2016 (11) TMI 1226 - AT - Central Excise

CENVAT credit - manufacture of ordinary Portland cement and pozzolana Portland cement falling under chapter 25 of the First Schedule to the Central Excise Tariff Act, 1985 - utilisation of cenvat credit which was wrongly availed by the appellant in the first year - Held that - we set-aside the impugned order and remand the matter back on this issue to the adjudicating authority to decide the issue of utilisation of cenvat credit which was wrongly availed by the appellant in the first year. On this issue including the issues of interest and penalty, the Commissioner shall provide an opportunity of hearing to the appellant as per law. Ld. Counsel has assured that full cooperation will be extended to the adjudicating authority. Credit amounting to ₹ 2,73,450/- availed on invoices not issued in the name of appellant - Held that - it appears that the issue needs fresh adjudication. Accordingly, we remand the matter back to the adjudicating authority to verify the ECC code and address and utilisation of the credit and use of the goods. These factual aspects are not emerging from the impugned order. Hence, we set-aside the impugned order and remand the matter to the adjudicating authority on this issue who will decide denovo after providing an opportunity of hearing to the appellant as per law. The next issue is regarding credit amounting to ₹ 11,90,941/- which was not admissible to the appellant since the iron & steel items such as MS channel/ flat/ beams/ angles were not input or capital goods - Held that - it appears that the utilisation of the item in the factory is not clearly reflected in the impugned order. The position in the impugned order pertaining to the utilisation of the items is not clear; when it is so, we set-aside the impugned order and remand the matter to the adjudicating authority to decide the issue in denovo proceeding after providing an opportunity of hearing to the appellant. The next issue pertains to the total cenvat credit amounting to ₹ 3,95,10,036/-, out of which the adjudicating authority has already granted relief of ₹ 1,83,62,358/-. Thus, only dispute is regarding balance amount of ₹ 2,11,47,678/-. The adjudicating authority has confirmed this demand on the ground that these items have been used for supporting structure or civil foundation - Held that - the issue regarding the admissibility of cenvat credit of ₹ 2,11,47,678/-, we are of the view that it needs to be re-examined in the light of the decision of the Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd. vs. CCE&C 2015 (5) TMI 663 - GUJARAT HIGH COURT as well as the charge made in the show cause notice. The next issue of cenvat credit amounting to ₹ 22,70,019/- which was denied to the appellant by the adjudicating authority by referring to the definition of capital goods under Rule 2(a)(A)(i) and (ii) of CCR - Held that - it appears that the utilisation of subject goods is not clear, when it is so then we set-aside the impugned order and remand the matter on this issue also to the adjudicating authority. The adjudicating authority shall provide an opportunity of hearing to the appellant as per law. The demand is not time barred as already discussed by the Commissioner (Appeals). Appeal allowed by way of remand.

Summary

Issues:
1. Cenvat credit availed in excess in the first year.
2. Credit availed on invoices not issued in the appellant's name.
3. Admissibility of credit on iron & steel items.
4. Dispute over cenvat credit used for supporting structures.
5. Denial of credit on cement used in fabrication.
6. Time-barred demand.

Analysis:

1. The first issue revolves around the appellant availing cenvat credit of ?5,18,98,485 on inputs and capital goods in excess in the initial year, contrary to Rule 4(2)(a) of the Cenvat Credit Rules, 2004. The appellant contended that the credit remained unutilized, thus no interest or penalty should apply. Relying on a Bombay High Court decision, the Tribunal remanded the matter to the adjudicating authority to determine the utilization of wrongly availed credit in the first year, including interest and penalty considerations.

2. The second issue concerns the appellant availing credit of ?2,73,450 on invoices not issued in their name. The Tribunal found this to be a procedural lapse and remanded the matter for fresh adjudication to verify the ECC code, address, credit utilization, and goods usage, as these details were lacking in the impugned order.

3. The third issue involves the denial of credit of ?11,90,941 on iron & steel items by the Commissioner, asserting they were not input or capital goods. The appellant argued that these items were used in manufacturing capital goods, falling under a specific rule of the Cenvat Credit Rules. Due to unclear reflections on the utilization of these items in the factory, the Tribunal remanded the matter for a fresh decision by the adjudicating authority.

4. The fourth issue pertains to a dispute over a total cenvat credit of ?3,95,10,036, with a balance amount of ?2,11,47,678 in question. The adjudicating authority confirmed the demand based on usage for supporting structures or civil foundations. Citing conflicting decisions, the Tribunal decided to re-examine the admissibility of this credit in light of a specific court decision and the show cause notice charges.

5. The fifth issue involves a denial of credit of ?22,70,019 on cement used in the fabrication of capital goods. The appellant argued for credit admissibility, while the Revenue contended it was neither input nor capital goods. Due to unclear utilization details, the Tribunal remanded the matter for further consideration by the adjudicating authority.

6. The final issue addressed whether the demand was time-barred, which the Tribunal determined was not, sustaining the demand based on the Commissioner's reasoning. Consequently, the Tribunal set aside the impugned order and remanded all issues back to the adjudicating authority for denovo proceedings, allowing the appeal by way of remand.