2013 (2) TMI 543 - AT - Central Excise

CENVAT Credit on capital goods - Rule 2(a) of the CENVAT Credit Rules, 2004 - National Litigation Policy - Assessee contended that the department cannot prefer an appeal to the CESTAT where the disputed amount is less than Rs.5,00,000/- hence appeal not maintainable - Held that - when these appeals were filed, there was no embargo based on monetary limits. When the counsel for the respondent all of a sudden wakes up the maintainability issue, the same can hardly be appreciated. The preliminary objection stands overruled. Whether various structural items to be cenvatable capital goods on the basis of certain photographs produced by the assessee - Held that - The method adopted by the appellate authority cannot be countenanced inasmuch as a photograph per se has no evidentiary value. Where the assessee claimed to have used the structural items to fabricate technological structures which were claimed to be cenvatable capital goods, the appellate authority ought to have arranged physical inspection of such structures by competent officers of central excise and should have taken a view only after considering the inspection report. Remand back to revenue

Summary

Issues:
Appeal against grant of CENVAT credit for structural items recognized as capital goods under CENVAT Credit Rules, 2004. Preliminary objection regarding the maintainability of appeals due to disputed amount below specified limits.

Analysis:
1. Maintainability of Appeals:
The respondent raised a preliminary objection regarding the maintainability of the appeals, citing the National Litigation Policy's monetary limits. The respondent argued that the appeals were filed in contravention of the policy, referring to specific instructions. However, it was highlighted that when the appeals were filed, there was no monetary limit embargo in place. The National Litigation Policy came into force later, and the retrospective effect was contested. The conduct of the respondent in not raising this issue in past proceedings was crucial. The objection was overruled due to the respondent's submission to the appellate jurisdiction without prior objections.

2. Merits of the Case:
Upon examining the merits of the case, it was found that the Commissioner (Appeals) had considered various structural items as 'cenvatable' capital goods based on photographs provided by the assessee. The Tribunal deemed this method unacceptable as photographs alone lack evidentiary value. It was emphasized that a physical inspection by central excise officers should have been conducted to verify the fabrication of claimed capital goods. Since no such inspection took place, the matter was deemed fit for remand for a fresh decision. Both parties agreed to this course of action, leading to the setting aside of the impugned order and the appeals being allowed for remand to the Commissioner (Appeals).

3. Remand and Further Directions:
The Tribunal remanded the case to the Commissioner (Appeals) for a fresh decision after obtaining a report of inspection of the respondent's factory and verifying their records. The Divisional Assistant Commissioner, assisted by the Range Officer, was directed to conduct the inspection and verification. The assessee was to be given a reasonable opportunity to be heard, and a copy of the inspection/verification report was to be provided to the assessee before the personal hearing. This comprehensive direction aimed at ensuring a fair and thorough reevaluation of the case based on proper verification and inspection processes.