2017 (6) TMI 707 - AT - Central Excise

Reversal of CENVAT credit - Rule 6 (3) of CCR - non-maintenance of separate records of taxable and exempted goods - natural justice - Held that - non-providing of a copy of report received from the Assistant Commissioner at the back of appellant have caused prejudice to the appellant and did not get the proper opportunity - learned Commissioner are directed to provide the copy of the report of Assistant Commissioner relied upon by him in the impugned order and other documents - appeal allowed by way of remand.

Summary

Issues:
Appeal against demand raised under Rule 14 in the Cenvat Credit Rules, 2004 with equal penalty - Allegation of not maintaining separate account for input receipt and consumption - Confirmation of demand along with interest and penalty under Rule 15 (2) of Cenvat Credit Rules, 2004 - Factual errors in the impugned order - Non-providing of a copy of the report from the Assistant Commissioner causing prejudice to the appellant.

Analysis:
The appellant, M/s Dinesh Irrigation Pvt. Ltd., appealed against the demand raised under Rule 14 in the Cenvat Credit Rules, 2004, along with an equal penalty. The allegation was that the appellant did not maintain a separate account for the receipt and consumption of inputs for the manufacture of dutiable and exempted goods during specific periods. The demand was proposed under Rule 6 (3) of the Cenvat Credit Rules, invoking an extended period of limitation. The show cause notice was adjudicated, confirming the demand, interest, and penalty under Rule 15 (2) of the Cenvat Credit Rules, 2004, read with Section 11AC of the Act.

The appellant contended that they maintained separate accounts for input receipts and had taken credit for inputs used in dutiable final products. They mentioned maintaining separate records for inputs meant for dutiable and exempted final products. The appellant also highlighted instances where they reversed credits based on auditor advice and clarified their approach to input services. The appellant argued that the impugned order contained factual errors and emphasized the lack of opportunity due to the non-provision of a copy of the report from the Assistant Commissioner.

Upon hearing the submissions, the Tribunal found factual errors in the impugned order, particularly regarding the computation of the amount and the lack of clarity on the Cenvat credit taken. The failure to provide a copy of the report from the Assistant Commissioner was deemed prejudicial to the appellant. Consequently, the appeal was allowed by way of remand, setting aside the impugned order. The Tribunal directed the Commissioner to provide the necessary documents relied upon and granted the appellant an opportunity to respond to the show cause notice. The fresh order was to be passed in accordance with the law after hearing the appellant. The appeal was allowed by way of remand, ensuring a fair opportunity for the appellant to present their case.

This detailed analysis covers the issues raised in the appeal against the demand under the Cenvat Credit Rules, focusing on the lack of separate account maintenance, factual errors in the order, and the need for providing a fair opportunity to the appellant.