The Allahabad High Court remanded back matter to the Tribunal on the ground that issue on merits not opened in Show Cause Notice ( SCN ).
The appeal is directed against the order passed by the Central Excise and Service Tax Appellate Tribunal on Stay Application. The Tribunal has rejected the stay application filed by the assessee against the demand of duty and has granted stay only with respect to demand of interest and penalty.
The assessee, M/S Dhampur Sugar Mills Ltd, contended that the assessee was only required to show cause why its claim of CENVAT credit may not be disallowed against the goods (specified in the notice) as they did not fall within the definition of the term ‘Capital Goods’.
The assessee also argued that no allegation was levelled in the show cause notice to disallow such claim on merits that input goods had not been purchased or received or used. However, while passing the adjudication order, the adjudicating authority has fallen in error in rejecting the claim on the basis of utilisation which was not an issue to be adjudicated.
The Counsel for the Revenue contended that the assessee has enjoyed a stay for very long inasmuch earlier the assessee had filed a writ petition before the Court sitting at Lucknow wherein interim order was granted in the year 2011 and that upon that writ petition being rejected for reason of territorial jurisdiction, the petitioner again seeks stay, in the present appeal.
The Bench comprising PritinkerDiwaker,Acting Chief Justice and Justice SaumitraDayal Singh, noted that while considering the stay application, the Tribunal has also missed the main issue raised. Occasioned by that error the stay application came to be rejected.
The Court observed that “Prima facie, it cannot be disputed that the issue on which adjudication was sought to be made and the issue that has been adjudicated appear to be different. Insofar as the issue on merits had not been opened in the show cause notice, prima facie case is made out for grant of interim protection.”
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