2018 (2) TMI 805 - AT - Central Excise

CENVAT credit - rejection on the ground that the appellant had raised debit notes towards rejection of inputs upon the supplier of inputs - Held that - the Appellant has disputed the demand on various reasons which cannot be gone into detail at this stage as the same requires the verification of records of the Appellant - the Appellant should be extended an opportunity to produce the relevant records which they wish to rely in their support - appeal allowed by way of remand.

Summary

Issues:
Disputed Cenvat credit due to rejection of inputs, sustainability of demand on debit notes, failure to prove use of rejected goods, lack of nexus between receipt, rejection, and disposal of goods, challenge to penalty imposition, discrepancies in invoices and debit notes, consideration of credit notes, time-barred demands, cum duty benefit.

Analysis:
The case involved a dispute over Cenvat credit due to the rejection of inputs by the appellant. The revenue contended that the rejected inputs were not used in manufacturing final products, thus challenging the appellant's entitlement to the credit. The adjudicating authority confirmed a demand of ?14,01,151 along with interest and penalty, a decision upheld by the Commissioner (Appeals), leading to the appellant filing the present appeal.

The appellant argued through their counsel that the impugned order incorrectly confirmed the demand, particularly focusing on the sustainability of the demand on debit notes. They highlighted discrepancies in the demand amounts, emphasizing that some goods were used and line rejected, questioning the nexus between receipt, rejection, and disposal of scrap. The appellant also challenged penalties imposed and raised concerns about the consideration of credit notes, time-barred demands, and the lack of cum duty benefit.

In response, the Revenue representative reiterated the findings of the impugned order, emphasizing the sustainability of the demand based on the debit notes raised by the appellant. However, the Member (Judicial) noted that a detailed examination of the reasons for disputing the demand was necessary, requiring verification of the appellant's records. Consequently, the case was remanded back to the adjudicating authority for a thorough review, instructing them to consider all relevant records and documents presented by the appellant, including aspects of time bar and cum duty benefit.

Ultimately, the appeal was disposed of with the decision to remand the case back to the adjudicating authority for further examination based on the observations made during the hearing, ensuring a comprehensive review of the disputed issues and relevant documentation.