2019 (2) TMI 308 - AT - Central Excise

100% EOU - CENVAT Credit of CVD - proper observations not been made - principles of natural justice - Held that - It is seen that the exact manner in which the admissible credit has been calculated is not specified. In the appeal No. E/554/2010 the figures in the annexure-A to the SCN do not match. In the column of credit availed, the figure shown is 15280 and in the column credit available the figure shown is 150947. Still in the last column it has been stated that there is an excess credit of ₹ 12133/- availed - It is seen that the figures have not been examined by the Order In Original as well as Order In Appeal. The manner in which total duty available has been calculated has also not been specified nor examined by the lower authorities. The credit taken when the credit eligible as per formula without actually specifying how these figures have been arrived at. The actual break up of duty paid in the documents has not been examined - matter requires re-examination. Appeal allowed by way of remand.

Summary

Issues:
- Denial of Cenvat Credit for the years 2007-2008 and 2008-2009
- Interpretation of provisions under Rule 3 of Cenvat Credit Rules, 2004
- Calculation and admissibility of Cenvat Credit
- Observations regarding duty payment under Notification No. 23/2003-CE
- Contradictory observations in the impugned order
- Lack of clarity in calculating admissible credit
- Remand of the matter to lower authority for fresh orders

Analysis:
The case involved appeals filed by M/s. Nandeshwari Packaging challenging the denial of Cenvat Credit for the years 2007-2008 and 2008-2009. The appellant had received material from a 100% EOU, M/s. Reliance Industry, and availed credit which was later disputed. The main contention revolved around the interpretation of Rule 3 of Cenvat Credit Rules, 2004, specifically related to units paying duty under Section 3 of the Excise Act and Notification No. 23/2003-CE.

The Commissioner (Appeals) had made observations regarding the applicability of exclusion clauses under the said notification and the admissibility of Cenvat Credit based on the type of clearances made by M/s. Reliance Industry. The lower authority's order was challenged due to contradictory observations and lack of clarity in calculating the admissible credit amount. The Tribunal noted discrepancies in the calculation of credit figures and the absence of a detailed examination by the lower authorities.

Ultimately, the Tribunal set aside the impugned order and remanded the matter to the lower authority for fresh orders. The Tribunal emphasized the need for a clear specification of duty paid against each invoice, credit taken, admissible credit with necessary calculations, and a comprehensive conclusion. The decision to remand the case was supported by citing relevant case laws for consideration during the reevaluation process.

In conclusion, the appeals were allowed by way of remand to ensure a thorough and accurate determination of the admissible Cenvat Credit amounts, addressing the discrepancies and lack of clarity identified in the initial proceedings.