2015 (6) TMI 1219 - AT - Central Excise

CENVAT Credit - all points raised by appellants were not considered by by first appellate authority - principles of natural justice - HELD THAT - It is to be seen that the first appellate authority has not considered any of the points raised by the appellants in its correct perspective and has not recorded any findings in the impugned order. These appeals need reconsideration in the hands of the first appellate authority - the appeals are allowed by way of remand to the first appellate authority, with a direction to restore the appeals to their original number and dispose them of by a reasoned order, after following the principles of natural Justice.

Summary

Issues:
Appeal against imposition of penalties on the company and its director for availing ineligible Cenvat credit.

Analysis:
The appellants, a company manufacturing mild steel ingots, appealed against penalties imposed by the adjudicating authority and upheld by the first appellate authority for availing ineligible Cenvat credit under the Cenvat credit rules. The investigation was initiated based on intelligence suggesting the company availed credit solely on documents. Show cause notices were issued, and after contesting on merits and seeking cross-examination of individuals whose statements were relied upon, the adjudicating authority confirmed demands and imposed penalties on the company and director. The first appellate authority rejected the appeals, leading to the current appeal before the CESTAT Mumbai.

The appellants argued that they were bona fide purchasers of scrap, paid through legitimate means, took steps to verify suppliers' identity, and were unaware of any scrap substitution. They contended that denial of cross-examination was unjustified, the penalty on the director was unwarranted, and cited precedent decisions to support their case. The Departmental representative reiterated lower authorities' findings, emphasizing statements and records indicating ineligible credit availed by the company based on documents without actual receipt of inputs.

Upon considering submissions and records, the CESTAT Mumbai noted that the first appellate authority failed to address appellants' contentions or provide reasoning for rejecting the appeals. The authority's order was deemed unreasoned and lacking judiciousness, prompting the CESTAT to set aside the impugned order and remand the appeals to the first appellate authority for a reasoned decision following principles of natural justice. The CESTAT refrained from expressing an opinion on the case's merits, emphasizing the need for a thorough reconsideration by the first appellate authority.

In conclusion, the CESTAT Mumbai disposed of the appeals by remanding them to the first appellate authority for a fresh decision, emphasizing the importance of a reasoned order based on a comprehensive review of the issues raised by the appellants.