2017 (11) TMI 286 - AT - Central Excise

CENVAT credit - suo-moto re-credit taken of credit reversed earlier - Held that - the stock of motor spirit which was de-bonded on 31.12.1998 and re-bonded on 1.1.1998 was cleared by the assessee on payment of duty during the period 1.1.1999 to 6.1.1999. This report is based on verification of RG.1, PLA, RT-12 records. It is observed that the adjudicating authority though directed the Superintendent for aforesaid report and despite the report was submitted before him he has not considered the same - both the lower authorities have not applied their mind and handled the matter in a very casual manner. In view of the above position, the matter needs to be reconsidered - appeal allowed by way of remand.

Summary

Issues:
1. Validity of reversing Cenvat Credit and taking suo moto re-credit.
2. Admissibility of suo moto credit and duty payment verification.
3. Compliance with principles of natural justice in the adjudication process.

Issue 1:
The appellant reversed Cenvat Credit on motor spirit stock on 31st December and took suo moto re-credit on 1st January, which the department contested as impermissible. The adjudicating authority upheld the demand, leading to appeals. The Tribunal previously remanded the case to verify if duty was paid post 1st January 1999 on the same goods. Despite evidence submitted, the authority confirmed the demand, prompting the present appeal.

Issue 2:
The appellant argued that if duty was paid on the stock after 1st January 1999, the demand would be unsustainable as per the Tribunal's remand order. Records and a report confirmed duty payment on motor spirit debonded on 31st December 1998 and rebonded on 1st January 1999, cleared from 1st to 6th January 1999. However, the lower authorities failed to consider this crucial evidence, indicating a lack of due diligence. The Tribunal emphasized the need for verifying duty payment on the re-bonded stock to determine the demand's validity, remanding the matter for a fresh adjudication.

Issue 3:
The appellant contended that the impugned order lacked consideration of the duty payment report, highlighting a breach of natural justice. The Tribunal noted the casual handling of the case by lower authorities, emphasizing the importance of verifying facts to avoid unjust demands. By setting aside the order and remanding the case, the Tribunal underscored the significance of ensuring proper verification of duty payment on the re-bonded motor spirit stock to determine the sustainability of the demand, thereby upholding principles of natural justice.

In conclusion, the Tribunal allowed the appeal by remanding the matter to the adjudicating authority for a fresh decision based on verifying duty payment on the re-bonded stock, emphasizing the need for thorough consideration of evidence and adherence to natural justice principles in such cases.