2023 (12) TMI 373 - AT - Central Excise

Benefit under Notification No.12/2009 denied - Reversal of CENVAT credit availed on imported zinc skimming - service tax paid on transport of goods and Custom House Agent Services which are common services for the manufacture of zinc ingots and zinc ash - Violation of principles of natural justice - HELD THAT - The learned Commissioner has not given any findings as to how the report dated 16.03.2010 was wrong and not required to be considered. This is a clear violation of principles of natural justice - it is also found that the appellants have not given suitable submissions as to whether the CENVAT credit of duty paid on the imported zinc skimming and the common input services has been reversed or not. It is also not clear from the records of the case as to whether the appellants reversed the duty paid on the zinc ash, though on a mistaken notion, or the credit availed on entire items and common input services. Under the circumstances, the matter needs to travel back to the Commissioner to examine the report dated 16.03.2010 and to record reasons as to why the same was not considered. The appeal is allowed by way of remand to the Adjudicating Authority.

Summary

Issues involved:
The judgment deals with the classification and exemption of zinc sulphate under Central Excise Act, 1944.

Details of the Judgment:

Issue 1: Classification and exemption of zinc sulphate
The appellants, manufacturers of zinc sulphate, believed the product continued to be exempted even after 01.01.2007 under Notification No.36/2007. However, show-cause notices were issued seeking to recover Central Excise duty. The impugned order confirmed duty on the appellants, with an exemption on zinc sulphate purchased from outside. The appeal was made challenging the duty demand.

Issue 2: Reversal of CENVAT credit
The appellants argued that they had reversed the CENVAT credit attributable to zinc sulphate cleared during the relevant period, as indicated in reports from the jurisdictional Deputy Commissioner. They claimed not to have availed credit on zinc ash consumed in manufacturing. The Department contended that the appellants needed to reverse CENVAT credit on imported zinc skimming and common input services for the exemption under Notification No.12/2009.

Judgment Summary:
The Tribunal found a lack of findings on why a certain report was not considered, indicating a violation of natural justice. It was unclear whether the appellants had reversed duty paid on zinc ash or credit availed on all items and input services. The matter was remanded back to the Commissioner for further examination, requiring the appellants to submit necessary documents and clarify which credit they had reversed. The Adjudicating Authority was instructed to obtain a comprehensive report to determine if the appellants were eligible for the exemption. The judgment allowed the appeal by remanding the case for reconsideration.