CCE, TIRUNELVELI Versus M/s PSA SICAL TERMINAL LTD (CESTAT Chennai)

For Appellant: Shri C Rangaraju, SDR
Per: M Veeraiyan:

This is an appeal by the department against the order of the Commissioner (Appeals) No. 202/2010 dated 31.05.2010.

2. None appears for the respondents. There is a request for seeking adjournment of hearing fixed for today.

3. After hearing the Ld. SDR and in view of the order proposed to be passed, it is held that there is no need for accepting the request for adjournment. As the respondents are not aggrieved against the order of the Commissioner (A) and the matter stands remanded by the Commissioner (A), it was felt that there is no need to give adjournment as sought for on behalf of the respondents.

4. A Show Cause Notice dated nil was issued in September’07 proposing a demand of interest of Rs. 52,162/- relating to the period December, 2005 to September, 2006, on the ground that Rule 4 (7) of the Cenvat Credit Rules, 2004, has been violated. The respondents filed reply dated 12.11.07. The original authority passed the order nearly after a year, on 23.12.08. From the records, it appears that no personal hearing had been granted, before passing the order. The original authority has chosen to conclude that the assessee failed to “substantiate their claim of non-availment of credit”. He accordingly, confirmed the demand of interest of Rs. 52,162/-. Before the Commissioner (A), the respondents raised the issue of violation of principles of natural justice and claimed that the credit in dispute was not utilized and the concerned officials were free to conduct verification of relevant records and returns. In the light of the above, the Commissioner (A) has remanded the matter to the original authority.

5. Ld. SDR submits that subsequent to the amendment to Section 35A (3) of Central Excise Act, w.e.f. 11.05.01, deleting the power of remand, the Commissioner (A) should not have remanded the matter. He also relies on the decision of the Hon’ble Supreme Court in the case of MIL India Ltd. Vs. CCE, Noida reported in 2007 (210) ELT 188 (S.C.), in support of his contention.

6.1 I have carefully considered the submissions of the Ld. SDR and perused the records. It is settled legal position that consequent to amendment of Section 35A (3) w.e.f. 11.05.01, Commissioner (A) has no powers of remand. Therefore, the order of the Commissioner (A) requires to be set aside.

6.2. It is not known as to why the Assistant Commissioner chose to not to give a personal hearing which is a clear violation of Principles of Natural Justice. The original authority has shown total disregard for the principles of natural justice in not granting personal hearing before passing the adjudication order. The claim of the respondents is that the credit wrongly taken was not utilized and therefore no interest was payable. There is no indication that the respondent was delaying the adjudication proceedings as the reply has been promptly submitted by the respondents as has been duly noted by the original authority. Apparently, the documents could not be produced by the respondents before the original authority. No doubt, that the matter could be directed to be dealt with by the Commissioner (A) or the matter could be dealt with by the Tribunal itself with the assistance of original authority. In the facts of the case, I hold that this course may not be desirable and I deem it appropriate that the matter must be considered afresh by the original authority himself. The original authority should not be allowed to follow the short cuts after sleeping over the matter for nearly a year.

7. In view of the above, order of the Commissioner (A) and the order of the original authority are set aside and the matter is remanded to the original authority for fresh consideration after giving reasonable opportunity of hearing to the respondents.

8. The appeal is disposed off as above.
(Order pronounced and dictated in the open Court)