KAJARIA CERAMICS LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) HEARD the learned Advocate and learned SDR.

(2.) THE Appellants are engaged in manufacture of Ceramic tiles having their units located in the State of Rajasthan and Uttar Pradesh. They are having their corporate office at New Delhi and it is their case that they used to take input service credit on the strength of distribution invoices raised by their corporate office in respect of advertising services, commission agency services, house keeping services, manpower recruitment services, AMC services, security services, exhibition services etc. and used to distribute such expenses between Gailpur plant and Sikanderabad plant in the ratio of 56% and 44% respectively. On allegation that the Appellants had wrongly availed the CENVAT credit amounting to Rs. 60,62,680/ - (Rupees Sixty Lakh Sixty Two Thousand Six Hundred Eighty) during the period 2006 -2007 on the services used exclusively for the exempted goods, show cause notice came to be issued and matter being contested, the same was disposed off by the impugned order. It is the case of the Appellants that in support of their contention regarding the issue pertaining to stagnation of the input services, the Appellants had produced certificate by the Chartered Accountant. Based on that, the Commissioner had directed the Assistant Commissioner to investigate into the matter and report to the Commissioner. It is the further case of the Appellants that the Assistant Commissioner at no point of time called for any records from the Appellants and without proper investigation arrived at a conclusion about unlawful availment of CENVAT credit of Rs. 55,38,139/ - (Rupees Fifty Five Lakh Thirty Eight Thousand One Hundred Thirty Nine) and based on such observation of the Assistant Commissioner, the adjudicating authority held that 26% thereof would be inadmissible to the Appellants under the CENVAT Credit Rules, 2004 and sought to disallow the same.

(3.) THE impugned order discloses that the Commissioner after hearing The Appellants had referred the matter to the Divisional Assistant Commissioner to verify the contentions of the Appellants in relation to the matter in issue. The impugned order does not disclose what exercise or investigation was carried out by the Assistant Commissioner pursuant to such direction by the Commissioner. However, it is the case of the Appellants that at no point of time, no records were called for from the Appellants. The impugned order does not disclose as to whether Assistant Commissioner had made any attempts in that regard. On the contrary, the finding of the Commissioner is to the effect that the Assistant Commissioner after getting the record examined came to the conclusion from the record that it could not be ascertained that the credit of Rs. 55,38,139/ - was relating to the manufactured goods only. Merely with the said observation, the Commissioner has come to the conclusion that the Appellants had failed to establish the case put -forth by the Appellants. The analysis of the records in the impugned order, nowhere discloses that the Assistant Commissioner had really called for any records from the Assessee, or that the nature and description of the records which were allegedly examined by the Assistant Commissioner before arriving at the said observation by the Assistant Commissioner. In the absence of any material to ascertain the nature and the description of the records which were allegedly examined by the Assistant Commissioner, one wonder as to how the Commissioner could have arrived at the finding on the liability of the Appellants merely on the basis of an observation by the Assistant Commissioner. The Commissioner who was the Adjudicating Authority had, to analysis of the records by himself in order to fix the duty liability upon the Assessee and he could not have delegated this function to his subordinate. Even assuming that the investigation could have been done through his subordinate, it was the duty of the adjudicating authority to arrive at a correct finding on the material issue on the basis of analysis of the records and all the materials placed before him and not to decide solely on the basis of the observation by his subordinate. Being so, the impugned order cannot be sustained.