2018 (4) TMI 1303 - AT - Central Excise

CENVAT credit - structural items such as Angle, Channel, Plate etc. - principles of natural justice - Held that - the Adjudicating authority passed an ex parte Order without verification of the use of the items - It is well settled by the various judicial authorities that the Cenvat Credit would be allowed after examination of the use of the items in question as the lower authorities had not examined the use of the items - the matter is remanded to the Adjudicating authority to decide afresh - appeal allowed by way of remand.

Summary

Issues:
- Disallowance of Cenvat Credit on procured structural items
- Appeal against the Adjudication Order
- Examination of the use of items for Cenvat Credit eligibility

Analysis:
1. The Respondent, engaged in manufacturing Sponge Iron, availed Cenvat Credit on structural items under Chapter 72 of the Central Excise Tariff Act, 1985. A Show Cause Notice was issued proposing disallowance of the credit. The Adjudicating authority disallowed the credit, imposed penalties, and appropriated the deposited amount.

2. The Commissioner (Appeals) set aside the Adjudication Order, allowing the Respondent's appeal. The Revenue filed appeals against this decision. The Commissioner dismissed the Revenue's appeal, stating the earlier Adjudication Order had been set aside. Subsequently, the Revenue filed two appeals against the Commissioner's decisions, and the Respondent filed a Cross Objection.

3. The Revenue argued that Cenvat Credit was inadmissible under Rule 2(k) of the Cenvat Credit Rules, 2004, for steel items used for specific purposes in the factory. The Adjudicating authority's ex parte Order lacked verification of the items' use, with the Respondent claiming they were used for factory expansion.

4. The Commissioner's decision lacked examination of the items' use, merely citing case laws. Both authorities failed to assess the items' utilization, a crucial factor for Cenvat Credit eligibility, as established by legal precedents.

5. Consequently, the Tribunal remanded the matter to the Adjudicating authority for a fresh decision after considering the appellant's submissions and ensuring compliance with the law. The appeal was allowed through remand, and the Cross Objection was disposed of accordingly.