2014 (10) TMI 83 - AT - Central Excise

Cenvat credit - M.S.Angles, Channels, Beams, Plates, flats, G.C./G.P. Sheets etc., claimed to have been used in the fabrication of capital goods - Held that - The ld.Adjudicating Authority has directed the field formation for a factual verification of the claim of the Appellant. Consequently, the Range Superintendent after due verification submitted to the adjudicating authority in explaining the use of disputed items at various locations/machineries in the factory. A copy of the said verification report ought to have been handed over to them, before deciding the issue and non-supply of the same, resulted in violation of principle of natural justice - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Waiver of predeposit of cenvat credit and penalty under Cenvat Credit Rules, 2004.

Analysis:
The case involved an application for waiver of predeposit of cenvat credit of Rs. 6.20 Crores and an equal amount of penalty imposed under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. The Appellant had availed cenvat credit on various items from April 2007 to December 2008, which were used in the manufacture of capital goods. The demand was contested on the grounds that the items were used in fabrication not related to capital goods. The Appellant provided a detailed explanation supported by a Chartered Engineer's Certificate, claiming the items were used in or in relation to the fabrication of capital goods as defined under the Rules. However, the Department did not provide a copy of the verification report conducted by the Range Superintendent, depriving the Appellant of the opportunity to rebut the findings, leading to an alleged violation of the principle of natural justice.

The ld. Advocate for the Appellant argued that the failure to provide the verification report infringed on the Appellant's right to a fair adjudication process. On the other hand, the ld. A.R. for the Revenue acknowledged the non-supply of the report but contended that it did not impact the findings in the impugned order. Despite this, the Revenue did not object to remanding the case to the adjudicating authority, suggesting a fixed time frame for the completion of the proceedings.

After hearing both parties, the Tribunal found that the appeal could be disposed of at that stage. It was noted that eleven show-cause notices alleging the improper availment of cenvat credit on various items had been adjudicated. The Appellant had provided a Chartered Engineer's Certificate to support their claim that the items were used in the fabrication of capital goods. The Tribunal agreed with the Appellant's argument that the non-supply of the verification report violated the principle of natural justice. Therefore, the Tribunal deemed it appropriate to remand the case to the Commissioner for a fresh decision, considering any submissions filed by the Appellant on the report. A time frame of four months was set for the completion of the adjudication process, emphasizing the importance of a fair and transparent procedure. Ultimately, the appeal was allowed by way of remand, and the stay petition was disposed of.