M.V. Ravindran, Member (J)
1. These two stay applications are directed against the order in appeal dated 11.8.06 that upheld the order in originals confirming the demand and imposing penalties. Since the issue is in a narrow compass, the condition of pre-deposit of penalties is waived and appeal itself is taken up for disposal.
2. Considered the submissions made by both the sides and perused the record. The issue for consideration is regarding denial of modvat credit on the finished goods manufactured and cleared by him to their purchase Rs. The purchasers did not avail the modvat credit on these goods cleared by the appellants. At the same time, rejected part consignment, back to appellant. The appellant availed the credit on such quantity under Central Excise Rules. The appellant is required to follow the procedure as per the Trade Notice issued by the jurisdictional Commissioner under the provision of Sub-rule (3) of Rules. I find that the office of the Commissioner of Central Excise, Jalandhar gave post facto permission to the appellants subject to the condition as mentioned in the letter. The letter reads as under:
Central Excise Commissioner ate, Jalandhar
C. No. IV (16)Tech/Jal/2005/8393 Dated 21.11.05
M/s Amrit Engg & Foundry Works, Mill Road,
Sub: Permission under Rule 16(3) and Trade Notice No. 22/2001-CE dated 25.1.2002 there of for taking Cenvat credit on returned/rejected goods – reg.
Please refer to your office letter Ref No. AEFW.09/03/2005-06 dated 6.9.2005 on the above subject received through the Assistant Commissioner, Phagwara.
In this regard, Commissioner’s observations are as under:
1. Failure to take prior permission of Commissioner before bring such rejected goods in to the factory, in terms of para 3(i) of the trade Notice No. 22/2001-CE dated 25.1.2002, has been condoned by the Commissioner provided it is not repeated.
2. For availing Cenvat credit on such returned goods, conditions prescribed under para 3 (ii) and (iii) of the trade Notice No. 22/2001-CE dated 25.2002 which prescribes method to ensure that credit is taken only on such goods which are duty paid, are returned back to you and on which no other person has taken credit, are to be complied. It is pointed out here that exemption to M/s ITL is only on tractors and their parts captively consumed. They still pay duty on spare parts of tractors and thus if such inputs supplied by you are to be used for such spare parts, M/s ITL can take credit.
3. Subject to verification/ascertainment of facts as mentioned in aforesaid para (2) above, the availment of credit is permitted ex-post facto.
3. Further, it is seen from the records that the appellant did not produce this letter before the adjudicating authority nor he produced any other documents that would require the compliance as per the above said letter. In absence of any such report before the lower authorities, the lower authorities could not have come to appropriate conclusion on the issue. It is the submission of the learned Counsel that they can produce all the record as envisaged in the post facto sanction. I find that the issue requires reconsideration by the lower authorities going through the documents and evidence that may be produced by the appellant. Accordingly, the impugned order is set aside and the appeals are allowed by way of remand to the adjudicating authority to consider the matter afresh in the light of the permission granted by the Commissioner of Central Excise vide letter dated 21.11.2005 and subject to the evidences that may produced by the appellant. The adjudicating authority may also grant personal hearing to the appellants before arriving at a conclusion. The appeals are allowed by way of remand.
(Order dictated and pronounced in the Open Court on 28.11.2006)