2016 (10) TMI 1156 - AT - Central Excise

CENVAT credit - It is the grievance of the appellant that the Tribunal s order and directions have not been implemented and the same demand have been repeated again by the impugned order, even after complete verification of facts and details having been made by the Assistant Commissioner in his verification report, which has accepted the appellant s pleas and submissions as well as records and documents as correct, but still the respondent has chosen to confirm the entire demand again - Held that - the entire case of the revenue confirming the impugned demand by denying Cenvat Credit is unsustainable, both on facts and in law. Nothing is brought on record by the revenue to prove that the assessee did not receive duty paid inputs and/or it did not utilise the same for manufacture of finished excisable goods cleared on payment of duty. The existence of commercial arrangement between the appellant and JMCIPL is only to carry out the commercial activities for the purpose of business of the company in the light of the need for financing control, sales, marketing and allied activities to run the business and in no way, does it disentitle the manufacturer of excisable goods i.e. ICI India Limited (presently Akzo Nobel Ltd.) to Cenvat Credit of the duty paid on inputs and capital goods. The law is well settled that the revenue cannot pass orders arbitrarily and cannot deny the credit or raise demand merely based on assumptions and presumptions. When facts on records are verified and found to be contrary to the allegations made in the notice, the demand as per notice cannot be confirmed again. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Disallowance of Cenvat Credit and imposition of penalty under sections 11AC and 11AB of the Central Excise Act, 1944.
2. Verification of duty paying documents and denial of Cenvat Credit based on technical grounds.
3. Implementation of Tribunal's directions for denovo adjudication.
4. Commercial arrangement between the appellant and another company affecting Cenvat Credit entitlement.
5. Allegations of denial of natural justice, violation of Tribunal's orders, and non-compliance with verification reports.

Analysis:
Issue 1: The appellant appealed against the disallowance of Cenvat Credit and imposition of penalties. The Tribunal had remanded the case for denovo adjudication after the initial order was set aside. Despite detailed verification and submission of records, the respondent confirmed the demand again. The Tribunal found the revenue's case unsustainable both factually and legally as there was no evidence to show non-receipt or non-utilization of duty paid inputs.

Issue 2: The denial of Cenvat Credit was based on technical and flimsy grounds, such as duty paying documents being in another company's name. The Tribunal held that the commercial arrangement between the appellant and the other company did not disentitle the appellant from claiming Cenvat Credit. The denial on hyper-technical grounds was deemed unjustified, especially after thorough verification by the Assistant Commissioner.

Issue 3: The appellant raised concerns about the non-implementation of the Tribunal's directions for denovo adjudication. The Commissioner disregarded the Assistant Commissioner's verification report, which confirmed the appellant's entitlement to Cenvat Credit. The Tribunal emphasized that orders cannot be passed arbitrarily, and demands cannot be confirmed based on assumptions without proper verification.

Issue 4: The commercial arrangement between the appellant and the other company was crucial in determining Cenvat Credit entitlement. The Tribunal highlighted that the duty paying documents reflected both companies' names and addresses, indicating proper utilization of duty paid goods. The denial of credit based on technicalities was deemed unwarranted.

Issue 5: The appellant alleged denial of natural justice, violation of Tribunal's orders, and non-compliance with verification reports. The Tribunal agreed that the demand was confirmed mechanically without considering subsequent verifications. The appellant's reliance on various decisions was disregarded by the respondent, further supporting the Tribunal's decision to allow the appeal and set aside the impugned order.