2022 (1) TMI 129 - AT - Central Excise

CENVAT Credit - inputs were neither actually received in the factory nor were used in the manufacture of final product - all invoices were not examined duly - March, 2005 to October, 2006 - violation of principles of natural justice - HELD THAT - It has been acknowledged that the appellant had maintained its record of about 35 consignments of HR coils during the year 2005-2006 and of about 30 consignments thereof for the period 2006-07. The copies of all 65 invoices have also been acknowledged to have been received by the Adjudicating Authority on 09.05.2017 along with RG 23 A part II register and original form IV register for the relevant period as is apparent from para 5.1, 5.3.2 of the order-in-original. However, still only 9 invoices for the period 2005-2006 and 13 invoices for the year 2006-2007 have been considered by the Original Adjudicating Authority even after receiving the verification report - the rest of the invoices have not been considered merely for want of non-maintenance of RG 23 A Part I register. It has been explained by the learned Counsel for the appellant that RG 23 A part I register is record maintained for quantity of inputs received. The said detail is very much available in RG 23 A Part II register as well as in form IV register which records the movement of received inputs, opening balance, quantity received, total quantity, opening and received quantity issued to production section, issued to job workers issued to such clearance and closing balance. Specific invoices are already mentioned in the given columns of these registers. It is otherwise apparent from the copies of the documents as annexed along with the written synopsis. It is deemed appropriate that the Adjudicating Authority has to give a clear finding to the effect what precisely is still missing for want of RG 23 A Part I register. In absence thereof, ₹ 27,99,593/- as has been confirmed against the appellant lacks reasonable jurisdiction - matter remanded to the Original Adjudicating Authority directing them to consider all the 65 ( 35 invoices of 2005-06 and 30 invoices of 2006-07) invoices and to appreciate simultaneously the RG 23 A part II register and form IV register. Appeal allowed by way of remand.

Summary

Issues:
- Alleged evasion of duty on availment of Cenvat Credit
- Disallowance and recovery of availed credit
- Confirmation of demand by Adjudicating Authority
- Consideration of invoices by authorities
- Non-maintenance of RG 23 A Part I register
- Appeal against the Order-in-Appeal

Alleged Evasion of Duty on Availment of Cenvat Credit:
The appellant, engaged in manufacturing MS Tubes, was alleged to have evaded duty by availing Cenvat Credit on inputs that were not actually received or used in the manufacturing process. The Directorate General issued a Show Cause Notice proposing disallowance and recovery of credit amounting to &8377;40,96,119. The Order-in-Original confirmed the proposal with a penalty imposed on the appellant and its Director. The appeal against this order was dismissed by the Commissioner, leading to the appeal before the Tribunal.

Confirmation of Demand by Adjudicating Authority:
The CESTAT, New Delhi, in a previous order, upheld a demand of &8377;11,70,737 but remanded the matter for verification of additional consignments of inputs for the periods 2005-2006 and 2006-2007. The Adjudicating Authority confirmed the demand based on a verification report, leading to the current appeal. The appellant argued that not all invoices were considered, resulting in a wrongful confirmation of the demand.

Non-Maintenance of RG 23 A Part I Register:
The Departmental Representative emphasized the absence of RG 23 A Part I register, stating that the Adjudicating Authority rightly confirmed the demand due to the appellant's failure to maintain this record. However, upon inquiry by the Bench, the Department did not object to remanding the matter for clarity on this issue.

Consideration of Invoices by Authorities:
The appellant contended that while 65 invoices were submitted, only a portion was considered by the Adjudicating Authority, leading to an erroneous confirmation of the demand. The Tribunal observed discrepancies in the consideration of invoices and directed the Adjudicating Authority to review all 65 invoices along with relevant registers to clarify the missing information.

Appeal Against the Order-in-Appeal:
After hearing both parties and examining the records, the Tribunal found that the Adjudicating Authority failed to consider all invoices and relevant registers, leading to an incorrect confirmation of the demand. Consequently, the Tribunal remanded the matter back to the Adjudicating Authority with specific directions to reevaluate the case based on all submitted documents and registers. As a result, the appeal was allowed by way of remand, emphasizing the need for a clear finding on the missing information related to the RG 23 A Part I register.