2023 (4) TMI 657 - AT - Central Excise

Appealable order or not - Letter written by the Superintendent directing, the assessee for not availing Cenvat Credit - The letter dated 25.09.2012 further stated that recovery action along with penal actions would be initiated if the respondent availed/ utilized the credit. - Appeal lies before Commissioner (Appeals) under Section 35 of the Act or not, against the letter or not - HELD THAT - There is no dispute that appellant have sought allowance of credit in respect of input service attributed to dutiable goods which was very much in accordance with the Cenvat Credit Rules. The Superintendent vide letter dated 25.09.2012 denied the benefit claimed by the appellant-assessee. It is also stated in the said letter that in case of availment of credit which was claimed by the appellant, penal action shall be taken against the respondent. The said letter therefore is clearly a decision given by a proper officer. From the plain reading of Section 35, it is clear that any decision or order passed by a proper officer below the rank of Commissioner is appealable before Commissioner (Appeals). Accordingly there is absolutely no ambiguity in Section 35. The letter whereby the Superintendent has clearly held that respondent is not eligible to take credit, the said letter is clearly a decision against which appeal lies before Commissioner (Appeals) as per the strict interpretation of Section 35 - It is also noticed that if the department s contention is accepted then the respondent left with no remedy against denial of substantial benefit claimed by the respondent and respondent is remediless. Reliance also placed by respondents in the case of USHA INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS (I) , MUMBAI 2017 (2) TMI 239 - CESTAT MUMBAI where it was held that once an application of refund has been filed before the refund sanctioning authority, the said authority is duty bound to decide the refund application one way or the other. The refund application can either be rejected or allowed in part or in full. Thus, in the facts of the present case the letter written by Superintendent is a decision against which the appeal lies before Commissioner (Appeals) under Section 35 of the Act - the order of the Commissioner (Appeals) is absolutely legal and correct hence the same is upheld. Appeal dismissed.

Summary

Issues involved:
The case involves the following Issues:
1. Availment of Cenvat credit on input services used for both dutiable and exempted goods.
2. Appeal against a letter from the Superintendent denying Cenvat credit.

Issue 1: Availment of Cenvat credit on input services:
The respondent, engaged in manufacturing bulk drugs and tablets, imported various drug formulations and repacked them, clearing them by discharging excise duty. They shared facilities like Nitrogen, Steam plant, Chilling unit, and compressed air unit with neighboring units. The respondent used common facilities for both dutiable and exempted operations without separate books of accounts for input services. In 2007, they received a show cause notice regarding Cenvat credit of service tax paid on input services used for both types of goods. The respondent sought to avail Cenvat credit for the Financial Year 2007-08 to 2011-12, following the provisions of the Cenvat Credit Rules, 2004.

Issue 2: Appeal against denial of Cenvat credit:
The respondent received a letter in 2012 from the Superintendent directing them not to avail Cenvat credit for the mentioned period. The letter warned of recovery and penal actions if the credit was utilized. The respondent appealed before the Commissioner (Appeals) challenging the denial. The Revenue contended that the Commissioner should not have entertained the appeal against the Superintendent's decision, as it was not an appealable order. However, the respondent argued that the denial of Cenvat credit affected their rights and was appealable. The Tribunal held that the letter was a decision by a proper officer and appealable under Section 35 of the Act. Upholding the Commissioner's order, the Tribunal dismissed the appeal, stating that the respondent had a remedy against the denial of substantial benefit claimed.