Maintainability of appeal and wrongful Cenvat credit utilisation sustained recovery against the assessee.

An appeal under Section 85 of the Finance Act, 1994 lies only from an adjudicatory decision or order; a mere recovery letter proposing dues is not appealable, so the Commissioner (Appeals) rightly held the appeal not maintainable. On the tax issue, Cenvat credit could be used only to the extent lawfully available for the relevant month, and the appellant failed to show that the credit utilised for June 2017 was available on 30.06.2017. The credit was therefore wrongly taken, and recovery of the unpaid duty with interest and penalty under Section 11 of the Central Excise Act, 1944 was sustained.

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Issues: (i) Whether the appeal before the Commissioner (Appeals) was maintainable against a recovery letter issued by the Deputy Commissioner. (ii) Whether the appellant could validly discharge the June 2017 duty liability by utilising Cenvat credit not available on 30.06.2017 and whether the consequent recovery was justified.

Issue (i): Whether the appeal before the Commissioner (Appeals) was maintainable against a recovery letter issued by the Deputy Commissioner.

Analysis: Section 85 of the Finance Act, 1994 permits an appeal against a decision or order of an adjudicating authority subordinate to the Commissioner (Appeals). The impugned communication was only a letter proposing recovery of government dues and was not an appealable adjudication order.

Conclusion: The appeal before the Commissioner (Appeals) was not maintainable, and that finding was upheld against the appellant.

Issue (ii): Whether the appellant could validly discharge the June 2017 duty liability by utilising Cenvat credit not available on 30.06.2017 and whether the consequent recovery was justified.

Analysis: Rule 3(4) of the Cenvat Credit Rules, 2004 permits utilisation of credit only to the extent available for payment of duty for the relevant month. The available credit on 30.06.2017 was far less than the amount utilised. Rule 4(7) of the Cenvat Credit Rules, 2004 also required payment of the underlying service tax before the related credit could be taken. On the recorded facts, the appellant failed to show entitlement to the credit utilised, and the recovery action under Section 11 of the Central Excise Act, 1944 was sustained.

Conclusion: The utilisation of Cenvat credit was held to be wrongful, and the recovery of the unpaid duty with interest and penalty was upheld against the appellant.

Final Conclusion: The challenged order was affirmed in full, and the appellant obtained no relief on the merits of the demand or on maintainability.

Ratio Decidendi: Cenvat credit can be utilised only to the extent lawfully available for the relevant period, and an appeal lies under Section 85 of the Finance Act, 1994 only from an adjudicatory order, not from a mere recovery notice or letter.

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