2015 (2) TMI 698 - AT - Central Excise

Denial of cenvat credit - During the course of adjudication, the appellant took a categorical stand that most of the iron and steel items were used in fabrication of capital goods or for repair and maintenance, in which case, they would be entitled to the benefit of cenvat credit.- Held that - Dy. Commissioner having jurisdiction over the appellant s factory submitted a report under the cover of his letter dated 29.01.2014. The said report is a detailed report, taking into consideration the various items in question and reporting that most of the items have either been used in fabrication of capital goods or for repair and maintenance , whereas it is not possible to find out in respect of the certain items. The report also concluded that the assessee had not availed the credit on a large quantity of iron and steel items and as such, it can be safely concluded that quantity which have been used for civil and structural purposes. - Surprisingly the said report of the Dy. Commissioner, which was sought by the Commissioner himself, stands fully ignored by him while passing the present impugned order. For the reasons best known to him, the adjudicating authority has completely shut his eyes towards the said report. If the said report of the Dy. Commissioner was not to be taken into consideration by the adjudicating authority, we really fail to understand and appreciate as to why the report was called for. Probably the said report has not been referred to by him as the same is in favour of the assessee, to the major extent. Such an action, on the part of the adjudicating authority, cannot be appreciated inasmuch as the same reflects upon the biased & premature determination of their adjudication. Having said so, we deem it fit to set aside the impugned order and remand the matter to the Commissioner for fresh decision in the light of the report dated 29.01.2014 of the Dy. Commissioner - Decided in favour of assessee.

Summary

Issues: Gross violation of principles of natural justice in passing the order, denial of cenvat credit on iron and steel items, consideration of evidence and report from jurisdictional Central Excise Authorities, ignoring the report in the impugned order, setting aside the order and remanding the matter for fresh decision.

Analysis:
1. The judgment highlighted a significant issue of gross violation of principles of natural justice by the adjudicating authority in passing the impugned order. The appellant was accused of denying cenvat credit on various iron and steel items. The appellant contended that these items were used in fabrication of capital goods or for repair and maintenance, making them eligible for cenvat credit. The Larger Bench decision of the Tribunal was also cited in this regard.

2. The Commissioner sought a report from the jurisdictional Central Excise Authorities to verify the appellant's claims. The report submitted by the Dy. Commissioner detailed that most items were used for fabrication of capital goods or repair and maintenance. However, the adjudicating authority ignored this report while passing the impugned order. The Tribunal noted this discrepancy and expressed dissatisfaction with the authority's biased and premature determination, leading to the decision to set aside the order and remand the matter for a fresh decision based on the Dy. Commissioner's report.

3. The appellant had provided detailed evidence, including item-wise summaries, drawings, bill amounts, material issue passes, and certificates to support their claim for cenvat credit. The Dy. Commissioner's report further corroborated the appellant's position. Despite this, the adjudicating authority failed to consider the report, indicating a lack of fair assessment and due diligence in the decision-making process.

4. The Tribunal emphasized the importance of adhering to procedural fairness and considering all relevant evidence before making a decision. By setting aside the impugned order and remanding the matter for reevaluation based on the Dy. Commissioner's report, the Tribunal ensured that the appellant's rights were protected and that a just and unbiased decision would be reached in accordance with the principles of natural justice and procedural integrity.