2019 (6) TMI 872 - HC - Central Excise

Maintainability of appeal - reversal of CENVAT credit - HELD THAT - The reversal of CENVAT credit, which was the bone of contention was undoubtedly contested in the show cause notice. Having regard to the factual matrix, the court is of the opinion that the interest of justice lies in the petitioner s grievance being adjudicated on the merits in appeal by the Commissioner (Appeal). In these circumstances, the order of the Commissioner (Appeal) and the CESTAT is set aside. Petition disposed off.

Summary

Issues:
1. Alleged infringement of Rule 3(5)(a) of the CENVAT Credit Rules 2004.
2. Rejection of appeal due to time bar.
3. Reversal of CENVAT credit and subsequent demand of payment.
4. Jurisdiction of Central Excise authorities in settlement of insurance claims.

Analysis:
1. The petitioner, a Central Excise assessee, faced a fire incident in its factory resulting in loss of unutilised inputs and raw material. The insurance claim was settled at a net value excluding excise duty with CENVAT credit. A show cause notice was issued alleging infringement of Rule 3(5)(a) of the CENVAT Credit Rules 2004. The Additional Commissioner of Central Excise confirmed a demand of payment along with interest and penalty. The petitioner contested the order, claiming lack of notice and inability to avail appellate remedy due to procedural issues.

2. The petitioner's appeal was rejected as time-barred by the Commissioner of Appeals and subsequently summarily by CESTAT. The High Court considered the petitioner's grievance regarding the rejection of its appeal. The court opined that justice required the petitioner's grievance to be adjudicated on merits in appeal by the Commissioner (Appeal). Therefore, the orders of the Commissioner (Appeal) and CESTAT were set aside, allowing the petitioner's appeal to be reconsidered subject to depositing a mandatory pre-deposit amount.

3. The core issue revolved around the reversal of CENVAT credit, contested in the show cause notice. The High Court, after evaluating the facts, determined that the interest of justice warranted the petitioner's appeal to be heard on its merits. The court directed the Commissioner to ensure compliance with the pre-deposit conditions and proceed to decide the appeal on its merits, preserving the rights and contentions of all parties involved.

4. The judgment highlighted the jurisdictional aspect of Central Excise authorities in the context of settling insurance claims involving excise duty components. The court's decision emphasized the need for procedural fairness and adherence to legal requirements in the resolution of disputes related to excise duty liabilities arising from insurance settlements. The judgment ultimately aimed to uphold the principles of natural justice and provide an opportunity for the petitioner to have its appeal considered on substantive grounds.