2016 (9) TMI 476 - AT - Central Excise

Validity of impugned order - power of commissioner (appeals) to admit / seek additional evidences - Rule 5 of Central Excise (Appeals) Rules, 2001 - drawings, designs and various detailed supporting charts as per Chartered Engineers certificate were produced before the Appellate authority and not before the Original Authority - Held that - The Commissioner (Appeals) is well within his right to seek clarification to explain any evidences submitted before him, before appreciating the said evidence for a finding. Seeking additional information or clarification on evidences on record to facilitate the proper finding cannot be apparently barred by the above mentioned rule. There is no allegation that the new set of evidences have been submitted by the respondent which came into existence after the said case was decided by the Original Authority. I find no substantial ground in the appeal by the Revenue when there is no challenge on merit. A perusal of the impugned order to examine the merit reveals that the factual usage of various items have been examined by the Commissioner (Appeals) and he was guided by various decided cases including the application of user test as laid down by the Hon ble Supreme Court in Rajasthan Spinning and Weaving Mills Ltd. 2010 (7) TMI 12 - SUPREME COURT OF INDIA and in General Mills 2001 (7) TMI 118 - SUPREME COURT OF INDIA . The eligibility of the credit has been decided by the lower authority on such merits. - Decided against the Revenue

Summary

Issues:
Appeal against Commissioner (Appeals) order on central excise duty and cenvat credit availed by respondent. Challenge based on violation of Rule 5 of Central Excise (Appeals) Rules, 2001 regarding additional evidences.

Analysis:
The appeal was filed by the Revenue against the Commissioner (Appeals) order related to central excise duty and cenvat credit availed by the respondent. The respondent was engaged in the manufacture of various products and availed credit on inputs and capital goods as per Cenvat Credit Rules, 2004. The Original Authority denied the credit and imposed a penalty, which was partially upheld by the Commissioner (Appeals) except for a small amount deemed ineligible. The Revenue challenged the order primarily on the grounds of violation of Rule 5 of Central Excise (Appeals) Rules, 2001, which restricts the appellant from submitting additional evidence before the Commissioner (Appeals).

The Revenue contended that additional evidence, including drawings, designs, and detailed charts, was presented before the Commissioner (Appeals) but not before the Original Authority, thus violating Rule 5. However, the respondent argued that they had submitted relevant evidence to support their case, such as drawings, material handling system details, and a Chartered Engineers Certificate. The Commissioner (Appeals) considered these submissions, along with supporting photographs and production/clearance details from ER-1 Returns, in arriving at the decision.

The Revenue raised concerns about discrepancies in reference numbers and the validation of the Chartered Engineers certificate. Despite these issues, it was acknowledged that the usage of various items by the respondent was not disputed with substantial evidence by the Revenue. The Commissioner (Appeals) had examined the factual usage of items and applied the user test criteria established by previous court judgments to determine the eligibility of credit.

Regarding the alleged violation of Rule 5, the Tribunal found the grounds of appeal to be vague and lacking specificity on which additional evidences were considered in violation of the rule. The Tribunal noted that seeking clarification or additional information on existing evidence by the Commissioner (Appeals) is a permissible practice to arrive at a fair decision. Since there was no challenge on the merits of the case and the Commissioner (Appeals) had thoroughly examined the factual usage of items, the appeal by the Revenue was dismissed for lack of merit.

In conclusion, the Tribunal found no substantial grounds in the Revenue's appeal, as the Commissioner (Appeals) had appropriately considered the evidence and decided on the eligibility of credit based on merit. The appeal was dismissed, upholding the Commissioner (Appeals) order.