CESTAT Orders Fresh Adjudication as lower authorities failed to verify documents

M. B. Control & Systems Pvt. Ltd. Vs Commissioner of CGST & CX (CESTAT Kolkata)

CESTAT finds that the Appellant has provided evidence of maintaining separate accounts and not claiming Cenvat Credit for inputs used in manufacturing exempted goods. However, the lower authorities failed to verify the documents before reaching a conclusion. Therefore, the Appellant is granted another opportunity to present the necessary documents to the Adjudicating Authority. The Appellant must submit RG23A Part 1 & Part 2 Books, photocopies, statements, and invoices related to inputs used for exempted goods. The Adjudicating Authority is instructed to thoroughly verify these facts and issue a well-considered order within four months.

FULL TEXT OF THE CESTAT KOLKATA ORDER

The Appellant is a manufacturer of Control Panel & Spare Parts thereof falling under CETSH No.85389000 and some other items. They claimed they have cleared the inputs on payment of Excise Duty and they also supply their finished goods to Indian Navy. The Appellants are also manufacturing and clearing the goods under Nil Excise Duty availing the benefit under Notification No.10/97-CE dated 01.03.1997 and Notification No. 64/95 dated 16/3/1995. During the period 2009-10 to 2012-2013, the Department conducted investigation and found that they were not maintaining separate records for the inputs being used in the manufacture of dutiable goods and the exempted goods. The Appellant on being pointed out about this mistake, paid the amounts of demand and closed the issue.

2. After this, the Appellant submits that they have started maintaining separate records for the inputs being used in the manufacture of dutiable and exempted goods. As per the new system of maintaining separate accounts, they are not taking the Cenvat Credit for the inputs used in the manufacturing of goods during the period 2013-14. The Department officials visited their unit on 03/02/2014 and asked them to submit documentary evidence for maintaining separate accounts for dutiable and exempted goods. The Appellant submitted that in view of the accident sustained by the concerned official, they were not in a position to produce the record immediately but they will do so after some time. The Appellant vide their letter dated 5/4/2014 (submitted to the Department on 29/4/2014) gave the complete details of inputs on which no Cenvat Credit was taken by them. They also enclosed the copies of the invoices.

3. The Department issued Show Cause Notice demanding 5%/6% of the value of the exempted goods wherein the duty demand was worked out to Rs.5,35,489/-. After due process, the lower authorities confirmed the demand along with interest and penalty. Aggrieved by the same, the Appellant is before the Tribunal.

4. The Learned Advocate submits that the lower authorizes failed to consider the detailed letter along with statement and invoices submitted by them vide the letter dated 5/4/2014 (filed on 29/4/2014). As they were maintaining separate accounts clearly, the Department is in error in confirming the demand. He prays that the Appeal may be allowed.

5. The Learned AR submits that the Lower Authorities have clearly given their findings that the Appellant was not in a position to show the details of maintaining separate accounts when the officials visited their unit. They have taken more than 85 days to submit their documents which gives rise to the doubt that the same was prepared subsequently. Therefore, he reiterates the findings of the lower authorities and justifies the confirmed demand.

6. Heard both sides.

7. It is seen from the records that the Appellant has made efforts to show that they have maintained separate accounts and no Cenvat Credit was taken by them for the inputs used in the manufacturing of the exempted goods during the period 2013-14. Inspite of their late filing of this statement with Invoices, the Adjudicating Authority should have undertaken proper verification before coming into any conclusion. However, both the lower authorities have not done so. Therefore, I feel that the Appellant is required to be given one more opportunity to present these documents before the Adjudicating Authority. Hence, I remand the matter to the Adjudicating Authority. The Appellant should produce the RG23A Part 1 & Part 2 Books as well as photocopies of the same before the Adjudicating Authority along with statement and copies of the invoices which they claim pertain to inputs used for exempted goods and Cenvat was not taken by them.

8. The Adjudicating Authority will get these facts properly verified and pass a considered Order within 4 months from the date of receipt of this order.

9. Appeal is disposed of thus.

(Dictated and pronounced in the open court.)