2023 (8) TMI 468 - AT - Central Excise

Violation of principles of natural justice - Validity of SCN - order passed without considering the Director s statement - no reasons were mentioned for invoking of extended period of limitation - HELD THAT - There is no basis for arriving at the quantity of inputs which is presumed to be in excess of the so called appropriate quantity of inputs for manufacture. It is also found that it is beyond the jurisdiction of the adjudicating authority to decide as to what is the appropriate quantity of inputs required for manufacture of specified quantity of final product. It is, therefore, clear that the show-cause notice was issued on the basis of presumption and therefore, the said show-cause notice is not sustainable. The impugned orders cannot be sustained and the same are set aside - Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are excess availment of cenvat credit on Sulphur, confirmation of demand by Adjudicating Authority, imposition of penalty, consideration of Director's statement, invocation of extended period of limitation, and justification of the impugned order by the Authorised Representative for the Revenue.

Excess Availment of Cenvat Credit on Sulphur:
The appellant was engaged in the manufacture and clearance of Basic Chrome Sulphate. A show-cause notice was issued for the availment of excess cenvat credit on Sulphur during a specific period. The Adjudicating Authority confirmed the demand and imposed a penalty, which was upheld by the Ld. Commissioner (Appeals). The appeal before the Tribunal challenged this decision.

Director's Statement and Lack of Consideration:
The Advocate for the Appellant argued that the entire proceeding was based on assumption and presumption. The Director of the Company provided a detailed explanation regarding the manufacturing process, highlighting complexities such as the absorption tower's limitations and damages. The Advocate contended that the authorities mechanically proceeded without considering the Director's statement and failed to provide reasons for invoking the extended period of limitation.

Legal Submissions and Precedents:
The Advocate for the Appellant emphasized that statutory records were maintained, and there was no allegation of non-submission of statutory returns. Referring to legal precedents, the Advocate argued that the show-cause notice was not sustainable as it was based on presumption rather than actual verification of consumed inputs. The Advocate cited judgments to support the argument against the impugned order.

Decision and Tribunal's Findings:
After hearing both sides and examining the appeal records, the Tribunal found that the Department's theoretical calculation for cenvat credit was based on presumption without actual verification of inputs. The Tribunal concluded that there was no basis for determining the quantity of inputs presumed to be in excess. Citing previous Tribunal decisions, the Tribunal held that the show-cause notice was not sustainable due to lack of actual verification and upheld the appeal, setting aside the impugned orders.

This summary provides a detailed overview of the judgment, addressing each issue involved and the Tribunal's findings on the same.