Approach of ignoring report which was in favour of assessee is unjust.

PJ/CASE LAW/2014-15/2526

Case:-M/s BIRLA CORPORATION LTD Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II

Citation:-2015-TIOL-202-CESTAT-DEL

Issue:- Approach of ignoring report which was in favour of assessee is unjust.

Brief Facts:- After dispensing with the condition of pre-deposit of dues, the appeal itself was taken up for disposal.The Tribunal finds that there is gross violation of principles of natural justice by the adjudicating authority in passing the present impugned order.

Proceedings were initiated against the appellant for denial of cenvat credit on various iron and steel items, on the allegations that the same were used as structural and in view of the Larger Bench decision of the Tribunal in the case of Vandana Global Ltd, they would not be eligible for the purpose of cenvat credit. During the course of adjudication, the appellant took a categorical stand that most of the iron and steel items were used in fabrication of capital goods or for repair and maintenance, in which case, they would be entitled to the benefit of cenvat credit.

By taking note of the above contentions of the appellant, office of the Commissioner sought a report from the jurisdictional Central Excise Authorities. In this connection, a letter dated 16.12.2013 written by the Superintendent is reproduced below for better appreciation:-

"Please refer to the above Show Cause Notice. The Hqrs. Office has soughtverification to the effect that the items on which cenvat credit was taken by you were used in the manufacture of capital goods, repair & maintenance of plant and machinery or in civil construction/structural work.

In order to conduct this verification, it is requested to provide following information/documents:-

(i) Issue slip from stores evidencing the issuance to particular department/section of the plant and purpose of issuance of the goods.
(ii) End use certificate issued by the concerned department after use of the issued goods in their section
(iii) Chartered Engineer certificate showing the use of goods for particular purpose.
(iv) Details of capital goods manufactured during the relevant period.
(v) Any other document which can establish the use of impugned items in particular machine/section/capital goods."

In response to the said letter the appellant filed their reply dated 6.1.2014. producing all the evidence on record. For ready reference, the said letter is reproduced below:-

"With reference to your letter no. 1587 dated 30.12.2013 we are submitting the following:-

1. Item wise and year wise summary of disputed items (2 pages)
2. Sample of Drawings (22 nos) attached, which proves that we have used the said items for making the items and for repairing and maintenance.
3. We are also submitting the item wise, Year wise total bill amount where we have not taken the cenvat credit (9pages).
4. Some material issue passes and ledger (34 pages).
5. Certificate dated 19.10.2013 of our Shri S.K. Gupta, DGM(Engg.)

From the above, it is very clear that we have taken CENVAT credit where it is available otherwise we have not taken. To steel is used only for the foundation of the machines, which is part of machine."

Reasoning of Judgement:-Subsequently, the Dy. Commissioner having jurisdiction over the appellant's factory submitted areport under the cover of his letter dated 29.01.2014.The said report is a detailed report, takinginto consideration the various items in question and reporting that most of the items have eitherbeen used in fabrication of capital goods or for repair and maintenance , whereas it is possible tofind out in respect of the certain items. The report also concluded that the assessee had notavailed the credit on a large quantity of iron and steel items and as such, it can be safelyconcluded that quantity which have been used for civil and structural purposes.

Surprisingly the said report of the Dy. Commissioner, which was sought by the Commissionerhimself, stands fully ignored by him while passing the present impugned order. For the reasons best known to him, the adjudicating authority has completely shut his eyes towards the saidreport. If the said report of the Dy. Commissioner was not to be taken into consideration by theadjudicating authority, we really fail to understand and appreciate as to why the report was calledfor. Probably the said report has not been referred to by him as the same is in favour of theassessee, to the major extent. Such an action, on the part of the adjudicating authority, cannotbe appreciated inasmuch as the same reflects upon the biased premature determination of theiradjudication. Having said so. we deem it fit to set aside the impugned order and remand thematter to the Commissioner for fresh decision in the light of the report dated 29.01.2014 of theDy. Commissioner. We also note that a major part of the demand is barred by limitation and theappellant would be within their right to contest the same on the ground of time bar. The staypetition as also appeal gets disposed of in the above manner.

Decision:-Appeal allowed by way of remand.

Comment:- The essence of this case is that evidence plays a wide role in the process of judgement and so the decision making authority is entrusted with crucial task of considering the evidences so provided in unbiased manner. The biased premature determination ofadjudication is never appreciated for consideration of evidences as the same is against the principles of natural justice.

Prepared By: Meet Jain

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PJ/CASE LAW/2014-15/2526

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