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2017 (12) TMI 692 - AT - Central ExciseCENVAT credit - it was alleged that there was a shortage of the inventory of inputs and credit availed on this shortage - Rule 3 of CCR, 2004 - it was alleged that the assessee has not produced the documents explaining the shortages in the inputs - Held that - Though the appellant had filed all these documents before this Court but the same were not considered by the learned Commissioner (A) because he did not find the same in the appeal paper-book - this case needs to be remanded to the original authority with a direction to pass a de novo order after considering the documentary evidence produced by the appellant explaining the reasons for the shortage of inputs - appeal allowed by way of remand.
Issues Involved:
Appeal against Commissioner's order regarding irregular CENVAT credit on shortage of inputs, confiscation of inputs, and penalty imposition. Analysis: The appeal was against the Commissioner's order regarding irregular CENVAT credit availed on shortage of inputs by the appellant, leading to a demand for recovery of the credit along with interest. The appellant, a manufacturer of excisable goods, faced discrepancies in the inventory of inputs during stock taking, amounting to a shortage valued at ?1,36,80,118/- with a duty liability of ?14,09,052/-. The show-cause notice invoked extended period proviso under Section 11(A)(4) of the Central Excise Act to demand recovery of irregular CENVAT credit, confiscate the inputs, and propose penalties. The Additional Commissioner confirmed the demand and recovery of the irregular credit along with interest but dropped the proposed penal action. Both the Department and the appellant filed appeals against the Order-in-Original, with the Department seeking penalties under Rule 15(2) of CCR read with Section 11AC, and the appellant contesting the Commissioner's failure to consider documentary evidence explaining the shortages in inputs. The appellant argued that the impugned order was unsustainable as the Commissioner failed to examine the documentary evidence provided, attributing the discrepancies to an accounting error in SAP on the shop floor. The appellant claimed to have made appropriate adjustments in the material suspense account and highlighted the absence of evidence supporting the Department's claim of clandestine removal of inputs. The appellant emphasized the perpetual nature of physical verification processes and the necessity of authorized documents for material transactions. Additionally, the appellant pointed out the Department's failure to address excess stock and the lack of physical stock verification in the case. The appellant cited legal precedents to support their arguments. In response, the Department defended the impugned order, asserting that the shortage of inputs was detected during an audit, prompting the request for the reversal of CENVAT credit taken on unused inputs. After hearing both parties and reviewing the records, the Tribunal found that the Commissioner did not consider the documents explaining the shortages in inputs provided by the appellant. The Tribunal noted discrepancies in the appeal papers and the absence of relevant supporting evidence, leading to the conclusion that the case required remand to the original authority for a de novo order. The Tribunal set aside the impugned order and directed the original authority to pass a reasoned order after considering the appellant's documentary evidence and ensuring compliance with natural justice principles. The Tribunal's decision highlighted the importance of proper documentation and evidence in cases involving irregular CENVAT credit and shortages of inputs. The remand to the original authority aimed to ensure a fair consideration of the appellant's explanations and the application of legal principles in reaching a decision regarding the irregular credit and confiscation of inputs. The judgment emphasized the need for due process and the opportunity for parties to present relevant evidence in excise duty matters to uphold procedural fairness and legal standards.
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