar Soni.
1.2 On the basis of evidences gathered during the investigation, the department alleged that during the period 2013-14, the appellant has availed improper Cenvat credit amounting to Rs.28,40,329/- on the strength of fake invoices issued by registered dealers as mentioned above. Accordingly, the Show Cause Notice No.111/2015-16 dated 11.05.2017 was served upon the eight above named co-noticees proposing the Cenvat credit of Rs.28,40,329/- to be disallowed and to be recovered from the appellant. The said proposal has been confirmed vide Order-in- Original No. 39/2017 dated 13.14.2018. Appeal against the said order has dismissed vide Order-in-Appeal No. 382 to 383/2018-19 dated 26.09.2018. Being aggrieved, the appellant is before this Tribunal.
2. I have heard Ms. Parul Sachdeva and Ms. Prerna Jain Kala, learned counsels for the appellant and Shri Anand Narayan, learned Authorized Representative for the department.
3. Learned counsel for the appellants has submitted that the present show cause notice is part of a larger investigation involving allegations against the same intermediary parties qua different sets of ultimate manufactures. All of these proceedings have already reached this Tribunal and stands concluded in favor of the respective assesses. The middlemen that of M/s. Jetking Trading and Agencies Pvt. Ltd., M/s. RMS Steel and Company, M/s. Prakash Industries, M/s. High Tide Projects Pvt. Ltd., M/s. Supreme Multi Trade Pvt. Ltd
