2015 (1) TMI 1134 - AT - Central Excise

Demand for CENVAT credit - inputs were wrongly shown to have been used in the manufacture in the factory - MSWPL showed that these items were sent for job work to other manufacturers for conversion into billets without actually sending the same - Held that - Additional Director was to conduct verification and send a confirmation report and also assessee was advised to approach DGCEI office. Subsequently in the letter dated 13.04.2013, a copy of which was produced before us today, in paragraph 4 it was stated that the appellants representative had visited the DGCEI office and the concerned officer had directed them to visit their office again in the week starting from 15.04.2013. - it was the Commissioner s office who directed the assessee to go to DGCEI office and also required the Additional Director to conduct verification and send a confirmation. That being the position, it was not proper for the Commissioner to simply adjudicate the matter ignoring his own office request to the Additional Director for a report and ignoring the fact that learned counsel for the appellants had stated that the DGCEI office had asked the appellants to come after 15th April for the purpose of verification of documents/supply of documents. Having written to the Additional Director to verify and confirm and having written to the assessee to go to the DGCEI office, passing an adjudication order without getting the complete reply/proper reply and without giving an opportunity to the appellants to go through the process of verification with DGCEI was not proper. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of demand for CENVAT credit availed by a company.
2. Allegations of diversion of inputs without using them in the manufacture of final products.
3. Non-observance of principles of natural justice and failure to provide required documents.
4. Reluctant remand of the matter due to lack of cooperation and procedural irregularities.

Issue 1:
The judgment confirms the demand for CENVAT credit of a significant amount availed by a company during a specific period. The company, Manidhari Stainless Wire Pvt. Ltd. (MSWPL), availed credit on steel inputs without utilizing them in the production of final products, namely SS Wire, SS Wire Rods, SS Flats, and SS Angles. The Revenue alleged that the company wrongly claimed credit by showing the inputs as used in manufacturing or sent for job work without actual utilization. Statements from suppliers and job-workers confirmed discrepancies, leading to the imposition of penalties on the company and its directors.

Issue 2:
Concerns were raised regarding the non-observance of natural justice principles and the failure to provide necessary documents during the proceedings. The appellant's counsel highlighted the denial of cross-examination opportunities and the lack of detailed consideration in rejecting such requests. Additionally, the appellants requested relied upon documents in a specific format, but these were not provided despite efforts spanning several months. The judgment acknowledged these issues and criticized the lack of proper handling by the Commissioner's office, leading to a reluctant remand of the case.

Issue 3:
The judgment emphasized procedural irregularities and lack of cooperation, resulting in the remand of the matter for fresh adjudication. The Commissioner's office was faulted for disregarding requests for cross-examination and failing to provide necessary documents in the required format. It was noted that the Commissioner's actions contradicted directives given to the assessee to approach another office for verification, indicating a lack of proper procedure and fairness in the adjudication process.

Conclusion:
The judgment, delivered by Shri B.S.V. Murthy and Shri S.K. Mohanty, highlighted the complexities surrounding the demand for CENVAT credit by MSWPL, procedural irregularities, and the need for adherence to principles of natural justice. The remand of the case underscored the importance of fair proceedings, cooperation, and proper documentation in legal matters. The decision aimed at ensuring a well-reasoned order in the future, emphasizing the necessity for clarity, cooperation, and adherence to legal procedures in such cases.