2007 (1) TMI 377 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are the denial of Cenvat credit on inputs, rejection of assessable value of goods, and compliance with the provisions of Notification No. 6/02-CE dated 31-3-2002.

Denial of Cenvat Credit on Inputs:
The appellants, engaged in building bodies on chassis for motor vehicles, were denied Cenvat credit by the Superintendent of Central Excise without issuing a show-cause notice. The Superintendent's letter dated 24-3-2006 directed the reversal of credit taken on chassis and disputed the value adopted for fully built vehicles. The Commissioner (Appeals) upheld the Superintendent's instructions without affording the appellants an opportunity to contest through adjudicatory proceedings. The Tribunal found that each proposal required a show-cause notice for the party to challenge the adjudication properly. The impugned order was set aside due to the violation of natural justice, and the department was directed to follow the principles of adjudication.

Rejection of Assessable Value of Goods:
The Superintendent's letter contained proposals regarding the assessable value of goods supplied to M/s. Ashok Leyland Ltd., which were not backed by a show-cause notice. The Tribunal emphasized that such proposals necessitated a formal notice to allow the party a chance to contest the issues in a statutory appeal. The impugned order, which directed compliance with the Superintendent's instructions without due process, was deemed unsustainable. The Tribunal highlighted the importance of quasi-judicial proceedings and the need for natural justice in adjudicatory matters.

Compliance with Notification No. 6/02-CE:
The Superintendent's letter raised concerns about compliance with Notification No. 6/02-CE dated 31-3-2002, specifically regarding Cenvat credit on chassis and raw materials used for body-building. The Tribunal stressed the requirement of issuing a show-cause notice before rejecting the assessable value, denying Cenvat credit, or disallowing notification benefits. The impugned order, which directed the appellants to follow the Superintendent's instructions without proper adjudication, was overturned to ensure adherence to legal procedures and principles of natural justice. The Tribunal allowed the appeal and instructed the Central Excise officer to proceed lawfully with a show-cause notice and due process.