Tribunal overturns order, rules for appellant due to lack of evidence and specific allegations.

M/s Mangalam Cement Limited Versus Commissioner, Central Goods and Service Tax, Jodhpur

M/s Mangalam Cement Limited Versus Commissioner, Central Goods and Service Tax, Jodhpur - TMI Issues Involved:
Whether the appellant is required to reverse and/or pay duty on removal of conveyor belt - scrap.

Analysis:
In the present case, the main issue revolves around whether the appellant is obligated to reverse and/or pay duty on the removal of conveyor belt scrap. The Tribunal, in the previous round of litigation, highlighted discrepancies in the quantity of scrap generated compared to the quantity sold by the appellant. The Tribunal directed the matter to go back to the original authority for detailed fact findings regarding the generation of conveyor belt scrap. The appellant was directed to pay duty on the removal of waste and scrap of conveyor belt if the annexure attached to the show cause notice corresponded to the calculation made by the adjudicating authority.

The appellant, represented by Ms. Surbhi Sinha, argued that the Commissioner (Appeals) confirmed the demand of duty and penalty under Section 11AC. The appellant failed to prove that the waste of conveyor belt cleared had arisen from non-modvatable conveyor belt purchased in the relevant financial year. It was contended that the appellant is liable to pay duty on the waste and scrap of the conveyor belt removed via the invoice dated 29.09.2005. The appellant's counsel emphasized that the show cause notice lacked specific allegations regarding the origin of the scrap and the relevance to the modvat scheme.

On the other hand, the Authorized Representative for the Revenue, Shri Pradeep Gupta, relied on the findings in the impugned order and stressed the obligation of the assessee to produce relevant details. After considering the arguments from both sides, the Member (Judicial) referred to Rule 5A of Rule 3 of CCR, which states that if capital goods, on which cenvat credit has been taken, are removed as waste and scrap, the manufacturer or service provider must pay duty equal to the transaction value. The Member found that the show cause notice lacked any allegation that the appellant had removed scrap on which cenvat credit was taken, rendering the notice defective for demanding duty on the value of the scrap removed. Consequently, the appeal was allowed, the impugned order was set aside, and the appellant was entitled to consequential benefits as per the law.

In conclusion, the Tribunal's decision was based on the lack of specific allegations in the show cause notice regarding the origin of the scrap and the absence of evidence that the appellant had taken credit on the relevant capital goods. The appellant successfully argued that the show cause notice was deficient, leading to the appeal being allowed and the impugned order being overturned.