2018 (2) TMI 281 - AT - Central Excise

CENVAT credit - capital goods - period August 2003 to December 2004 - Held that - the appellants are entitled to cenvat credit of ₹ 1,11,258/- during the period August 2003 to December 2004 for cenvat credit on capital goods during this period. CENVAT credit - period June 2004 to February 2005 - Availment of cenvat on the invoices not consigned to appellant - Held that - For the period June 2004 to February 2005 the Department cannot recover the alleged irregular cenvat credit availed by the appellant as there was no recovery provision during the relevant period which came only on 01.03.2013. Similarly amount collected through debit notes without reversing the credit to the tune of ₹ 3,89,825/- cannot be recovered from the appellant because there was no recovery provision during the relevant period which came only on 01.03.2013. Denial of other credits for the period January 2004 to February 2005 for the fabrics consigned to others received by the appellant - Held that - the appellants have submitted detailed documentations to prove their correlation but the same was not considered by both the authorities below. In view of this, the case is remanded back to the original authority to examine afresh all the documents which may be produced by the appellants to establish the receipt of the goods in the factory. Appeal allowed in part and part matter on remand.

Summary

Issues:
- Appeal against rejection of cenvat credit under Cenvat Credit Rules 2004.
- Allegations of irregular cenvat credit availed by the appellant.
- Recovery of alleged irregular cenvat credit.
- Compliance with principles of natural justice in passing the impugned order.

Analysis:
1. The appeal was filed against the rejection of cenvat credit under Cenvat Credit Rules 2004 by the Commissioner (Appeals). The appellant, a manufacturer of excisable goods, faced allegations of irregular cenvat credit availed on various items. The show-cause notice proposed a recovery of cenvat credit along with interest and penalty, leading to a series of legal proceedings.

2. The appellant contended that the impugned order lacked legal sustainability as it was based on assumptions and presumptions, violating principles of natural justice. The appellant challenged the demands related to cenvat credit availed on fabrics, capital goods, and invoices not consigned to them. The appellant argued that certain demands were not valid due to the absence of a recovery mechanism during the relevant period.

3. The learned consultant representing the appellant cited legal precedents to support their arguments, emphasizing that the demands made by the authorities were not justified. The appellant provided detailed documentation to establish the legitimacy of the cenvat credit availed, which they claimed was not adequately considered by the authorities.

4. The learned AR defended the impugned order, leading to a thorough examination of the submissions and legal arguments presented by both parties. After considering the material on record and legal precedents cited, the Judicial Member found merit in some of the appellant's contentions.

5. The Judicial Member allowed the appeal in part, concluding that the appellant was entitled to certain cenvat credits based on legal interpretations and precedents. The recovery of alleged irregular cenvat credit was deemed unjustified due to the absence of a recovery provision during the relevant period. The matter concerning non-receipt of material during a specific period was remanded back to the original authority for further examination.

6. The judgment highlighted the importance of compliance with principles of natural justice in adjudicating such matters and emphasized the need for a reasoned order from the original authority. The appeal was disposed of with directions for further examination and compliance with legal principles.

This detailed analysis of the judgment showcases the legal intricacies involved in the case and the careful consideration given to each issue raised by the appellant in challenging the rejection of cenvat credit.