2018 (2) TMI 465 - AT - Central Excise

CENVAT credit - input services - denial on the ground that documentary evidence were not produced - Held that - The appellant during adjudication submitted all the documents however the adjudicating authority has disallowed the credit on the issue of admissibility of the input service for which the appellant was not issued any notice therefore the order-in-original was passed in gross violation of principles of natural justice - the matter to the adjudicating authority for passing a fresh order after providing personal hearing to the appellant and giving opportunity for explaining the issue of the admissibility of the input service - appeal allowed by way of remand.

Summary

Issues:
- Denial of cenvat credit due to lack of documentary evidence
- Disallowance of cenvat credit by adjudicating authority
- Scope of show cause notice and violation of principles of natural justice
- Overlapping of cenvat credit amount in another case

Analysis:
The appellant received a show cause notice proposing denial of cenvat credit for input services due to the alleged non-production of documentary evidence. The appellant responded by submitting all documents, but the adjudicating authority disallowed the credit amount based on the admissibility of the input service, without issuing a specific notice on this issue. The appellant contended that both the adjudication order and the Commissioner (Appeals) order exceeded the show cause notice's scope and violated principles of natural justice. The appellant argued that the disallowed cenvat credit was also part of another case, leading to an overlap in the cenvat amount, which required correction.

During the hearing, the appellant's counsel emphasized that the orders went beyond the show cause notice's allegations, and the Commissioner (Appeals) failed to address this issue. The Additional Commissioner representing the Revenue reiterated the impugned order's findings, leading to a thorough consideration by the Member (Judicial). The Member found that the adjudication process lacked procedural fairness as the order-in-original was passed without a specific notice on the admissibility issue, violating natural justice principles. Additionally, the Commissioner (Appeals) failed to address this procedural flaw, rendering their order illegal and incorrect.

The Member also acknowledged the appellant's argument regarding the overlapping cenvat credit amount, noting that the issue needed correction. The Member decided to set aside the impugned order and remand the matter to the adjudicating authority for a fresh decision. The adjudicating authority was instructed to provide a personal hearing to the appellant, allowing them to explain the admissibility of the input service. The appeal was disposed of by way of remand, keeping all other issues open for further consideration. The Member's decision aimed to ensure procedural fairness and correct any overlapping demands in the cenvat credit cases, emphasizing the importance of adhering to principles of natural justice in adjudication processes.