By TIOL News Service

NEW DELHI, MAY 05, 2014: THE issue involved is demand of CENVAT Credit on inputs found short during the verification by the officers of the department. It is the contention of the assessee that the officers did not take into account the stock of inputs lying adjacent to the factory during the stock taking which is sufficient to hold that the appellant has a prima facie case in their favour .

After considering the submissions by both sides, the Member (J) held:

The appellants have already deposited an amount of Rs.35.67 lakhs . As regard balance amount, we find that the appellants wrote a letter to the Commissioner immediately on the next day of visit of the officers detailing each and every fact. The contention of the ld. DR that the said fact is not reflected in the panchnama drawn on the spot cannot be appreciated inasmuch as drawing of the panchnama is in the hands of the visiting officers. If the visiting officers refuse to take into consideration the stock lying in immediate next premises, the appellant is in a helpless situation. Only remedy available to the assessee is to bring the matter to the notice of the higher officers as soon as possible, which they have adopted immediately.

Inasmuch as adjacent premises is admittedly owned by the assessee though not registered with excise department, it may be technical offence to keep stock outside the factory premises in a adjacent plot but in our view the same would not result in denial of the credit.

In view of the above, the Member (J) granted waiver of balance amount of pre-deposit. However, the Member( T) held:

The adjudication order shows that Appellants have taken credit of Rs.11 ,76,168 /- on 14 invoices issued by them which were subsequently returned to them. It was observed that no remark or note was written on these invoices indicating reason for return of goods. Further no vehicle numbers were mentioned and no transport documents accompanied these invoices. Prima facie, availment of irregular credit amounting to Rs.11 ,76,168 /- without receipt of goods on their own invoices was not available. Balance of convenience is in the favour of revenue. Reversal of this credit was called for.

Huge shortage of lead Concentrate weighing 1693475 Kgs . and shortage of Zinc Concentrate weighing 214350 kgs were detected on 19.1.2011 by investigating Officers. These shortages were admitted by Shri Ramesh Kumar Agarwal, Director on 17.2.2011. The draft order of learned Judicial Member shows that appellant took plea afterwards that shortages found in factory were actually lying in the premises adjoining to the factory. Their contention that materials on which credit was taken and found short during visit of officers were lying in adjoining premises had no basis or truth as is clear from threadbare analysis of facts and evidence by learned adjudicating authority. Panchnama in the presence of Panchas does not show such afterthought plea of appellant as to existence of stock elsewhere designed after investigation. Tribunal should not be swayed away by such false pleas.

Accordingly, the Member (T) directed pre-deposit of Rs 50 lakhs duty and part of the penalties imposed.

In view of the difference of opinion, the matter is placed before the President of CESTAT to resolve the issue.

(See 2014-TIOL-698-CESTAT-DEL)