INPUTS stored outside factory - As AC accepted request for inclusion of premises in Registration Certificate after more than year, applicant has a prima facie strong case in favour: CESTAT
By TIOL News Service
MUMBAI, FEB 15, 2013: RULE 8 of the CENVAT Credit Rules, 2004 reads as under -
'8. Storage of input outside the factory of the manufacturer. - The Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of a manufacturer of the final products may, in exceptional circumstances having regard to the nature of the goods and shortage of storage space at the premises of such manufacturer, by an order, permit such manufacturer to store the input in respect of which CENVAT credit has been taken, outside such factory, subject to such limitations and conditions as he may specify:
Provided that where such input is not used in the manner specified in these rules for any reason whatsoever, the manufacturer of the final products shall pay an amount equal to the credit availed in respect of such input.'
Paragraph 2.9 in Chapter 5 of the Supplementary Central Excise Manual also makes a mention of the above facility.
Be that as it may, in the present case, due to paucity of space in the factory premises situated at Plot N-65, the appellant stored these ‘inputs' in Plot No. 66, and which premises they sought to include in their Central Excise Registration Certificate. To this effect they addressed a request letter to the jurisdictional Assistant Commissioner on 07.05.2010.
Perhaps, the Assistant Commissioner was too busy and, therefore, this request remained pending…pending…pending!
In the meantime, “Inputs” continued to arrive at Plot No. 66 and the appellant went on taking the CENVAT Credit on these.
Someone must have got a whiff of the pending application and immediately a case was booked against the appellant and the CENVAT Credit of Rs.1,04,92,036/- was proposed to be denied and recovered on the ground that the ‘inputs were stored in an un-registered premises and the appellant had not obtained the necessary permission under rule 8 of the CCR, 2004'.
The CCE, Nagpur completed the final rites of this demand notice inasmuch as vide an Order-in-Original dated 28.05.2012 he confirmed the demand and imposed penalty and interest.
Before the CESTAT, the appellant submitted that the Assistant Commissioner had kept their application, for including the Plot no. 66 in their registration certificate, pending for long and had finally agreed to their request on 06.06.2011. It was further submitted that this fact was also brought to the notice of the adjudicating authority but he said nothing doing and confirmed the charges leveled in the SCN. Inasmuch as since the Plot no. 66 is now included in the Registration Certificate, the CENVAT credit should be allowed, submitted the appellant.
The Revenue representative stuck to Rule 8 of the CCR, 2004 and the absence of the permission to store inputs outside the registered factory premises.
The Bench observed -
"5. We find that the demand is confirmed for the period May, 2010 to January, 2011 on the ground that the applicants stored inputs on which credit was allowed at Plot no. 66. The applicants made an application for including Plot no. 66 in their Registration Certificate on 7.5.2010 and ultimately on 6.6.2011 the request was accepted and Plot no. 66 was included in their Registration Certificate. In these circumstances, we find that the applicants have made a strong prima facie case in their favour. Therefore, pre-deposit of the dues is waived and recovery is stayed during the pendency of the appeal."
In fine, the Stay petition was allowed.
Inside Outside: Probably, the Central Excise Commissionerates must have issued Facilitation notices with regard to Rule 8 of the CCR, 2004 and also laid down all sorts of limitation and conditions in this regard. As to whether this ‘permission' has to be taken before the “excess inputs” arrive in the factory or after they arrive is another issue altogether. Anyways, since it is an “order” the same can always be appealed against. In fact, since the rule refers to inputs on which CENVAT has been taken, the question of denial of CENVAT may not arise except in the situation covered in the proviso in rule 8 of CCR, 2004. And by the way, how much time does it take to make an amendment/incorporation into an existing Registration Certificate when the fact of the matter is that a new RC is to be granted within seven days! As they say, eco-friendly engineered solution for a better tomorrow!
(See 2013-TIOL-294-CESTAT-MUM)
