2019 (6) TMI 165 - HC - Central Excise

CENVAT Credit - inputs - denial of credit on the ground that they were unable to prove any manufacturing activity - HELD THAT - When two lower adjudicating authorities had come to a finding on facts that the respondent assessee was not entitled to Cenvat Credit on inputs, there was a higher burden on the Tribunal to consider all the facts and evidence in the records and come to a reasonable finding. We feel that more reasons were required to be advanced by the Tribunal to reverse the said findings of the adjudicating authorities. This itself gives rise to a substantial question of law. Matter remanded back to the Tribunal to decide the case afresh after hearing the parties and by a reasoned order within six months from the date of communication of this order.

Summary

Issues:
1. Delay in filing appeal - condonation of delay
2. Denial of Cenvat Credit by lower authorities
3. Reversal of lower authorities' orders by Tribunal without proper reasoning
4. Burden on Tribunal to consider all facts and evidence
5. Substantial question of law arising
6. Remand of the matter back to Tribunal for fresh decision

Analysis:
1. The High Court of Calcutta addressed the issue of delay in filing an appeal in the case. The Court noted that an affidavit of service was filed and none appeared for the respondent. The Court found sufficient cause for the delay of 101 days in filing the appeal and thus condoned the delay. The application was allowed, and the department was directed to register the appeal immediately.

2. The Court delved into the issue of denial of Cenvat Credit by the lower authorities. It was observed that the Additional Commissioner and the Commissioner had denied Cenvat Credit on inputs to the assessee based on the ground that they failed to prove any manufacturing activity. However, the Tribunal later reversed these orders without proper findings on facts, relying on the presumption that payments made on inputs entitled the buyer to claim Cenvat Credit. The Court opined that the Tribunal had a higher burden to consider all facts and evidence in the records before reaching a conclusion. It was deemed necessary for the Tribunal to provide more reasons for reversing the findings of the lower adjudicating authorities.

3. The Court highlighted the substantial question of law arising from the Tribunal's decision and the lack of sufficient reasoning provided for the reversal of the lower authorities' findings. In light of this, the Court remanded the matter back to the Tribunal for a fresh decision after hearing the parties. The Tribunal was instructed to issue a reasoned order within six months from the date of communication of the Court's order. The appeal along with the connected application was disposed of by the judgment and order of the Court.