2018 (11) TMI 1448 - AT - Central Excise

CENVAT Credit - job work undertaken in terms of Rule 4(5)(a) of the CCR, 2004 - case of appellant is that the duty on the goods manufactured on job work basis is an exception in terms of Rule 4(6) ibid - extended period of limitation. Held that - The remand Order of the Commissioner (Appeals) requires no interference. The impugned Order is also sustained on the issue of larger period for the reasons given by the lower authorities and also since the communication is indirect, by the principal manufacturer and not by the assessee. There is a possibility of the adjudicating authority being influenced by the findings of the Commissioner (Appeals) which appears to be contrary to the pleadings inasmuch, the plea of the appellant is that its case is covered by the exception as per Rule 4(6) - the finding of the Commissioner (Appeals) on this requires setting aside and the adjudicating authority shall pass a fresh Order on these pleadings of the appellant as well - appeal allowed in part.

Summary

Issues:
- Appeal against Order-in-Appeal remanding the matter for fresh adjudication.
- Availment of CENVAT Credit on chemicals for manufacturing.
- Allegations of duty payment on manufacturing activity.
- Remand by Commissioner (Appeals) and contentions raised by both parties.
- Consideration of larger period and communication by principal manufacturer.
- Influence of Commissioner (Appeals) findings on adjudicating authority.
- Setting aside findings and remanding for fresh adjudication.

Analysis:

The appellant appealed against the Order-in-Appeal remanding the matter for fresh adjudication by the Commissioner of Customs and Central Excise (Appeals). The appellant manufactures Iso Butyl Acetophone on job work basis for a pharmaceutical company using chemicals supplied by them. The appellant availed CENVAT Credit on duty paid chemicals under the belief that no duty needs to be paid on job work undertaken. Show Cause Notices were issued alleging duty payment on manufacturing activity, leading to Orders-in-Original and subsequent appeal.

During the hearing, the appellant contended that the remand by the Commissioner (Appeals) was erroneous and that the activity did not attract service tax as it fell under an exception in Rule 4(6) of CENVAT Credit Rules. The appellant argued against the invocation of a larger period for dispute and emphasized the lack of findings on suppression of facts. The Revenue supported the lower authorities' findings and stated that the appellant could provide evidence to satisfy the adjudicating authority.

The Member (Judicial) carefully considered the contentions and found that the remand Order required no interference. The Order was sustained on the issue of a larger period due to indirect communication by the principal manufacturer. However, the Member noted a possibility of the adjudicating authority being influenced by the Commissioner (Appeals) findings, which appeared contrary to the appellant's pleadings. Consequently, the Member set aside the findings and directed the adjudicating authority to pass a fresh Order without influence, expressing no opinion on the case's merits. The appeals were treated as partly allowed for statistical purposes.

In conclusion, the judgment addressed the issues of remand for fresh adjudication, availing CENVAT Credit, duty payment allegations, influence of previous findings, and setting aside those findings for a fair adjudication process.