CX - Without any proof of clandestine removal, it is not legal to disallow CENVAT credit on inputs, if same had been received in factory: CESTAT
By TIOL News Service
NEW DELHI, MAR 22, 2017: BOTH, the assessee and the Revenue are in appeal against the order passed by the CCE, Jaipur.
CENVAT credit of Rs.10,66,300/- has been disallowed and an equivalent penalty has been imposed on the assessee.
Revenue is in appeal stating that the entire amount of CENVATcredit demanded of Rs.53,30,722/- taken on the strength of 97 invoices issued by M/s SPM Enterprises, Delhi is to be disallowed.
The assessee appellant submits that the allegation is regarding availment of credit on inputs, on the basis of invoices issued by M/s SPM Enterprises, without actual receipt of the inputs. However, the Commissioner after considering various records and submissions placed before him, agreed with the receipt and usage of the inputs. Inasmuch as reversal of CENVAT credit of Rs.31,82,272/- was made on removal of inputs as such to their Haridwar Unit, which fact was also regularised by the Deputy Commissioner, Dehradun vide letter dated 16.08.2010, confirming the receipt of PP Granules by Haridwar Unit of appellant and so also the waste generated during the processing of PP granules have been cleared on payment of excise duty. All these clearly established the factum of receipt of inputs by assessee and, therefore, CENVAT credit has been correctly availed. Reliance is also placed in support on the decisions in Continental Cement Company = 2014-TIOL-1527-HC-ALL-CX and Wires N. Machines Pvt. Ltd. = 2016-TIOL-280-HC-AHM-CX.
In the matter of the demand confirmed against the assessee, it is their submission that the same is made on a presumptive reasoning which was not even alleged in the impugned show cause notice. [ Brindavan Beverages (P) Ltd. = 2007-TIOL-118-SC-CX refers.] Moreover, the charges against the dealer and transporter supplying the inputs to the assessee have been dropped by the AA which itself is sufficient evidence to conclude that the inputs have been received and credit should have been allowed in full under the disputed invoices as there is no case of diversion of inputs as such in the market or clandestine clearance. Also cross examination has not been allowed and, therefore, proceedings are not tenable - J&K Cigarettes Ltd. = 2009-TIOL-478-HC-DEL-CX, BasudevGarg vs. CC = 2013-TIOL-464-HC-DEL-CUS, G-Tech Industries = 2016-TIOL-2749-HC-P&H-CX relied upon.
The AR reiterates the contents of the appeal memorandum and submits that the AA had heavily relied on the retraction made by the Assistant Manager and which is incorrect in view of the decision in Kalvert Foods India Pvt. Ltd. = 2011-TIOL-76-SC-CX
The Bench observed -
Revenue appeal:
+ The impugned order [paragraph 75] has examined the issue in detail and has given the findings that the assessee M/s GPIL was a bonafide purchaser and it has not been proved that the said goods were not received by them.
+ It appears to be the fact that the goods were received by the Haridwar unit of Respondent-assessee. The Department has not submitted any substantial evidence to prove otherwise than the findings arrived at by the Commissioner in the impugned order. Therefore, the Revenue's appeal has got no substance; the case laws cited by the Revenue are not applicable to the present facts. Consequently, the Revenue appeal has no merits and deserves to be rejected.
Assessee appeal:
+ The impugned order does not anywhere discuss to arrive at the conclusion that 109.512 MT of PP granules on which (after deduction of duty paid on scrap i.e. Rs.54,824/-) cenvat credit demand of Rs.10,66,300/- has been confirmed was either diverted or clandestinely removed. Without the fact of clandestine removal being on record, it is not legal to disallow cenvat credit for the subject goods, if the same had been received by assessee-appellant in the factory . The impugned order notes that the subject goods were received by the appellant and when there is no diversion or clandestine removal of 109.552 MT of material, the denial of CENVAT credit on the same can not be legally sustained.
+ This issue needs fresh examination by the original adjudicating authority for which fresh personal hearing and opportunity of production of fresh evidence as per law is to be made available to the appellant.
In fine, the Revenue appeal was dismissed and the appeal by the assessee was allowed by way of remand.
(See 2017-TIOL-936-CESTAT-DEL)
