Case Law Details
Faze Three Limited Vs C.C.E & S.T.-Silvasa (CESTAT Ahmedabad)
Introduction: The legal landscape can be intricate, especially when navigating cases involving tax demands, exemptions, and capital goods usage. The case of Faze Three Ltd vs CCE & S.T. provides a fertile ground for exploration into the nuanced legal aspects surrounding exempted product clearance. In this comprehensive analysis, we delve into the detailed legal intricacies of the case, scrutinizing the mismatch between the show cause notice and adjudication order, contestations over capital goods usage, lapsing of credit, and the conditional nature of exemption.
1. Mismatch in Show Cause Notice and Adjudication Order: The foundational issue in the Faze Three Ltd case lies in the misalignment between the show cause notice and the subsequent adjudication order. While the notice proposed a demand of 10% under Rule 6 (3) of Cenvat Credit Rules, the adjudication order veered into a different territory by ordering the lapse of credit balance. Legal precedents emphasize the importance of consistency between the allegations in the notice and the subsequent adjudication order for the latter to be deemed valid.
This discrepancy opens the door for a compelling legal argument by Faze Three Ltd. The established principle that the order cannot transcend the scope of the show cause notice forms a robust foundation for contesting the validity of the demands made.
2. Demand on Capital Goods Usage: The second facet of contention revolves around the demand of Rs. 40,66,510 pertaining to the balance of credit related to capital goods. Faze Three Ltd vehemently challenges this demand, asserting that the capital goods were utilized for both dutiable and exempted products. This assertion challenges the very essence of the allegation that the capital goods were used exclusively for exempted final products.
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