2016 (2) TMI 1310 - AT - Central Excise

Reversal of CENVAT Credit - non-receipted quantity of the inputs from the job worker s premises - Rule 4(5) of the Cenvat Credit Rules, 2004 - principles of natural justice - HELD THAT - Rule 4(5) of the Cenvat Credit Rules, 2002 does not require return of the waste and scrap from the job workers premises. The Commissioner (Appeals) also took the view that non-entering of particulars in challan or in job work register is a procedural infraction, for which the benefit of Cenvat cannot be denied - the test report based on which the Commissioner (Appeals) has arrived at the conclusion regarding generation of the waste was also available before the Original Authority. The principle of natural justice in this case has been violated inasmuch as the Commissioner (Appeals) has decided the case solely based on the documents without giving the opportunity to the Revenue Respondent to properly put forth their case before the Commissioner (Appeals) - matter remanded back to the original authority for a fresh fact finding on the additional documents submitted by the Respondent before the Commissioner (Appeals) - appeal allowed by way of remand.

Summary

Issues:
- Appeal against order requiring reversal of cenvat credit for non-receipted quantity of inputs from job worker's premises.
- Allegation of dropping demand based on letter not produced during adjudication proceedings.
- Interpretation of Rule 4(5) of the Cenvat Credit Rules, 2004 regarding return of waste and scrap from job worker's premises.
- Violation of principle of natural justice by deciding the case solely based on documents without giving opportunity for proper defense.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT NEW DELHI involved the Revenue challenging an order passed by the Commissioner (Appeals-I), Customs and Central Excise, Jaipur. The grievance of the Revenue was related to the requirement for the respondent to reverse the cenvat credit under Rule 4(5) of the Cenvat Credit Rules, 2004, concerning the non-receipted quantity of inputs from the job worker's premises. Additionally, the Revenue contended that the dropping of demand by the Ld. Commissioner(Appeals) based on a letter not produced during adjudication proceedings was improper and unjustified.

2. Upon hearing arguments from both sides and examining the records, the Tribunal noted that the Commissioner (Appeals) had set aside the Adjudication order on the grounds that Rule 4(5) did not mandate the return of waste and scrap from the job worker's premises. The Commissioner also considered the non-entry of particulars in challan or job work register as a procedural infraction not warranting denial of Cenvat benefit. However, the Tribunal observed that the letter explaining waste generation, crucial to the case, was not presented before the Original Authority during adjudication. This lack of opportunity for the Revenue to address the issue violated the principle of natural justice.

3. In light of the procedural irregularity and to uphold the principles of justice, the Tribunal decided to remand the matter back to the original authority for a fresh fact-finding based on the additional documents submitted by the Respondent before the Commissioner (Appeals). The Tribunal emphasized that the Respondent should be granted a proper opportunity of hearing before the case's final disposal, ensuring a fair and just resolution. The appeal was disposed of with these directions to safeguard the rights of all parties involved.