2017 (3) TMI 301 - AT - Central Excise

CENVAT credit - HR beams, sheets, channels, plates, falling under Chapter 72 of the Schedule to the CETA - Held that - this case needs to be remanded back to the original authority to verify the actual use of the items alleged to have been stated by the appellant to have been used in the fabrication which is used for production of the paper - appeal allowed by way of remand.

Summary

Issues:
Appeal against rejection of CENVAT credit on certain items.

Analysis:
The appeal was directed against the order rejecting the appellant's appeal and confirming the Order-in-Original. The appellant, a manufacturer of kraft paper, availed CENVAT credit on various items including HR beams, sheets, channels, plates, and a finger print reader. The adjudicating authority disallowed a portion of the credit and ordered recovery along with interest and penalty. The appellant contended that the items were used in the fabrication of machinery, which was part of the manufacturing process. The appellant argued that proper investigation was not conducted, and specific details regarding the usage of the items were not considered. The appellant relied on various decisions to support their case.

The learned counsel for the appellant highlighted that as per Rule 2(l) of the CENVAT Credit Rules, credit is eligible on goods used in the factory of manufacture of the final product. They emphasized that the items formed part of the machinery used in the manufacturing process. The appellant requested a remand to the original adjudicating authority for proper investigation and verification of the usage of the items. The Tribunal noted that both parties had conflicting views on the actual usage of the items, and the appellant claimed to have records supporting their usage. Referring to a previous order in the appellant's case, the Tribunal decided to remand the matter to the original authority for a thorough examination of the usage of the disputed goods. The adjudicating authority was directed to visit the site, verify the usage, and pass a reasoned order within two months, allowing the appellant to produce all relevant documents during the process.

In conclusion, the Tribunal set aside the impugned order and remanded the case for further examination of the usage of the items in question. The decision was based on the need for a detailed investigation into the actual utilization of the goods in the manufacturing process. The adjudicating authority was instructed to consider all relevant documents and pass a reasoned order within a specified timeframe.