2017 (12) TMI 694 - AT - Central Excise

CENVAT credit - central excise duty on scrap - case of appellant is that the demand on Cenvat Credit was raised on the basis of consumption of inputs recorded in the private record whereas there were no allegations in the SCN that the inputs covered by the invoices were not received by them - Held that - the exercise of comparing quantities of inputs recorded to have been received in RG-23 record which is prescribed under the Cenvat Credit Rules and the returns filed under sub Rule (5) of Rule 7 of Cenvat Credit Rules with the claim of the appellant of having received the inputs into their factory has not been done by the Original Authority - the Original Authority has erred in ignoring the relevant evidence produced by the appellant - matter is remitted back to the Original Authority with a direction to compare the quantities of inputs claimed to have been received with the quantities of inputs reported to have been received filed on monthly basis as required under sub Rule (5) of Rule 7 and if there is any difference then only to confirm the demand - appeal allowed by way of remand.

Summary

Issues:
1. Cenvat Credit demand based on consumption of inputs recorded in private records.
2. Demand for Central Excise Duty on scrap generated.
3. Allegations of suppression of facts and fabrication in submitted returns.
4. Original Authority's reliance on private records and retracted statement.

Analysis:
1. The appeals arose from a common Order-in-Original passed by the Commissioner of Central Excise, Customs & Service Tax, Ghaziabad, covering the period from 2005-06 to 2006-07. The manufacturer-appellant, engaged in various manufacturing activities, was accused of discrepancies in the consumption of inputs for final products. The show cause notice proposed a recovery of Cenvat Credit and Central Excise Duty on scrap. The Original Authority confirmed the demand, imposed penalties, and upheld the allegations. The appellants challenged this decision before the Tribunal.

2. The appellants argued that the demand was unjust as it was based on consumption recorded in private records, not on actual receipt of inputs. They contended that they had followed proper procedures, submitted required returns, and no objections were raised earlier. The department, however, supported the Order-in-Original. The Tribunal noted the failure of the Original Authority to compare the inputs claimed to be received with actual records filed monthly, as required. The reliance on private records and a retracted statement without considering all evidence was criticized.

3. The Tribunal found the Original Authority erred in disregarding the evidence provided by the appellants. It set aside the Order-in-Original and remanded the matter back for a thorough comparison of input quantities. The Tribunal directed the Original Authority to consider the retracted statement and any additional submissions by the appellants. The decision was to be made within six months, allowing the appellants the opportunity to present their case adequately.

4. In conclusion, the Tribunal allowed the appeal by remanding the case for further examination. The judgment highlighted the importance of proper scrutiny of records, adherence to procedural requirements, and consideration of all relevant evidence before confirming demands related to Cenvat Credit and Central Excise Duty. The appellants were granted the chance to present their case effectively in the remand proceedings, emphasizing the principles of natural justice and fair adjudication.