By TIOL News Service

MUMBAI, MAY 29, 2013: YOU may have heard of the consignee being denied CENVAT credit on the short supply of inputs received by them. One always wondered as to what happened to the inputs that went missing on the way…pilfered, evaporated or vanished into thin air! On occasions where the variation in weight occurs due to weighment at various weighbridges and also because of evaporation during transportation, the Tribunal has been allowing the credit of the duty paid on the entire quantity more so since there is no proof that the inputs were diverted.

Be that as it may, in those cases where the inputs were received short, the consignee issues debit notes and avails a lesser quantum of credit so that he does not land into trouble later.

Resultantly, the consignor has to bear the loss!

To overcome this, the present assessee has devised a unique modus. Read further -

+ The assessee is clearing cement in the bulkers to their buyers. At the time of deliveries of the cement from bulker to the buyers, some consignment of cement remained in the bulker , which are received by the applicant and the applicant availed credit on the duty paid on such quantity which was received back and as per the delivery challans where the buyers of the applicant shows the short receipt of the cement.

The jurisdictional authorities found this intriguing and resultantly issued and confirmed the demand of credit irregularly availed on the ground that the applicant availed credit without cover of any proper document/challan showing short receipts issued by the buyers.

The Commissioner (A) too confirmed this demand and so the appellant is before the CESTAT with a Stay application.

It is submitted that they produced sample invoices and challans before the adjudicating authority and being a voluminous record, the applicant sought time. However, time was not granted by the adjudicating authority and confirmed the demand. Before the Commissioner (Appeals) also, the applicant sought time to produce all the documents. In spite of the request made, the appeal was dismissed. The contention is that the applicant is having all the records showing the delivery of short supply of cement to their buyers and the challans issued by the buyer, debit entries made by the applicant to show that the buyers have received less quantity of the cement mentioned in the invoice issued by the applicant on which duty has been paid hence the demand is not sustainable.

The Revenue representative submitted that the R/s had visited the factory of the applicant for verification but none of the records were provided to him and hence had to return “empty” handed.

The Bench observed -

“5. We find that the applicant is availing credit of duty paid on the cement which was received short by their customers. In these circumstances, the applicant is to show that their customers have received less quantity of cement than shown in the invoice. The applicant has not produced such documents before the adjudicating authority nor before the Commissioner (Appeals). In these circumstances, we find that it is not a case for total waiver of duty. However, taking into accounts the facts and circumstances of the case, the applicant is directed to deposit an amount of Rs.10,00,000/- (Rupees Ten lakhs only) within eight weeks….”

In passing : Any scope for rule 16 of CER, 2002 to enter the scene?

(See 2013-TIOL-802-CESTAT-MUM)