2019 (7) TMI 1652 - AT - Central Excise

Tribunal finds natural justice violations in Cenvat credit case, remands for fair consideration

M/s. Elmech Engineers Versus Commissioner of CGST & CX, Kolkata South Commissionerate

The Tribunal found violations of natural justice principles in the case involving alleged irregular Cenvat credit on components used in manufacturing DG ... Principles of natural justice - non-speaking order - Clandestine Removal - shortage of goods - shortage of 99 numbers of diesel engines and 167 numbers of alternators - recovery of CENVAT Credit - HELD THAT:- All the diesel engines and alternators are having serial numbers incorporated by the manufacturers and suppliers. They had also shown the serial numbers of the diesel engines and alternators at the time of clearance of the diesel generator sets in their Central Excise invoices. Hence, it is not difficult to co-relate such documents with the receipts and clearance of diesel engines and alternators and diesel generator sets. Non-speaking order - violation of principles of natural justice - HELD THAT:- The learned adjudicating authority in his Order-in-Original did not consider the submissions made by the appellant in his reply to the show cause notice and also the documents submitted by them along with their reply and also the submissions made at the time of de novo adjudication proceeding. Hence, the order of the learned adjudicating authority was not a speaking order and such order is not maintainable under the statute. Thus, the appellants should be given one more opportunity to explain their case before the lower authorities since there have been violations of principles of natural justice on the earlier occasions - Accordingly the appeal is remanded to the adjudicating authority to consider the submissions of the appellant on the basis of the supporting documents, statutory registers and the Chartered Accountant’s certificate. Appeal allowed by way of remand. Issues: Alleged irregular Cenvat credit on components used in manufacturing DG sets, shortage of diesel engines and alternators, validity of adjudication, consideration of submissions and documents, violation of principles of natural justice.The case involved the appellant, a manufacturer of Diesel Generating sets, who procured components from reputable suppliers and availed Cenvat credit on materials used in manufacturing. Central Excise officers alleged irregular credit amounting to Rs. 28,79,250 on 99 diesel engines and 167 alternators during a factory visit. A show cause notice was issued for recovery. In the second round of litigation, the Tribunal noted discrepancies in the computation of shortages and errors in the opening balance of components. The appellant argued that every component had a serial number for identification, which was reflected in their invoices. They contended that the lower appellate authority failed to consider crucial documents and the Chartered Accountant certificate, emphasizing that their goods were sold to Government entities with proper documentation.The Tribunal observed that all components had serial numbers for easy identification, which could be cross-referenced with invoices. It criticized the adjudicating authority for not considering the appellant's submissions, documents, and proceedings during de novo adjudication, deeming the order unsustainable under the statute. Similarly, the Commissioner(Appeals) was faulted for overlooking the appellant's appeal submissions and the Chartered Accountant's certificate provided as instructed during the hearing. Consequently, the Tribunal found violations of natural justice principles and remanded the case to the adjudicating authority for a fair consideration of the appellant's case based on supporting documents, statutory registers, and the Chartered Accountant's certificate, setting aside the impugned order and allowing the appeal by way of remand for proper adjudication.