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Adjudicating authorities should pass the orders only after considering evidences on record. In case of doubt regarding facts of the case, adjudicating authorities should resort to means to gather the correct facts of the case as against passing order without any basis. It is a misconception that the burden of proof is on assessee in case of allegation by department.
Facts
Show Cause Notice was issued proposing recovery of irregular availment of CENVAT Credit in violation of Rule 6 of CENVAT Credit Rules, 2004 for failure to maintain separate accounts of CENVAT credit on common inputs used for taxable as well as exempted services. It was submitted that it had only availed credit of inputs and input services used for providing taxable services. Further, Show cause notice (SCN) failed to reveal any basis for the allegation of irregular availment of CENVAT credit. The adjudicating authority completely disregarded the submissions and observed that it is not the duty of the Department to establish that the appellant have not maintained separate records.
Held
The Tribunal held that the adjudication order jumped to the conclusion of irregular availment of Cenvat credit without substantiating it by any material evidence or analysis. Even when the contention was not accepted, the adjudication order mentioned that the appellant did not dispute availment of CENVAT credit on common inputs and input services. In case of doubt by revenue authorities, it ought to have summoned the appellants’ records or should have verified from their premises whether the they had correctly pleaded to have maintained separate records or not. If no summons were issued and there was a failure to inspect records, conclusion regarding non-maintenance of separate accounts was without any basis. It was also held that It is a misconception that the burden of proof is on assessee in case of allegation by department. In the present case, in absence of clear findings regarding non-maintenance of separate accounts by the appellants without any evidence, the inference of failure to maintain separate records is perverse. In order to enable the adjudicating authority to pursue judicial discipline in recording adjudication orders and eschew perversity in adjudication functions, matter was remanded back for fresh adjudication on the basis of observations made in this order.
