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CX - CENVAT denied on ground that ingots of thickness of more than 3 inches cannot be used for manufacture of MS Bars of 6mm - SCN relied solely on certificate of Technical Expert given upon inspection of rollers and dies at another Mill - same cannot be applied to appellant: CESTAT

By TIOL News Service

MUMBAI, APRIL 08, 2016: M/s Salasar Steel Industries were using MS Ingots and billets of thickness more than 3 inches for manufacture of MS Bars of 6 mm. On the basis of a technical opinion given by Mrs. Keerti Deshpande, Chartered Engineer of M/s Amod Consultants in the case of another party, it was alleged that the ingots and billets of thickness more than 3 inches cannot be used for manufacture of MS Bars of 6 mm.

On this ground, the demand for recovery of CENVAT Credit of Rs.26,64,744/- allegedly taken wrongly on ingots/billets of thickness more than 3 inches was issued.

The original authority confirmed the demand but the Commissioner (Appeals) set aside the demand by observing thus:

"The plethora of rulings given by various judicial authorities on Modvat&CENVAT Credit indicate that there are three criteria on the basis of which admissibility of CENVAT Credit is decided viz. inputs should be duty paid, inputs should be received in the factory or inputs were not used for manufacture of final products to disallow CENVAT Credit. The department has not brought any such proof on the record. Moreover, the possibility of carrying out the manufacturing activity in any other premises has also not been ruled out by the investigations….Therefore, I hold that the Department could not make out a case for disallowance of CENVAT Credit in this case. In view of the above, discussions, I find that the credit availed by the appellant on Ingots having thickness of more than 3 inches cannot be disallowed and the Order-in-Original dated 28.1.2011 passed by the respondent needs to be set aside."

Aggrieved with this order, Revenue took the matter in appeal before the CESTAT.

The respondent assessee was absent during the hearing.

The AR reiterated the grounds of appeal.

The Bench observed thus -

"4. …It is seen that the show-cause notice relied solely on the certificate of the Technical Expert which was given in a different case. The said certificate reads as under:-

"From the inspection of rollers and dies at the said premises and the observations-Ingots with size more than 2.5" (which is the disputed size) thickness cannot be used in the mill as raw material, because the size of first roller is such that, it gives output of a dimension 1.00" to 1.25" and the maximum size of input material 1.5" to 2.25" dimension."

The report of the Chartered Engineer is very specific and has been given after examining the machines installed in that Mill. The same cannot be applied in any circumstances to M/s Salasar Steel Industries without giving actual comparison of the machines installed and without bringing the said expert to M/s Salasar Steel Industries.

5. As regards the purchase register and the change in stand of M/s Salasar Steel Industries, these facts are irrelevant as none of these have been alleged in the show-cause notice."

In fine, the Revenue appeal was dismissed.

(See 2016-TIOL-839-CESTAT-MUM)


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