2019 (1) TMI 1247 - AT - Service Tax

Tribunal overturns ex parte rejection, orders reconsideration on merit & natural justice principles

M/s. YG Cutting Tools Corporation Private Limited Versus The Commissioner of Central Tax, Bangalore North

The Tribunal set aside the ex parte rejection of the appellant's appeal by the Commissioner (A) for not considering the appellant's grounds or case laws ... Principles of Natural Justice - Commissioner (A) has rejected the appeal of the appellant ex parte without giving any findings on merits - CENVAT Credit - certain common input services which were used for both manufactured goods and traded goods - Rule 6(3) of the CENVAT Credit Rules, 2004 read with Rule 6(1) of the said CENVAT Credit Rules, 2004 - Held that:- The impugned order passed by the Commissioner (A) has not considered any of the grounds raised by the appellant in his grounds of appeal along with various case laws relied upon by the appellant. Since the impugned order is passed ex parte and that too not on merits, therefore, the impugned order is set aside and case remanded back to the Commissioner (A) with a direction to decide the appeal on merit after following the principles of natural justice and after giving an opportunity to the appellants for producing the documents - appeal allowed by way of remand. Issues:Appeal against ex parte rejection of appeal by Commissioner (A) without considering merits.Analysis:The appeal was directed against the order passed by the Commissioner (A) rejecting the appellant's appeal ex parte without giving any findings on merits. The appellant, engaged in manufacturing carbide cutting tools, availed CENVAT credit on various inputs and services. During a CAG audit, it was observed that the appellant had availed credit on common input services used for both manufactured and traded goods, which was not permitted under the CENVAT Credit Rules. The original authority confirmed a demand on the appellant, part of which was paid by the appellant. The appellant contended that the impugned order was unsustainable as it did not consider the grounds raised in the appeal or the documentary evidence provided. The appellant argued that the Commissioner (A) did not provide reasons for the findings, violated principles of natural justice, and failed to consider the case on merit. The appellant cited relevant case laws to support their arguments.The learned counsel for the appellant argued that the impugned order dismissing the appeal was not sustainable as it did not appreciate the facts and law properly. The Commissioner (A) did not consider the grounds raised in the appeal or the documentary evidence provided. The appellant contended that not giving reasons for the findings violated principles of natural justice. The appellant also claimed that they did not receive the hearing notice due to shifting their unit, which was duly intimated. The appellant argued that even in their absence, the Commissioner (A) should have considered all grounds in the appeal and provided findings to comply with natural justice. The appellant asserted having a strong case on merit and cited relevant case laws to support their position.After hearing both parties and examining the records, the Tribunal found that the impugned order did not consider any of the appellant's grounds or the case laws cited. Since the order was passed ex parte and not on merits, the Tribunal set aside the order and remanded the case back to the Commissioner (A) with directions to decide the appeal on merit, following principles of natural justice and allowing the appellant to produce necessary documents. The appeal was allowed by way of remand, emphasizing the importance of a fair consideration of the appellant's case.