2017 (3) TMI 784 - AT - Central Excise

CENVAT credit - natural justice - impugned order challenged on the ground that the same has been passed without considering the submissions of the appellant and without considering the various judgements relied upon by the appellant - also the order is not speaking order - Held that - the impugned order is not sustainable in law because the same has been passed mechanically without considering the submissions of the appellant. Both the authorities have not considered the reply filed by the appellant to the SCN wherein the appellants have contested the denial of CENVAT credit by producing the documents as well as the judgements/decisions in their favor allowing CENVAT credit in similar situations. Further simple reversal of the CENVAT credit at the asking of the Revenue does not debar the appellant to contest the same by filing a detailed reply to the SCN. Both the authorities have not considered the same and therefore the impugned order is without any reason and is passed in violation of principles of natural justice - appeal allowed by way of remand.

Issues:
- Availment of CENVAT credit on inputs based on invoices addressed to other units
- Availment of CENVAT credit on capital goods in the first year
- Denial of CENVAT credit on the basis of xerox copies of input invoices
- Availment of CENVAT credit on storage racks not used for manufacture
- Availment of CENVAT credit on input services such as testing, dry cleaning, courier, GTA, and security services
- Alleged irregularities in availing CENVAT credit

Analysis:
1. Availment of CENVAT credit on inputs based on invoices addressed to other units:
The appellants filed three appeals against the impugned order denying credit for availing CENVAT credit on inputs based on invoices addressed to other units. The Commissioner upheld the denial, stating the appellant admitted the lapse. However, the appellant argued that payment during investigation did not waive the right to contest the case on merits. The appellant cited legal principles emphasizing substantive rights over procedural grounds. The tribunal found the impugned order lacking reasoning and violating natural justice. The case was remanded to the original authority for a fresh decision considering the submissions and legal precedents.

2. Availment of CENVAT credit on capital goods in the first year:
The appellant availed CENVAT credit on capital goods fully in the first year, contrary to the rule allowing 50% in the first year. The tribunal noted that the mere reversal of credit did not bar the appellant from contesting the denial. Legal authorities were cited to support the appellant's position. The case was remanded for a fresh decision, emphasizing the need to consider the appellant's submissions and relevant legal decisions.

3. Denial of CENVAT credit on the basis of xerox copies of input invoices:
The denial of CENVAT credit based on xerox copies of invoices was contested by the appellant, citing legal precedents supporting such credit. The tribunal found the impugned order lacking detailed reasoning and violating principles of natural justice. The case was remanded for a fresh decision, instructing the original authority to consider the appellant's submissions and relevant legal decisions.

4. Availment of CENVAT credit on storage racks not used for manufacture:
Credit availed on storage racks not used for manufacturing purposes was a point of contention. The appellant argued that procedural grounds should not override substantive rights, citing relevant legal cases. The tribunal remanded the case for a fresh decision, emphasizing the consideration of appellant's submissions and legal precedents.

5. Availment of CENVAT credit on various input services:
The appellant's availing of CENVAT credit on input services like testing, dry cleaning, courier, GTA, and security services was deemed irregular. The appellant contested this denial, emphasizing substantive rights over procedural grounds. The tribunal remanded the case for a fresh decision, directing the original authority to consider the appellant's submissions and legal precedents.

In conclusion, the tribunal found the impugned order lacking detailed reasoning and violating principles of natural justice. The cases were remanded to the original authority for a fresh decision, emphasizing the consideration of appellant's submissions and relevant legal decisions to ensure a fair adjudication process.

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