2024 (9) TMI 1069 - AT - Central Excise

Reversal of Cenvat Credit - Invocation of extended period of limitation - appellant submits that the Adjudicating Authority has not given bifurcation of the items specifically on which the demand has been confirmed - HELD THAT - The first SCN was issued on 05.05.2011 and second SCN was issued on 30.01.2011. He has clearly noted that the Show Cause Notices have not brought in any evidence to rely upon their allegations. After this, he has gone on to direct the officers of Headquarters Anti Evasion Unit to do the necessary verification and submit their findings which was done by them between 06.03.2013 to 07.03.2013. There is no legal sanctity to undertake such an exercise after the Show Cause Notice was issued. Once the Show Cause Notice is issued and reply is filed by the Appellant, the Adjudicating Authority is required to consider the allegations vis- -vis the replies filed by the Appellant and come to a conclusion. He cannot step into the shoe of the investigating authority and undertake a fresh investigation. In this case his undertaking of such an exercise has vitiated the entire adjudication process since the principles of natural justice have not been followed. The observation of the Adjudicating authority clarifies that the goods in question have been used by the Appellant in their manufacturing process. Therefore, even on this count, the Appeals are allowed. The impugned order is set aside - appeal allowed.

Summary

Issues:
1. Demand for reversal of Cenvat Credit on various items
2. Invocation of extended period provisions
3. Confirmation of demand by Adjudicating Authority
4. Legal precedents cited by the Appellant
5. Department's justification for confirmed demand
6. Verification process conducted by Adjudicating Authority
7. Adjudicating Authority's reliance on Chartered Engineer certificate
8. Lack of evidence in Show Cause Notices
9. Adjudicating Authority's fresh investigation
10. Compliance with principles of natural justice

Analysis:
The judgment by the Appellate Tribunal CESTAT KOLKATA dealt with a case where the Appellant was issued Show Cause Notices demanding reversal of Cenvat Credit on various items, including angles, channels, beams, TMT bars, welding electrodes, and cement. The Notices were issued invoking extended period provisions due to a Larger Bench decision. The Adjudicating Authority confirmed a portion of the demand, which the Appellant contested. The Appellant cited legal precedents to support their case, emphasizing the allowance of Cenvat Credit in similar instances. The Department, represented by the Authorized Representative, supported the Adjudicating Authority's findings, justifying the confirmed demand based on factual details and a Chartered Engineer's certificate.

The Appellant's counsel argued that the Adjudicating Authority erred in relying on a certificate issued by a Chartered Engineer appointed by the Department, highlighting the lack of bifurcation of confirmed items and questioning the verification process. The Tribunal noted that the Show Cause Notices lacked specific evidence and that the Adjudicating Authority's post-Notice verification was irregular. The Tribunal emphasized that after issuing a Show Cause Notice, the Authority should consider responses and not conduct fresh investigations. The Tribunal found this procedural error violated natural justice principles, leading to the setting aside of the Adjudicating Authority's order.

Furthermore, the Tribunal found in favor of the Appellant based on legal precedents and the Adjudicating Authority's own observations indicating the usage of goods in the manufacturing process. Consequently, the Appeals were allowed, providing consequential relief as per the law. The judgment underscored the importance of adhering to procedural fairness and established legal principles in adjudicating such matters, ensuring a fair and just resolution for the parties involved.