2011 (4) TMI 1070 - AT - Central Excise

Cenvat credit penalty - appellant imported two bottle decorating machines and availed CENVAT credit, subsequently, the appellant exported the machines - Commissioner (Appeals) in the impugned order has come to the conclusion that the machines were not used, appellant submitted production reports, machine wise production which show the machines were put to use about 13 months Held that - once the appellant submitted production report and other evidence it was necessary for the lower authority to verify the same and record his observation, matter remanded to the adjudicating authority

Summary

Issues:
1. Availment of CENVAT credit on imported machines.
2. Demand to pay back CENVAT credit due to non-usage of machines.
3. Imposition of penalty and interest.
4. Consideration of evidence by the lower authority.
5. Remand for fresh consideration of the case.

Analysis:
1. The appellant imported two bottle decorating machines and claimed CENVAT credit of Rs.23,33,782/- for the years 2002-03 and 2004-05. Subsequently, the machines were exported. The issue arose when the appellant was asked to repay the CENVAT credit as the machines were deemed unused.

2. The appellant's advocate argued that the lower authority based its decision on a letter from the appellant dated 21.6.2006, concluding that the machines were not utilized. However, the appellant provided evidence such as production reports and affidavits indicating that the machines were indeed used for about 13 months. The advocate contended that these pieces of evidence were not properly considered, and there was no explanation provided for their rejection.

3. Upon review, the tribunal found that the lower authority failed to assess the documentary evidence submitted by the appellant and did not provide any reasoning for deeming it unacceptable. Consequently, the tribunal decided to remand the case for fresh consideration. The Deputy Registrar agreed to the remand, and the requirement for pre-deposit of the demanded amount was waived. The stay application was allowed, and the appeal was remanded to the adjudicating authority for a thorough reevaluation of the appellant's submissions.

4. It was emphasized that the tribunal's decision to remand the case did not reflect any judgment on the merits of the appeal, keeping all arguments open for further consideration. The adjudicating authority was instructed to carefully assess the appellant's evidence and issue a reasoned order based on a fresh examination of the case.

This detailed analysis of the judgment highlights the issues of CENVAT credit, non-usage of imported machines, penalty imposition, evidence consideration, and the remand for a fresh evaluation, providing a comprehensive understanding of the legal proceedings and decisions involved.