2014 (2) TMI 246 - AT - Central Excise

Tribunal rules in favor of appellant, remands case for fresh hearing

The Tribunal found in favor of the appellant, setting aside the impugned order and allowing the appeal for remand. The case was deemed suitable for de ... CENVAT credit admissibility on inputs supplied under loan licence - endorsement on Bills of Entry as basis for availing CENVAT credit - invoice issued by the importer under Rule 9 of the CENVAT Credit Rules, 2004 - duty-paid character of inputs - violation of principles of natural justice - de novo adjudication / remand for fresh considerationCENVAT credit admissibility on inputs supplied under loan licence - endorsement on Bills of Entry as basis for availing CENVAT credit - invoice issued by the importer under Rule 9 of the CENVAT Credit Rules, 2004 - duty-paid character of inputs - de novo adjudication / remand for fresh consideration - Whether the denial of CENVAT credit for the period May to November 2009 was sustainable on the record before the adjudicating authority - HELD THAT: - The Tribunal found that the appellants had taken CENVAT credit on the basis of Bills of Entry and invoices in the names of the principal manufacturers, and that some Bills of Entry bore endorsements in favour of the appellant while invoices generally did not. The duty-paid character of the inputs and receipt/use in manufacture were not disputed. The appellate record, however, did not show any invoice issued by the importer in the form prescribed by Rule 9 enabling availing of CENVAT credit of CVD; further factual particulars relied on before the Tribunal (endorsements, invoice details and transport documents) were not placed before the Commissioner. Given these lacunae and the factual nature of the disputed documentary evidence, the Tribunal concluded that the matter required fresh adjudication on the merits and factual verification by the adjudicating authority after permitting production of evidence and personal hearing. [Paras 5, 6]Impugned order set aside and matter remanded for de novo adjudication in accordance with law after granting the party a reasonable opportunity to adduce evidence and be personally heard.Violation of principles of natural justice - de novo adjudication / remand for fresh consideration - Whether there was a breach of natural justice in the adjudication leading to denial of CENVAT credit - HELD THAT: - The Tribunal observed that the adjudicating authority had repeatedly afforded opportunities to the appellant to be heard; the appellant's representative did not appear on several occasions, and although an undertaking was given on 23.5.2011 to produce supporting documents by 25.5.2011, the documents were not furnished and the Commissioner proceeded to pass the order on 30.5.2011. On these facts the Tribunal held the plea of violation of natural justice to be untenable, while still permitting reconsideration of the substantive documentary issues on remand. [Paras 5]Plea of violation of natural justice rejected; nevertheless, factual issues remitted for fresh consideration with opportunity to be heard.Final Conclusion: Appeal allowed in part: impugned order set aside and the matter remanded for de novo adjudication in accordance with law after giving the appellant a reasonable opportunity to produce evidence and be personally heard; stay application disposed of and pre-deposit dispensed with. Issues:Denial of CENVAT credit and connected penalty imposition.Analysis:The appellant filed an application seeking waiver and stay against the demand of Rs. 64,03,424/- for denied CENVAT credit and a penalty of Rs. 2,00,000/-. The appeal was taken up after dispensing with predeposit. The denial of CENVAT credit was primarily for the period from May to November 2009, where the appellant claimed credit based on Bills of Entry and invoices not addressed to them but endorsed by the principal manufacturers. The appellant argued that they received and used the inputs for manufacturing medicaments, and the duty-paid character of the inputs was not disputed. The appellant cited relevant case law to support their claim. The department contended that the plea of endorsement was not raised before the adjudicating authority and should not be considered at the appellate stage as it was a factual plea.Upon careful consideration, the Tribunal noted that the appellant failed to produce necessary documents despite undertaking to do so within a specified timeframe. The plea of violation of natural justice was deemed untenable. However, the Tribunal considered the plea of endorsement, as copies of Bills of Entry bearing endorsements by principal manufacturers were presented. The appellant's argument was based on the entitlement to CENVAT credit due to the endorsed Bills of Entry. The Tribunal also noted that factual details and relevant case law were not presented before the adjudicating authority. Rule-9 of the CENVAT Credit Rules 2004 was referenced, highlighting the requirement of an invoice issued by the importer for availing CENVAT credit, which was not shown by the appellant.In light of the facts and circumstances, the Tribunal found the case suitable for remand for de novo adjudication. The impugned order was set aside, and the appeal was allowed for remand with instructions for the Commissioner to conduct a fresh adjudication, providing the appellant with a reasonable opportunity to present evidence and be heard. The appellant's consultant agreed to cooperate and not seek adjournments. The stay application was also disposed of.