2017 (11) TMI 473 - AT - Central Excise

CENVAT credit - pig iron - pig iron appeared to have been not received and used for the intended purposes of manufacture of final product - case of Revenue is that it is not technically feasible for the appellant to use such quantities of duty paid pig iron in the manufacture of cast iron ingot moulds during the impugned period - Held that - there is no study conducted by NIT. It is only an opinion given based on the query raised by the Commissioner in his letter dated 9.7.2009 without referring to the name of the appellant. We are not able to appreciate how a specific study conducted by the very same expert by physical observation of three days of operation in the appellant s unit can be brushed aside by preferring a general opinion given based on a query by the Department. In our considered opinion, we find that the Original Authority has not given due regard to the expert s study report of the very same authority conducted in the premises of the appellant. The reasons for the same has also not been recorded. Regarding the other evidences with reference to manufacturing process in M/s. Bhawani Moulders Pvt Ltd. and usage of the appellants own lorry for movement of the pig iron, we note that the defence of the appellant with supporting documents have not been duly analyzed for a proper finding by the Original Authority. Denial of credit amount of more than ₹ 5 crore, on the principal raw material procured and used by the appellant, cannot be made based on the opinion and inferences - Original Authority shall decide the case afresh after providing adequate opportunity to the appellant to submit their defence along with all the supporting evidence - appeal allowed by way of remand.

Summary

Issues: Alleged excess availment of cenvat credit on pig iron, violation of principles of natural justice, technical aspects of manufacturing process, transportation of pig iron, discrepancy in central excise duty payment, reliance on expert opinion, examination of supporting documents, change in procurement practice.

Analysis:
1. The dispute revolves around the alleged excess availment of cenvat credit on pig iron by the appellants, contested by the Revenue based on technical feasibility during the material period. The Revenue's inquiries were supported by a technical opinion from NIT, Raipur, which raised queries regarding pig iron usage in manufacturing cast iron ingots. The proceedings heavily relied on this opinion, disregarding the appellant's physical test report by the same expert conducted in their unit over three days, showing satisfactory material yield.

2. The appellant argued against the Original Authority's findings, citing violations of natural justice, lack of consideration for technical aspects, and reliance on a generalized opinion without due regard to actual physical testing. They highlighted discrepancies in the expert's opinion provided by NIT and emphasized the importance of scrutinizing the expert's study report conducted in their manufacturing unit. The appellant also presented evidence regarding the transportation of pig iron in their own lorry and maintained statutory records without discrepancies.

3. The Tribunal observed that the Original Authority failed to adequately analyze the appellant's defense, including supporting documents related to the manufacturing process and transportation of pig iron. Moreover, the explanation provided by the appellant regarding changes in procurement practices and the impact on central excise duty percentage was not duly considered. The Tribunal concluded that the denial of credit exceeding &8377;5 crore on the principal raw material lacked sufficient scrutiny and examination of crucial points raised by the appellant.

4. Consequently, the Tribunal set aside the impugned order, directing the Original Authority to reevaluate the case after providing the appellant with an opportunity to present their defense and all supporting evidence. The decision was made to allow the appeal by way of remand, emphasizing the need for a more thorough examination of the issues raised by the appellant and a fair consideration of all relevant factors in the case.

Conclusion:
The judgment highlighted the importance of a detailed analysis of technical aspects, proper consideration of supporting evidence, and adherence to principles of natural justice in adjudicating disputes related to cenvat credit. The Tribunal's decision to remand the case for a fresh evaluation underscores the significance of a comprehensive review and fair treatment of all parties involved in such matters.