2022 (1) TMI 1069 - AT - Central Excise

CENVAT Credit - Credit availed during the month of December, 2016 on the basis of invoices which were more than one year old from the date of purchase of inputs - HELD THAT - It is observed that the notice of hearing was issued by the Commissioner (Appeals) to the appellants for making themselves available for personal hearing before him. However, there is no documents on record proving the service thereof upon the appellant. The appellant was very much responding since the issuance of the SCN. He marked his presence before Original Adjudicating Authority as well. Accordingly, the submission of the appellant for not receiving the notice of personal hearing given by Commissioner (Appeals), that too, prior to the pronouncement of this order in appeal dated 30.04.2021 are opined acceptable. It is the settled law that mere issue or dispatch of notice is not the proof of service of the said notice. Hence cannot be held to be received by the recipient in absence of such proof of service. There is no denial apparent on record about appellant opting out from the Scheme of Cenvat Credit on 31.03.2016 with the reversal of credit lying with them at that time. There is also no apparent denial to the fact that the production initiated again by the appellant in December, 2016 - bare perusal of Rule 3 Sub Rule (2) of Cenvat Credit Rules 2004 makes it clear that the appellant was entitled to claim Cenvat Credit with respect to the inputs contained in the final products lying in the stock on the date when the goods manufactured becomes excisable. In the present case the appellants goods post being manufactured in December, 2016 became excisable in December 2016 itself. Hence, the availment of credit on the inputs of such manufactured goods was very much available to the appellant. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged wrongful availment of Cenvat Credit based on old invoices, violation of principles of natural justice, applicability of Cenvat Credit Rules, rejection of appellant's entitlement based on Rule 9 and relevant circular.

Alleged wrongful availment of Cenvat Credit:
The appellant, engaged in manufacturing of Bar and rods, was alleged to have wrongly availed Cenvat Credit amounting to ?524152 during December 2016 based on invoices more than one year old. The Department proposed recovery with interest and penalty. The original adjudicating authority rejected the proposal, but the Department appealed, leading to the current Tribunal case.

Violation of principles of natural justice:
The appellant argued that the Commissioner (Appeals) passed the order without considering the defense submissions and without providing a personal hearing. The Department contended that ample hearing opportunities were given, but the appellant failed to appear. The Tribunal found that the notice of personal hearing was not proven to have been served on the appellant, violating principles of natural justice.

Applicability of Cenvat Credit Rules:
The appellant claimed that they had opted out of the Cenvat Scheme on March 31, 2016, and reversed the credit, but re-availed it in December 2016 after resuming production. The Tribunal analyzed Rule 3 Sub Rule (2) of Cenvat Credit Rules 2004, allowing credit on inputs lying in stock when goods become excisable. It concluded that the appellant was entitled to claim the credit under this rule.

Rejection of appellant's entitlement based on Rule 9 and relevant circular:
The Commissioner (Appeals) rejected the appellant's entitlement based on Rule 9, which imposes a time limit for re-credit of reversed amounts. The Tribunal considered the appellant's submissions citing a CBEC Circular clarifying the limitation period and found that the conditions of the rule were met by the appellant. It held that the original adjudicating authority's conclusion had a reasonable legal basis, unlike the order under challenge, and set aside the latter, allowing the appeal.

This detailed analysis of the judgment highlights the issues involved, arguments presented by both parties, legal provisions considered, and the Tribunal's final decision based on the facts and applicable laws.