2016 (12) TMI 1568 - AT - Central Excise

Tribunal orders further investigation on CENVAT credit eligibility for manufacturing items

The tribunal remanded the case to the original authority for further investigation regarding the eligibility of CENVAT credit on certain items used in the ... CENVAT credit - beams - sheets - channels - plates - Held that: - The adjudicating authority on its previous visit to the factory on 10.10.2013 has only seen the invoices and the photographs but has not fully examined the usage of the specific items of material - this case needs to be remanded back to the original authority to verify the actual use of the items alleged to have been stated by the appellant to have been used in the fabrication which is used for production of the paper - appeal allowed by way of remand. Issues:Appeal against rejection of CENVAT credit availed on certain items under CCR, 2004.Analysis:The appeal was directed against the order rejecting the appellant's appeal and confirming the Order-in-Original. The appellant, a manufacturer of kraft paper, availed CENVAT credit on various items under CCR, 2004. The audit revealed that credit was wrongly availed on certain items, leading to a show-cause notice for recovery. The adjudicating authority allowed credit on some items but disallowed on others, ordering recovery and imposing penalties. The Commissioner (A) upheld the Order-in-Original, prompting the present appeal.The appellant argued that CENVAT credit is eligible for goods used in the factory of manufacture, not just in the final product. They claimed eligibility under Notification No. 67/95-CE for machinery fabrication. The appellant contended that the items in question were part of machinery manufacture, not considered by the authority. They cited precedents to support their case. The respondent reiterated the findings and relied on other judgments.After hearing both parties and reviewing the records, the tribunal decided to remand the case to the original authority for further investigation. The tribunal noted the conflicting claims regarding the actual usage of the items and directed the authority to verify this on-site. The appellant offered to provide records supporting their claim. The tribunal set aside the impugned order and instructed the authority to pass a reasoned order after re-examining the item usage, considering the arguments and decisions cited. The authority was given two months to decide, allowing the appellant to present all relevant documents.In conclusion, the tribunal remanded the case for detailed verification of item usage in the manufacturing process, emphasizing the need for a thorough examination before reaching a decision. The tribunal's decision aimed to ensure a fair assessment based on actual usage, providing the appellant with an opportunity to substantiate their claim with supporting documents within a specified timeframe.