2017 (12) TMI 1020 - AT - Central Excise

Jurisdiction - power of first appellate authority to remand - CENVAT credit - rejected goods - Held that - This summary disposal without examining the material brought on record in the appeals filed before him displays lack of application of mind and neglect of his role as an appellate authority. Appeal proceedings are not mere eyewash and statistics of disposal are not substitutes for delivery of justice and the constitutional imperative to collect such taxes as are authorised by law and not to deprive the consolidated fund of any tax that is authorised by law. In the absence of a proper and considered disposal of the appeal, the impugned order is set aside and the proceedings restored to first appellate authority for fresh determination - appeal allowed by way of remand.

Summary

Issues: Improper availment of CENVAT credit, remand by appellate authority, validity of e-mails as evidence, imposition of penalties under CENVAT Credit Rules.

Improper Availment of CENVAT Credit:
The case involved allegations against the assessee for improperly availing CENVAT credit on goods cleared but rejected by customers, with the defective goods allegedly not returned but retained with dealers or depots. Investigations revealed email correspondence indicating the modus operandi, and the assessee admitted the impossibility of re-processing some paints and reversed credit. The original authority concluded that rejected goods were not brought back based on stock shortage during physical verification and lack of rejected paint, supported by email correspondence.

Remand by Appellate Authority:
The first appellate authority remanded the matter for fresh determination after the original authority restricted the recovery, resulting in confirmation of the entire demand, interest imposition, and penalties under CENVAT Credit Rules. The appellants challenged the remand, arguing the authority lacked competence, but the Tribunal found their failure to challenge it earlier unacceptable. The Tribunal emphasized the importance of a proper and considered disposal of appeals, criticizing the lack of examination of material before the first appellate authority.

Validity of E-mails as Evidence:
The appellants contended that the order-in-appeal was contrary to law as it ignored their contentions on the validity of e-mails used against them. The Tribunal noted that ample evidence, including e-mails, statements, and confessions, supported the demand for inadmissible CENVAT credit, while the appellants failed to provide evidence of correct credit availment. The Tribunal rejected the appeal, emphasizing the need for evidence and proper examination in appeal proceedings.

Imposition of Penalties under CENVAT Credit Rules:
Penalties were imposed on individuals and the assessee under CENVAT Credit Rules. The Tribunal set aside the impugned order due to the lack of a proper disposal of the appeal, restoring the proceedings to the first appellate authority for fresh determination of the grounds agitated. The appeals were allowed by way of remand, highlighting the importance of delivering justice and following constitutional imperatives in tax collection.