2021 (7) TMI 908 - AT - Central Excise

Challenging denial of CENVAT credit under Central Excise Act

The judgment addressed the denial of CENVAT credit and recovery under the Central Excise Act, 1944, challenging reliance on adjudication orders. The case ... CENVAT Credit - inputs or not - menthol oil/flakes - Jurisdiction of supplier - sanctity of promulgation of such geographically delimited harbours of privilege - HELD THAT:- From the record of proceedings, it is found that the several independent arguments for setting aside the demand of duties, and the imposition of detriments, was disregarded by the adjudicating authority on the assurance of the finding of lateral jurisdiction on goods not having been supplied - It would, therefore, appear that the adjudicating authority was influenced entirely by the finding of non-manufacture on the part of the supplying units by the coordinate statutory functionary which ceases, owing to nullification by the coordinate bench of the Tribunal, to sustain the impugned order in the absence of any other limb. In the circumstances of these facts as well as the non-consideration of several contentions put forth on behalf of the appellants, the impugned order does not commend itself as redolent of the essential qualifications of being legal and proper - the matter be remanded to the original authority for a fresh determination of the conclusions leading from the evidence available on record - appeal allowed by way of remand. Issues:1. Denial of CENVAT credit and recovery of amounts under Central Excise Act, 19442. Allegations against the first appellant regarding procurement of 'menthol oil/flakes'3. Reliance on adjudication orders by the Commissioner of Central Excise, Jammu4. Relevance of Tribunal's decision on suppliers in the case against the first appellant5. Validity of demands and penalties imposed on the first appellant6. Verification of documents provided by the first appellant7. Invocation of extended period of limitation for recovery8. Influence of findings on non-manufacture by supplying units on the impugned order9. Legality and propriety of the impugned orderAnalysis:1. The judgment deals with the denial of CENVAT credit and subsequent recovery of amounts under the Central Excise Act, 1944. The appellants contested the denial of credit and imposition of penalties, arguing that reliance on adjudication orders by the Commissioner of Central Excise, Jammu, was unfounded.2. The case involves allegations against the first appellant regarding the procurement of 'menthol oil/flakes' from suppliers in Jammu. The suppliers were accused of availing CENVAT credit without the capacity for manufacturing, leading to liabilities for the first appellant.3. The appellants challenged the reliance on adjudication orders, pointing out that the Tribunal had set aside similar orders in the past. The judgment discusses the limited credits availed by the first appellant from the suppliers under scrutiny.4. The relevance of the Tribunal's decision on the suppliers in the case against the first appellant was debated. The judgment highlighted the distinction between the proceedings involving the suppliers and those concerning the first appellant.5. The validity of demands and penalties imposed on the first appellant was a key issue. The judgment scrutinized the basis for upholding the demands and penalties, especially in light of subsequent developments in the proceedings.6. Verification of documents provided by the first appellant, such as transporters' records, was discussed. The judgment noted that the veracity of these documents was not a determining factor in the adjudication process, raising questions about the credibility of the findings.7. The invocation of the extended period of limitation for recovery was contested. The judgment acknowledged the absence of a specific submission on this issue before the original authority, hampering a definitive decision on the matter.8. The influence of findings on non-manufacture by supplying units on the impugned order was analyzed. The judgment highlighted the impact of the nullification of such findings by the Tribunal on the sustainability of the impugned order.9. The judgment concluded that the impugned order lacked essential legal qualifications and propriety. It directed a remand to the original authority for a fresh determination, emphasizing the application of principles of natural justice and statutory provisions.This detailed analysis encapsulates the complex legal issues and arguments presented in the judgment, providing a comprehensive understanding of the case.