2019 (7) TMI 1798 - AT - Central Excise

CENVAT Credit - failure to discharge duties of central excise - misclassification of the finished goods and scrap retained at the premises of job-work - goods returned as rejections and scrapped but without reversal of CENVAT credit - Principles of natural justice - HELD THAT - The issue is found in favour of the assessee. Having evaluated the submissions made by the rival sides, the plea of the Learned Counsel of non-consideration of the evidences and contentions placed before the adjudicating authority warrants the the demands, as well as rejection of refund, be considered afresh. The matter remanded to the respective original authorities for determination of the claim for reversal of credit availed on invoices pertains to goods - appeal allowed by way of remand.

Summary

Issues:
1. Disallowance of credit amounting to ?59,51,011/- arising from customer rejections not returned, returned and scrapped without reversing CENVAT credit, and availment of credit against self-generated invoices without actual receipt of goods.
2. Recovery of ?66,76,689/- on account of scrap generated at jobworker's premises and short-payment of duty due to misclassification of finished goods.
3. Rejection of claim for refund of ?35,20,576/- due to non-compliance with procedural rules.
4. Wrong availment of CENVAT credit of ?16,42842/- against invoices generated for a specific period.
5. Availment of credit of ?25,87,903/- on self-generated invoices without actual receipt of goods.

Analysis:

1. The first issue involves disallowance of credit due to various discrepancies in handling customer rejections, scrap generation, and self-generated invoices. The appellant argued justifications based on previous court decisions and procedural interpretations.

2. The second issue pertains to duty liability due to misclassification of finished goods, leading to short-payment of duty. The appellant argued that the classification was incorrect and provided legal precedents to support their position.

3. The third issue revolves around the rejection of a refund claim due to procedural non-compliance. The appellant presented arguments regarding the timelines and procedural aspects of the refund claim.

4. The fourth issue concerns the wrong availment of CENVAT credit against specific invoices, which the appellant contested based on the classification of goods and procedural errors in the adjudication process.

5. The fifth issue focuses on the availment of credit on self-generated invoices without actual receipt of goods. The appellant argued that the invoices were wrongly generated and that procedural aspects were not adequately considered in the adjudication.

The judgment favored the assessee on issues related to scrap not returned, misclassification of goods, and procedural non-compliance. The matter was remanded to original authorities for further evaluation on credit reversal, duty payment verification, and individual-appellant penalty imposition. The decision emphasized the need for a fresh consideration of evidence and contentions for a fair resolution.