2015 (10) TMI 2138 - AT - Central Excise

Tribunal orders fresh decision on Cenvat credit denial, stresses fair assessment

M/s Bihar Raffia Industries Ltd, Shri TC Agarwal, Director Versus Commissioner of Central Excise, Raipur

The Tribunal remanded the case back to the Original Authority for a fresh decision regarding the denial of Cenvat credit on inputs due to the alleged lack ... Denial of CENVAT Credit - revenue came to the finding that since they have no facility to manufacture HDPE/PP Sacks at Pangaon they are not entitled for the credit of duty on inputs. - Held that:- Appellant made certain factual points which could not be considered by the lower Authority as no personal hearing could be conducted in spite of opportunities given to the appellant. Though the appellant pleads that they had compelling reasons for non-appearance the Original Authority is bound by the provisions of Section 33A and as such proceeded to adjudicate the case without a personal hearing. However, the fact remains that certain details which have direct bearing on the finding of the Original Authority ought to be considered for a fair decision. It is an admitted fact that the purchase of main raw material HDPE/PP Granules the movement of Granules and semi-finished/finished products like HDPE Woven Fabric and Printed Sacks are duly accounted for in statutory records by the appellant. Now the denial of credit is solely dependent on lack of capacity in the appellant unit to cut, print and to make the final HDPE Woven Sacks out of Woven fabric. Further, it is also seen that the appellants have questioned to the factual correctness of the findings of the learned Commissioner in para 4.3 (d) of the order. Correct appreciation of the factual position is required to arrive at the proper decision. The various accounts maintained by the appellant are to be cross-checked with the allegations made in the show cause notice. Apparently this could not have been done as the original order was passed ex-parte. As mentioned earlier the appellant did not avail the opportunity of personal hearing given by the Original Authority resulting in the present situation. However, in the interest of justice and to arrive at a fair decision we find that the matter has to be remanded back to the Original Authority to decide the case afresh. - Matter remanded back - Decided in favour of assessee. Issues:- Denial of Cenvat credit on inputs due to alleged lack of manufacturing facility for woven sacks at one unit.- Allegations of incorrect appreciation of facts by the Commissioner.- Ex-parte adjudication leading to the need for a fair decision based on proper factual assessment.Analysis:1. The case involved the denial of Cenvat credit on inputs by the Commissioner due to the belief that the appellant's unit lacked the capacity to manufacture woven sacks, leading to the issuance of a show cause notice. The appellant contested this decision, arguing that they maintained proper records, including registration and monthly returns, and that the denial was solely based on a statement from the owner of the premises. The appellant claimed to have accounted for all activities related to the production process in their statutory registers, supporting their right to avail the credit on various inputs.2. The learned AR supported the findings of the Original Authority, asserting that the machinery at the appellant's unit was non-operational, and the entire transaction was merely on paper to claim Cenvat credit. The Original Authority's decision was based on various documents and statements indicating the alleged lack of manufacturing capacity at the unit.3. Upon hearing both sides and examining the appeal papers, the Tribunal acknowledged that certain crucial factual points raised by the appellant were not adequately considered during the adjudication process due to the absence of a personal hearing, despite opportunities provided. The Tribunal noted that the denial of credit hinged on the unit's capacity to process woven sacks, and discrepancies in the Commissioner's findings were highlighted by the appellant. Consequently, the Tribunal found it necessary to remand the case back to the Original Authority for a fresh decision, emphasizing the importance of a fair assessment of facts and directing the appellant to fully present their case and participate in the hearing without seeking adjournments for a just resolution.In conclusion, the judgment revolved around the denial of Cenvat credit on inputs based on the perceived lack of manufacturing capacity at the appellant's unit, highlighting the importance of a fair assessment of facts and the right to a personal hearing in reaching a just decision.