2014 (5) TMI 835 - AT - Central Excise

Tribunal remands case for fresh consideration, highlights importance of Cost Accountant's Certificates & direct link for Cenvat Credit

RELIANCE INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX (LTU) MUMBAI

The Tribunal allowed the appeal by remanding the case back to the adjudicating authority for fresh consideration. It emphasized the importance of ... Denial of CENVAT Credit - Nexus between the services availed and the manufacturing operations undertaken - Held that:- costs of various services availed forms part of the assessable value of the goods manufactured and sold by the appellant. Therefore, there is no reason to deny Cenvat Credit of the duty/taxes paid on the various inputs/input services availed by the appellant for undertaking their business operations. The appellant has also furnished Cost Accountant's certificates certifying the above. For any reason, if the department does not want to place reliance on these certificates, under Section 14AA of the Central Excise Act, they can conduct special audit where the credit of duty availed of or utilised is not within the normal limits or such credit has been availed by reason of fraud, collusion or any willful mis-statement or suppression of facts. - The department has not invoked these powers available to it - Therefore, matter remanded back - Decided in favour of assesee. Issues:Appeal against denial of Cenvat Credit | Lack of nexus between services availed and manufacturing operations | Interest and penalties imposed | Consideration of Cost Accountant's Certificates | Request for stayAnalysis:The judgment pertains to an appeal against the denial of Cenvat Credit amounting to Rs.2,39,47,069/- based on the lack of nexus between services availed and manufacturing operations. The appellant contested that the services, including insurance coverage and various policies, were essential for their manufacturing operations, and the expenses incurred were part of the products' value on which excise duty was paid. The appellant provided Cost Accountant's Certificates to support their claim, but the adjudicating authority did not consider these submissions. The appellant argued that the denial of Cenvat Credit was unjustified, and they requested a stay.The Revenue, represented by the Additional Commissioner, supported the adjudicating authority's findings. However, the Tribunal examined the submissions from both sides and found that the services availed were integral to the assessable value of the goods manufactured and sold. The Tribunal noted that the Cost Accountant's Certificates corroborated the appellant's claims. Additionally, the Tribunal highlighted the provision under Section 14AA of the Central Excise Act, allowing for a special audit if necessary. Since the Revenue did not invoke this provision, the Tribunal remanded the case back to the adjudicating authority for a fresh consideration, emphasizing the importance of evaluating the Cost Accountant's Certificates or conducting a special audit to ascertain the eligibility of the credit taken on the services.The Tribunal emphasized that the appellant should have a fair opportunity to address any audit findings that might impact the proceedings. Consequently, the appeal was allowed by way of remand, and the stay petition was also disposed of. The judgment underscores the significance of establishing a clear connection between services availed and manufacturing operations for claiming Cenvat Credit, while also highlighting the procedural aspects related to special audits and fair hearings for manufacturers/appellants in such cases.