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TMI Blog2023 (7) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... availed and utilized Cenvat Credit on the inputs and input services used for of both dutiable products (their own) and exempted products (job worked goods), without maintaining separate records as envisaged under Rule 6(2) of the CCR. Therefore, the Noticee is liable to pay an amount @ 5% of the value of exempted products for the period from January 2009 to 31.03.2012 and @ 6% from 01.04.2012 to 31.03.2013 as per provisions of Rule 6(3) of the CCR, as amended for the job work carried out in respect of M/s. Metal and Steel Factory, Ishapur West Bengal. The verification report reveals that the Noticee for the period from January, 2009 to March, 2013 have carried out the job work without payment of duty in respect of M/s. Metal and Steel Factory. The basis on which the Adjudicating Authority has confirmed the demand has never been subject matter of the show cause notice and therefore, we hold that Adjudicating Authority has travelled beyond the scope of the show cause notice and therefore, violated the principles of natural justice by not disclosing the verification report to the appellant, this clearly amounts to an act of violation of the principles of natural justice. The im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fourteen only) payable by them under Rule 6(3) of the Cenvat Credit Rules, 2004 should not be recovered from them, as Cenvat credit wrongly taken, under Rule 14 of Cenvat Credit Rules, 2004 read with proviso to Section 11A (4) (earlier proviso to Section 11A(1) upto 07.04.2011) of Central Excise Act, 1944. (ii) Why interest at the appropriate rate should not be recovered from them on the aforesaid amount under Rule 14 of CENVAT Credit Rules, 2004 read with proviso to Section 11AA (earlier Section 11AB upto 07.04.2011) of Central Excise Act, 1944. (iii) Why penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 should not be imposed upon them. The matter got adjudicated by learned Commissioner vide his order dated 29.09.2014 and the Commissioner dropped the demand for reversal of Cenvat credit to the extent of Rs. 1,45,52,699/- after observing that in view of the exception made out in the form of Rule 6(6) of Cenvat Credit Rules, 2004, the provisions of Rule 6(1), 6(2) and 6(3) of Cenvat Credit Rules, 2004 do not apply on clearances made by the appellant of the excise goods cleared to 100% EOU under Notification No. 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86-CE are well within the scope of Rule 6(6)(ii) of Cenvat Credit Rules, 2004 and hence he has found no violation on this count. 3.2 Learned Advocate submits that Adjudicating Authority has travelled beyond the scope of show cause notice by holding that on verification, the principal manufacturer namely M/s. Metal and Steel Factory has cleared the finished goods availing benefit of another notification and has not discharged duty on the finished goods and therefore, the appellant has been asked to reverse Cenvat credit amounting to Rs. 84,20,615/-, penal and interest provisions have also been invoked in complete violating of legal provisions. 3.3 It has been the contention of the learned Advocate that verification called by the learned Commissioner was beyond the scope of show cause notice and verification reports dated 03.06.2014 and 06.08.2014 which were relied upon by the Adjudicating Authority were not provided to the appellant to defend this allegation. Learned Adjudicating Authority based on the above mentioned verification reports has confirmed the demand of Cenvat credit on altogether different grounds than the one raised by the show cause notice. It has forcefully be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able goods as well goods manufactured and cleared on job work basis without payment of duty availing exemption Notification No. 214/86-CE and Notification No. 22/2003-CE. For ease of reference, we reproduce here the impugned show cause notice:- 12 . Whereas it appears that, the said assessee at no point of time disclosed the material facts to the department in any manner that they were using common inputs and availed Cenvat credit on the inputs for manufacture of dutiable goods on job-work basis which were cleared without payment of duty by availing exemption under Notification No. 214/86-CE and/or Notification No. 22/2003- C.E. also and were not maintaining any separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products and the quantity of input meant for use in the manufacture of such exempted goods as stipulated in Rule 6(2) of the CENVAT Credit Rules, 2004 and this fact came on record only when the was information called for by the Range Superintendent. Therefore, it appears that the assessee had deliberately suppressed the material facts from the department with an intention to evade payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding entry in column (3) of the said Table, from the whole of (i) the duty of excise leviable thereon which is specified in the said Schedule; and (ii) the additional duty of excise leviable under the second mentioned Act on goods specified against S. No. 1 of the said Table. TABLE S.No. Description of goods Condition (1) (2) (3) 1 All goods If produced in Ordnance factories belonging to the Central Government and intended for consumption by the members of the Armed Forces of the Union or by such Ordnance Factories. 2 Omitted 3 omitted From the above, it is clear that the said principal manufacturer Le. M/s. Metal and Steel Factory, has cleared the final product without payment of duty, and the fact that the Noticee had not exercised any option as envisaged under Rule 6(3) of the CCR, and had availed and utilized Cenvat Credit on the inputs and input services used for of both du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the show cause notice and therefore, we hold that Adjudicating Authority has travelled beyond the scope of the show cause notice and therefore, violated the principles of natural justice by not disclosing the verification report to the appellant, this clearly amounts to an act of violation of the principles of natural justice. In this regard we also take note of the Hon ble Supreme Court decisions in the case of Ballarpur Industries Limited (supra) and in the case of Toyo Engineering India Limited (supra). However, we take shelter of Hon ble Gujarat High Court decision in the case of Kandarp Dilipbhai Dholkia vs. UOI 2014 (307) ELT 484 (Guj.) and reproduce the relevant portion of the judgment as follow:- 5.1 However, from the impugned orders, it appears that so far as rebate/refund claim of the petitioners on the inputs/used excisable goods used in manufacturing of the final product is denied also on the ground that petitioners have not followed the procedure while claiming rebate/refund under Rule 8, which is required to be followed under Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004. However, on that ground, show cause notice was not issued and the rebate cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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