Credit eligibility under a circular may be remanded for fresh examination when contractual evidence is offered

Disallowance of credit was set aside where entitlement depended on factual compliance with Circular No. 97/8/2007 and the assessee sought to produce contractual documents to establish that compliance. As the revenue did not oppose remand and the assessee was ready to place the relevant material before the adjudicating authority, the matter was sent back for fresh adjudication. The authority was directed to reconsider credit eligibility after giving the assessee a reasonable opportunity of hearing and examining the contractual evidence afresh.

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Issues: Whether the disallowance of credit required interference and the matter should be remanded for fresh consideration in view of the assessee's claim that relevant contracts could be produced to establish compliance with Circular No. 97/8/2007 dated 23.08.2007.

Analysis: The assessee sought an opportunity to place the contractual documents before the adjudicating authority to show fulfilment of the conditions prescribed in the circular for availing credit. As the revenue did not oppose remand, and as the assessee asserted readiness to produce the relevant material, the impugned order was found fit to be set aside so that the factual basis for entitlement to credit could be examined afresh after hearing both sides.

Conclusion: The matter was remanded to the adjudicating authority for fresh decision after granting a reasonable opportunity of hearing to the assessee.

Ratio Decidendi: Where entitlement to credit depends on factual compliance with a circular and the assessee seeks to adduce relevant contractual evidence, the matter may be remanded for fresh adjudication with due opportunity of hearing.

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