2019 (1) TMI 497 - AT - Central Excise

Tribunal overturns Commissioner's order on cenvat credit transfer, emphasizes procedural compliance

The Tribunal set aside the impugned order by the Commissioner (Appeals) in a case involving irregular transfer of cenvat credit during factory premises ... Transfer of credit - shifting of factory - Rule 10 of Cenvat Credit Rules, 2004 - Board’s Circular No. 502/68/99-CX dated 16.12.1999 - principles of natural justice - Held that:- Admittedly, there is no dispute regarding the shifting of the factory and the fact of transferring the cenvat credit which has been accepted in the impugned order also. But the only ground on which the cenvat credit has been denied is that the appellant has not followed the procedure as prescribed in Rule 10 of the Cenvat Credit Rules, 2004 - the original authority has also travelled beyond the show-cause notice and proposed the recovery under one provision of the Central Excise Act whereas confirmed the demand under different provisions of law which is not permitted under law. The original authority has observed that appellant has not appeared before them and satisfied the authority regarding the procedure followed by them - matter remanded to the original authority who will pass a De novo order after affording an opportunity of hearing and after considering the findings - appeal allowed by way of remand. Issues:1. Irregular transfer of cenvat credit without following Rule 10 of Cenvat Credit Rules, 2004.2. Allegations of demand for irregular cenvat credit, interest, and penalty.3. Validity of the impugned order by the Commissioner (Appeals).4. Compliance with procedural requirements during factory premises shifting.5. Applicability of Section 11A(4) of Central Excise Act, 1944 and Rule 15(2) of Cenvat Credit Rules, 2004.Analysis:1. The appellant was engaged in manufacturing Plywood Sheets and Plywood pellets and had shifted factory premises, leading to the irregular transfer of cenvat credit without following Rule 10 of Cenvat Credit Rules, 2004. The show-cause notice proposed a demand for irregular cenvat credit of &8377; 2,76,659/- along with interest and penalty under Rule 15(1) of Cenvat Credit Rules, 2004.2. The Assistant Commissioner disallowed the irregularly transferred cenvat credit and imposed penalties. The appellant, aggrieved by this decision, filed an appeal before the Commissioner, who rejected the appeal. The appellant contended that the impugned order was not sustainable in law and the corrigendum issued was in violation of natural justice principles.3. The appellant argued that they had informed the Range Officer before shifting the factory premises and had amended the registration certificate accordingly. They also highlighted that the corrigendum invoked different legal provisions than those mentioned in the show-cause notice, which was impermissible under law. Citing a relevant case law, the appellant emphasized that demands must be based on the proposal in the show-cause notice.4. The Commissioner (Appeals) upheld the original authority's decision, stating that the appellant did not follow the prescribed procedure in transferring the cenvat credit. However, the Tribunal found that the impugned order was unsustainable as it went beyond the show-cause notice and proposed recovery under different provisions of law. The Tribunal set aside the impugned order and remanded the case to the original authority for a fresh decision after affording the appellant an opportunity to be heard.5. The Tribunal concluded that the appellant had complied with procedural requirements during the factory premises shifting, as evidenced by their communication with the authorities and inclusion of the shift in their ER-1 returns. The Tribunal found that the original authority had not properly considered these facts and had incorrectly applied legal provisions. The appeal was allowed by way of remand for a de novo order to be passed after due consideration of all relevant factors.