M/S Bihar Raffia Industries Ltd vs Cce, Raipur

[Arising out of the Order-in-Original No. 34/Commr (ADJ)/ RPR/2006 dated 20/03/2006 passed by The Commissioner of Central Excise, Chhattisgarh.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

M/s Bihar Raffia Industries Ltd. ] Appellant

Shri T.C. Agarwal, Director ]

Versus

CCE, Raipur Respondent

Appearance

Shri B.L. Narsimhan, Advocate  for the appellant.

Shri Pramod Kumar, Authorized Representative (Jt. CDR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52540-52541/2015 Dated : 10/08/2015

Per. B. Ravichandran :-

The appellant are manufactures of HDPE/PP Sacks. They have unit at Pangaon, District Raipur and have another unit at Adityapur Industrial Area, Gumhariya, Jamshedpur. The Jamshedpur unit is involved in manufacture of HDPE/PP Woven Sacks from duty paid HDPE/PP Granules. The appellant is purchasing duty paid inputs and availed credit on the same. They supplied the inputs to their Jamshedpur unit under the cover of challan under Rule 4 (5) of Cenvat Credit Rules. They also supplied such inputs to another unit in Jamshedpur. They receive back the Woven Fabric under challan thereafter it is cut and stitched and sold to customers. They discharged appropriate Central Excise duty at that time and maintained records. Sometimes finished goods were cleared from Jamshedpur unit also. The Revenue conducted certain investigation in July 2003 and came to the finding that since they have no facility to manufacture HDPE/PP Sacks at Pangaon they are not entitled for the credit of duty on inputs. Accordingly, the show cause notice was issued and the case was adjudicated by the Commissioner. The appellant is before us against the said impugned order.

The main point of contention of the appellant is that there are serious factual errors in appreciating the details of the case by the Commissioner. Since the adjudication was concluded without hearing them they could not put-forth their views effectively resulting in incorrect appreciation of facts. During argument the learned Counsel for the appellant fairly conceded that the Original Authority did give four opportunities of personal hearing but due to various compelling reasons they could not avail of the same. The Original Authority proceeded to decide the cases as no further opportunity is required as per the provisions of Section 33A of Central Excise Act, 1944. The appellant pleaded that the entire order denying the Cenvat credit on input is on the basis that they have no manufacturing facility for woven sacks. This conclusion was solely based on statement of the owner of the premises. The learned Counsel for the appellant pleads that they did take registration in January 2002 and the nature of activities like cutting, stitching and printing of bags is clearly indicated in their request.

They have maintained records in terms of Rule 4 of Cenvat Credit Rules, 2004 for movement of inputs and receipt of semi-finished goods. The entire quantities of sacks were duly accounted for in the statutory RG-1 register. They have also filed monthly returns showing all these details. Thus, the credit has been rightly availed by them on various inputs.

2. On the other hand, the learned AR reiterated the findings of the Original Authority and stated that the Original Authority relied on various documents and statements to arrive at the conclusion and the appellant unit has no capacity to manufacture the impugned goods as the machinery was not operative. He pleaded that full transaction is only on paper to avail the Cenvat credit.

3. Heard both the sides and examined appeal papers. In the appeal, the appellant made certain factual points which could not be considered by the lower Authority as no personal hearing could be conducted in spite of opportunities given to the appellant. Though the appellant pleads that they had compelling reasons for non-appearance the Original Authority is bound by the provisions of Section 33A and as such proceeded to adjudicate the case without a personal hearing. However, the fact remains that certain details which have direct bearing on the finding of the Original Authority ought to be considered for a fair decision. It is an admitted fact that the purchase of main raw material HDPE/PP Granules the movement of Granules and semi-finished/finished products like HDPE Woven Fabric and Printed Sacks are duly accounted for in statutory records by the appellant. Now the denial of credit is solely dependent on lack of capacity in the appellant unit to cut, print and to make the final HDPE Woven Sacks out of Woven fabric. Further, it is also seen that the appellants have questioned to the factual correctness of the findings of the learned Commissioner in para 4.3 (d) of the order. On this point, the appellants submission is as below:-

The appellants submits that the quantity of 150 M.T. recorded by the Commissioner in the impugned order relates to the purchases made during the period from January 2002 to March 2002. This quantity was accounted for by them in their Central Excise records and in Form 59A register. Similarly in the year 2002-2003 also, the appellants purchased a total quantity of 460.683 M.T. of granules, 25.005 M.T. of PP fabrics which was accounted for by them in Central Excise records and sales tax records. Further, in the year 2003-2004, the appellants purchased a total quantity of 409.000 M.T. of granules 78.2813 fabrics and which were accounted for by them in the Central Excise records and records maintained by commercial tax department there was no discrepancy as held by the Commissioner in the impugned order.

4. The appellants also contended various other findings by the lower authority based on facts. We find that correct appreciation of the factual position is required to arrive at the proper decision. The various accounts maintained by the appellant are to be cross-checked with the allegations made in the show cause notice. Apparently this could not have been done as the original order was passed ex-parte. As mentioned earlier the appellant did not avail the opportunity of personal hearing given by the Original Authority resulting in the present situation. However, in the interest of justice and to arrive at a fair decision we find that the matter has to be remanded back to the Original Authority to decide the case afresh. We also direct the appellant to present the full facts and avail the opportunity of personal hearing without seeking adjournment so that the correct factual position can be appreciated by the Original Authority before decision. With these terms, we dispose of the appeal by way of remand.

(Operative part of the order pronounced in the open court.)

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

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