CX - Allegations in SCN project a grievance pertaining to wrongful availment of credit - However, o-in-o & o-in-a proceeded on footing that declaration u/s rule 57G did not contain the reference to finished products - Orders travel beyond SCN: HC
By TIOL News Service
MUMBAI, FEB 05, 2015: THIS is a Revenue appeal filed in the year 2004.
The facts:
The Assessee was a manufacturer of rubber articles [CSH. 40, 59, 35 and 93 of the CETA, 1985]. For availing credit on inputs in terms of the MODVAT Rules, they had filed a declaration u/r 57G of CER, 1944. In the form, the assessee denoted that they have withdrawn the finished products under Chapter 9306 and 3506 from the list of final products and on which the credit for inputs was claimed. Resultantly, a SCN came to be issued alleging that the assesse had wrongly availed credit on the inputs used in the final products falling under Ch. 9306 & 3506.
The demand of Rs.3.84 lakhs was confirmed by the lower authorities but the Tribunal allowed the appeal of the assessee.
Therefore, the appeal by the Revenue before the Bombay High Court.
The High Court observed -
“Upon careful perusal of the entire record, the Tribunal found that the show cause notice, though alleging wrongful availment of credit and which was inadmissible, essentially projected a grievance that the Assessee filled in a form for availing of this credit. In that form, he has withdrawn the products under Chapter 9306 and 3506. The withdrawal is from the list of final products. If they were deleted from the declaration, then, the credit was not admissible. The Tribunal found that the allegations in the show cause notice project a grievance or issue pertaining to wrongful availment of credit or availment of inadmissible credit. However, the orders proceeded on the footing that the declaration under section 57G did not contain the reference to the finished products under Chapter 9306 and 3506. Rather they were withdrawn from the list of final products mentioned in the declaration. Thus, the allegations in the show cause notice, based and founded on which the orders should have been passed by the Commissioner and the Commissioner (Appeals), are not adhered to by them. They have traveled beyond the same and by referring to the declaration. If the credit was inadmissible and therefore wrongfully availed of, then, that was required to be reversed/recovered. That was the foundation on which the show cause notice was issued. That was the principal allegation. There was no reference therein to the declaration under Rule 57G or the deletion of the final product from the purview of the same. In such circumstances, the Tribunal rightly interfered with the concurrent orders and allowed the Assessee's Appeal. In any event, a declaration requiring the Assessee to mention the final product and which declaration is to be filled in, in compliance with the procedural provision, would not govern the issue of admissibility of the credit. That is how the Tribunal proceeds as well. On both counts, we do not find that its order is perverse or vitiated by error of law apparent on the face of the record. The substantial question of law would therefore have to be answered against the Revenue and in favour of the Assessee.”
The Revenue appeal was dismissed.
In passing: Perhaps, the time has come to dismiss such low value appeals as not maintainable in view of the Board's Instruction F.No.390/Misc./163/2010-JC dated 17.08.2011. See also Navjivan Synthetics - 2015-TIOL-199-HC-AHM-CX.
(See 2015-TIOL-265-HC-MUM-CE)
