2023 (1) TMI 447 - AT - Central Excise

CENVAT Credit - common input services used in manufacturing and trading activity - primary plea of appellant had been that the option available under rule 6 of CENVAT Credit Rules, 2004 for neutralisation of credit owing to inability to segregate input services deployed in common was acknowledged by the Tribunal and the matter remanded back for the adjudicating authority to consider the option preferred by the assessee. HELD THAT - The show-cause notice pertaining to the use of input services in common for manufacturing as well as trading involving a demand of Rs.33,47,30,142/- for the period January 2008 to March 2011 had, on the former occasion, been limited to Rs.4,24,52,646/- in the adjudication order. The appeal which was allowed by way of remand then was that of assessee and not of Revenue, which has now been revised upward to Rs.24,89,73,043/-; it is settled law that in remand proceedings arising from appeal of assessee, the appellant cannot be burdened with liability that is more than that remanded in the first place. The confirmation of demand, many times over, upon the challenge to the first demand is contrary to law. Insofar as the disposal of that notice as well as the three other show-cause notices for the subsequent periods are concerned, it is found that the adjudicating authority has referred several times to the order that had been been extinguished by operation of order of the Tribunal on the former occasion. Matter remanded to the adjudicating authority for rendering a decision consistent with CENVAT Credit Rules, 2004 as directed in the remand by Tribunal on the former occasion without being influenced, in any manner, by any of the predecessor adjudication orders - appeal allowed by way of remand.

Summary

Issues:
Appeal against order-in-original confirming demands on availment of credit for input services and segregation of clearances for manufacturing exempted and dutiable goods.

Analysis:
The appeal by M/s Godrej & Boyce Manufacturing Co Ltd challenged the order-in-original confirming demands totaling Rs.33,47,30,142/-, Rs.12,39,14,171/-, Rs.1,08,87,155/-, and Rs.1,56,19,370/- related to two main issues. Firstly, the availment of credit for input services used in common for manufacturing and trading activities. Secondly, the segregation of clearances from the same factory for manufacturing exempted and dutiable goods. In a previous proceeding, the Tribunal acknowledged the option under rule 6 of CENVAT Credit Rules, 2004 for neutralizing credit due to the inability to segregate input services used in common. The matter was remanded back for the adjudicating authority to consider the preferred option of the assessee. Dissatisfied with the re-adjudication outcome, the appellant appealed again.

During the hearing, the Senior Counsel for the appellant argued that the Tribunal's direction had been breached, warranting the setting aside of the impugned order. On the other hand, the Special Counsel for Revenue contended that any flaws attributed to the adjudicating authority should not prejudice the exchequer, suggesting a fresh decision by the adjudicating authority.

The Tribunal noted discrepancies in the adjudication order, where the demand for the use of input services in common for manufacturing and trading had increased substantially from the previous order. It was emphasized that in remand proceedings resulting from the appeal of the assessee, the liability imposed should not exceed that remanded initially. The confirmation of demands beyond the remanded amount was deemed contrary to law. Furthermore, the Tribunal observed that the adjudicating authority had incorporated findings from the extinguished order into the impugned order without proper consideration during the de novo proceedings.

The Senior Counsel highlighted that the computations based on the amended provisions of rule 6(3)(a) of CENVAT Credit Rules were submitted but not duly considered, emphasizing the need for a comprehensive review.

Ultimately, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a decision consistent with the CENVAT Credit Rules, 2004, without influence from previous adjudication orders. The appeal was disposed of accordingly.