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The appeal by the revenue is directed against the order dated 16.12.2020 passed by the Customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkata, (Tribunal) in Excise Appeal No. 76425/2016. This appeal is to overrule the order passed by the Tribunal. T.S.SIVAGNANAM, J on 18.01.2022 pronounced this Judgement in COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, HALDIA V. M/S. EMAMI AGROTECH LIMITED.

The respondent/assessee is recognized palm oil and soyabean oil manufacturer with the Central Excise Department. During the examination of the documents for the years 2010-2011 to 2012-2013, the department discovered that the assessee had claimed duty credit for a variety of structural materials such as “MS Channel, MS Angle, Joist, TMT, Cement, Plates, and so on,” which are covered by Chapters 72 and 73 of the Central Excide Tariff Act, 1985. The department also noted that during the period mentioned above, the assessee had erected structural items such as platforms, structures for carrying pipelines, structures for resting capital goods, and primarily for building capital goods foundations and that such materials had been used, erected, and installed at the factory site.

The revenue believed, on the surface, that the credit granted to the company was excessive. As mentioned above, the assessee was not acceptable in court in the capital case. According to Cenvat Credit Rules, 2004, Rule 2 (k) read with Explanation 2, inputs utilized in manufacturing capital goods that were then used in the factory for manufacture were considered inputs and not as capital goods.

The respondent/learned assessee’s counsel sought to uphold the Tribunal’s decision, arguing that the Tribunal correctly recognized that the adjudicating authority had glossed over the assessee’s specifics, which included item-by-item details of the credit taken out. Additionally, the Tribunal examined the sample bills and determined that the products were categorized under Chapters 84, 85, and 90 of the Tariff Act. The Tribunal correctly noted the Chartered Accountant certificate dated 23.08.2016, attesting that the credit of Rs. 2,42,79,485/- is directly related to plant, machinery, equipment, and other things squarely covered by the capital goods category.

The Learned Judge, on-going through the order passed by the adjudicating authority dated 26.05.2016, observed that the Tribunal’s assertion that the adjudicating administration glossed over the facts is false. The charges in the show cause notice, the assessee’s response, and the documents they relied on were all taken into account by the adjudicating body. The matter before the adjudicating authority was whether the assessee had appropriately claimed and used the amount of Cenvat Credit on the materials stated above during the period in question by classifying them as capital goods. If not, the credit they took out is recoverable, with interest and penalties levied against the assessee. The assessee contends that the goods for which the credit was obtained were utilized to commission and manufacture storage tanks and so would be covered by Clause (a) (iii).

The preceding judgment circumstances are identical to the facts before the learned Judge. There is no evidence on file that the assessee provided supporting documentation to back up the Chartered Accountant credential. Even though the assessee had possession of the papers, the Tribunal should have attempted to either check the documents, request a remand report, or remit the matter to the adjudicating body to examine the validity of the Chartered Accountant’s certificate. As a result, the Learned Judge does not agree with the Learned Counsel for the assessee’s contention that the subject is entirely factual and that the Learned Counsel’s findings are distinct on facts.

Given the preceding, the Judge is compelled to intervene with the Tribunal’s decision. Since previously said, verification of the contents of the Chartered Accountant certificate is necessary, as the certificate appears to have been brought for the first time before the Tribunal and does not suggest that it was given following appropriate verification of the information. As a consequence, the appeal has been granted. The Tribunal’s order is overturned, and the substantial questions of law are answered in favor of the appellant/revenue. The case is remanded to the adjudicating authority to consider the correctness of the contents of the Chartered Accountant certificate after allowing the respondent-assessee to produce sufficient documents and evidence in support of the Chartered Accountant’s conclusion.

Click here to view the Judgement

Reviewed by Rangasree