2019 (10) TMI 1303 - AT - Central Excise

CENVAT Credit - duty paying invoices - improper invoices to avail CENVAT Credit - contravention of the provisions of Rule 11(2) of CER, 2002 read with Rule 9(2) of CCR, 2004 - power of Commissioner (Appeals) to remand the case - Revenue Neutrality - HELD THAT - The ld. Commissioner (Appeals) has failed to exercise the jurisdiction vested in him judiciously as noticed hereinabove. Further, allowing of appeal by way of remand is bad in law. Ld. Commissioner (Appeals) was required to make such further inquiry and obtain explanation and details as deemed fit, and should have passed a reasoned order in accordance with law either allowing or dismissing the appeal - From the plain reading of Rule 9(2) with the proviso, it is evident that legislature has taken into account difficulty that may arise for some discrepancy in the documents on the basis of which, credit has been taken. To alleviate such difficulty and to facilitate the assessee, power has been conferred on the jurisdictional Deputy/Asstt. Commissioner that he may enquire into documents, etc. and on being satisfied that the goods or services covered by the said documents have been received and accounted for in the books of account of the receiver, he may allow the cenvat credit. Power of Commissioner (Appeals) to remand the case - HELD THAT - The Commissioner (Appeals) has got no powers to order for reinvestigation. Further, the Commissioner (Appeals), being a creature of statute, has no powers to extend the limitation prescribed in the Act for issue of show cause notice. Further, it is found that an order allowing to take cenvat credit under the proviso to Rule 9(2) of CCR is not an adjudication order and accordingly, the monetary limit prescribed for an adjudication order is not applicable. Admittedly, there is no cause to issue notice. Further, the Commissioner (Appeals) has got no powers to remand in the facts and circumstances. Further, duty paid nature of the goods/inputs in question has not been doubted. Evidently, there is only a technical objection raised by the Preventive Team. Revenue Neutrality - HELD THAT - Rule 16 (1) of Central Excise Rules provides that where any goods on which duty has been paid at the time of removal thereof, or brought to any factory for being re-made, refined, reconditioned, etc., the assessee shall state the particulars of such Rule in his records and shall be entitled to take cenvat credit of the duty paid, as such goods are received as inputs under the Cenvat Credit Rules, and utilise this credit, according to the said Rules. Thus, under the facts and circumstances, there is no violation of the provisions of Rule 16 of Central Excise Rules. Further, the position is wholly Revenue neutral as the same amount of duty is available as cenvat credit even if the procedure under Rule 16 of Central Excise Rules is followed - there is no error in the order-in-original passed by the Dy. Commissioner allowing cenvat credit to the assessee Rajasthan Antibiotics. Further, taking notice that under Notification No.71/71-CE, the assessee is entitled to a set off of the duty paid on the intermediate products from the final products, it was held that the benefit of the said notification cannot be denied on the technical ground of non-compliance with Rule 56A procedure when the assessee contested the correctness of the classification and dutiability of the intermediate products, observing that the assessee could not have ordinarily complied with the procedure under Rule 56A (Proforma GATI Procedure). Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Wrongful availment of Cenvat credit by the assessee.
2. Validity of documents for availing Cenvat credit.
3. Jurisdiction and powers of the Commissioner (Appeals) and Dy. Commissioner.
4. Compliance with Rule 16 of Central Excise Rules (CER), 2002.
5. Monetary limit for adjudication by Dy. Commissioner.
6. Suppression of material facts by the assessee.

Detailed Analysis:

1. Wrongful Availment of Cenvat Credit by the Assessee:
The Preventive Branch of the Central Excise Division, Bhiwadi, observed that the assessee availed Cenvat credit on improper duty-paying documents issued by two dealers, M/s. Poonam Chemicals and M/s. Aditi Chem. The invoices lacked essential details such as the name and address of suppliers/manufacturers, invoice number and date, item name, quantity, and rate of duty. The Vice President (Finance) of the assessee admitted the mistake and voluntarily deposited ?20,60,000/- as part of the wrongly availed Cenvat credit.

2. Validity of Documents for Availing Cenvat Credit:
The assessee submitted an application under Rule 9(2) of CCR, 2014, acknowledging that the invoices did not contain all particulars but included essential details such as the name and address of the buyer/supplier, central excise registration, description of inputs, tariff heading, transaction price, and rate of duty. The Dy. Commissioner allowed the Cenvat credit after verifying that the goods were received and accounted for in the books of accounts.

3. Jurisdiction and Powers of the Commissioner (Appeals) and Dy. Commissioner:
The Commissioner (Appeals) observed that the Order-in-Original was a non-speaking order and required further examination. However, the Tribunal held that the Commissioner (Appeals) does not have the power to remand or order reinvestigation. The Tribunal emphasized that the Commissioner (Appeals) should have made further inquiries and passed a reasoned order.

4. Compliance with Rule 16 of CER, 2002:
The Revenue argued that the provisions of Rule 16 of CER were applicable as the goods were brought back to the factory for reprocessing. However, the Tribunal found that there was no violation of Rule 16 as the goods were received and accounted for in the books of accounts, and the duty-paid nature of the goods was not in dispute.

5. Monetary Limit for Adjudication by Dy. Commissioner:
The Revenue contended that the Dy. Commissioner lacked jurisdiction as the monetary limit for adjudication was ?5 lakhs, whereas the disputed credit was ?8.25 crores. The Tribunal clarified that the monetary limit for adjudication does not apply to proceedings under Rule 9(2) of CCR, which is not an adjudication proceeding.

6. Suppression of Material Facts by the Assessee:
The Tribunal noted that there was no suppression of facts by the assessee. The duty-paid nature of the goods and their receipt in the factory were not disputed. The Tribunal found that the Dy. Commissioner had made proper inquiries and allowed the Cenvat credit based on satisfactory evidence.

Conclusion:
The Tribunal set aside the order of the Commissioner (Appeals) and restored the Order-in-Original passed by the Dy. Commissioner, allowing the Cenvat credit to the assessee. The appeal by the Revenue was dismissed, and the appeal by the assessee was allowed. The ground of limitation was left open.

← Previous Next →