2023 (8) TMI 184 - AT - Central Excise

Violation of principles of natural justice - Cenvat Credit - use of the goods in the machineries equipments fabricated by the appellant, were not appreciated properly - contradictions between the show cause notice and adjudication order CENVAT Credit - items like M.S. Beams/Angles/ Channels/Flats/Joists etc. claimed to have been used in the fabrication of plant and machinery in the factory during January 2008 to April 2010 - extended period of limitation - HELD THAT - There are number of discrepancies/ contradictions between the show cause notice and adjudication order such as, in the show cause notice the Cenvat credit was proposed to be denied on the ground that the goods were used in the construction. However, in the impugned order though it was admitted that the goods were used in fabrication of machinery but the same was denied on the ground that these machineries are embedded to earth. The Adjudicating Authority has not appreciated in proper perspective, regarding the use of the goods in the machineries equipments fabricated by the appellant. After passing of the adjudication order much water has flown on this issue and various judgments were passed by various forums. Therefore, the entire matter needs reconsideration in the light of the facts of the present case vis-a-vis the law in terms in various judgments of the High Courts/ Tribunals. All the issues are kept open. The appeal is allowed by way of remand to Adjudicating Authority for passing a fresh order after compliance of the principles of natural justice.

Summary

Issues involved:
1. Whether Cenvat Credit on iron and steel items used in the fabrication of plant and machinery is eligible.
2. Whether the extended period of limitation could be invoked.

Issue 1:
The appellant argued that the iron and steel items were used in the fabrication of plant and machinery, supported by a Chartered Engineer's Certificate. The items fabricated using the disputed iron and steel items were essential for manufacturing activity in the plant. The appellant contended that Cenvat credit is eligible on such items regardless of whether the machinery is embedded to earth. The appellant also highlighted that the show cause notice and impugned order presented contradictory allegations regarding the use of the items for civil construction versus fabrication of machinery. The appellant further argued that prior to a certain date, there should be no dispute about the admissibility of the Cenvat credit. Additionally, the appellant asserted that the extended period of limitation cannot be invoked as the demand was beyond the normal period, and the actions were bona fide.

Issue 2:
The Deputy Commissioner (AR) reiterated the findings of the impugned order, which denied the Cenvat credit on the ground that the machinery was embedded to earth. However, the appellate tribunal found discrepancies and contradictions between the show cause notice and the adjudication order. The tribunal noted that the Adjudicating Authority did not properly appreciate the use of the goods in the machinery equipment fabricated by the appellant. Therefore, the tribunal set aside the impugned order and remanded the case to the Adjudicating Authority for a fresh order within three months, emphasizing compliance with the principles of natural justice.

Judgment Summary:
The appellate tribunal addressed two main issues in the case: eligibility of Cenvat Credit on iron and steel items used in the fabrication of plant and machinery, and the invocation of the extended period of limitation. The appellant argued that the items were essential for manufacturing activity and eligible for credit, while also contesting the invocation of the extended period of limitation. The Deputy Commissioner (AR) supported the findings of the impugned order, which denied the credit based on the machinery being embedded to earth. However, the tribunal found discrepancies and contradictions in the case, leading to the decision to remand the matter for a fresh order by the Adjudicating Authority. The tribunal emphasized the need for a reconsideration of the case in light of various judgments and principles of natural justice.