2019 (4) TMI 1069 - AT - Central Excise

CENAVT Credit - capital goods - engineering goods - denial on account of nexus - it is also alleged that the assessee had adjusted such capital goods against physical goods against physical shortage/obsolescence in their stores account and spare consumption account - main grounds of appeal of the Revenue are that the Commissioner (Appeals) did not resort to any enquiry and remanded the matter to the Adjudicating Authority which is contrary to the provisions of law. HELD THAT - Since the Show Cause Notice was issued only in respect of capital goods, there is no occasion on the part of the Lower Appellate Authority to include inputs also which was not an issue to be decided by him - Accordingly, the impugned order is modified to the extent that the Original Adjudicating Authority would pass the denovo order after verification of the statutory registers and quantification of capital goods only and not the inputs since such allegation was not there in the Show Cause Notice. Appeal allowed by way of remand.

Summary

Issues:
1. Allegation of in-admissible Cenvat Credit availed by the assessee.
2. Appeal against the Order-in-Original by the assessee.
3. Grounds of appeal by the appellant Revenue.
4. Scope of remand by the Commissioner (Appeals).
5. Observations and decision by the Tribunal.

Allegation of In-admissible Cenvat Credit:
The case involved the Respondent Assessee, engaged in manufacturing Organic Chemicals and Rubber Chemicals, facing a Show Cause Notice alleging in-admissible Cenvat Credit utilization on Engineering Goods not used in the manufacture of final products. The Adjudicating Authority confirmed the demand, disallowed excess credit, and imposed penalties under relevant rules.

Appeal Against Order-in-Original:
The assessee appealed before the Lower Appellate Authority, which set aside the Order-in-Original and remanded for quantification verification. The appellant Revenue challenged this decision before the Tribunal, arguing the remand was not in line with legal provisions.

Grounds of Appeal by Appellant Revenue:
The appeal by the Revenue contended that the Commissioner (Appeals) did not conduct an inquiry and improperly remanded the matter to the Adjudicating Authority. The main issue raised was the lack of proper investigation before the remand order.

Scope of Remand by Commissioner (Appeals):
The Commissioner (Appeals) remanded the case for re-quantification of capital goods and inputs used by the assessee, directing verification of statutory registers and invoices. The Tribunal noted that the inclusion of inputs exceeded the scope of the Show Cause Notice and modified the order to focus solely on capital goods quantification.

Observations and Decision by the Tribunal:
The Tribunal observed discrepancies in the Commissioner (Appeals)'s order and directed the Original Adjudicating Authority to pass a denovo order after verifying statutory registers and quantifying capital goods only. The Tribunal emphasized the need for proper quantification based on the allegations raised by the assessee during the proceedings. The appeal was remanded to the Original Adjudicating Authority, with directions for cooperation from the respondent assessee in the proceedings.