By TIOL News Service

NEW DELHI, SEPT 22, 2014 : THE appellants are manufacturers of Terry Towels and Terry Towel Fabrics. They had taken CENVAT credit of Rs.54,004/- on the basis of four invoices, one of which had been issued by M/s Surya Roshni Ltd. for supply of M.S. Tube [SH 73063090] and three invoices issued by M/s Adventec Polymers P. Ltd. under which HDPE and PVC Pipes [SH 39172310 & 39172300] had been supplied.

The Internal audit wing of the department raised an objection that that the appellant had taken CENVAT credit on ‘tube lights' supplied by M/s Surya Roshni and such ‘tube lights' and PVC Pipes supplied by the other party are not capital goods.

SCN followed and the Dy. Commissioner had no hesitation in disallowing the credit and imposing equivalent penalty and interest.

Before the Commissioner (Appeals), the appellant pleaded that the goods received from M/s Surya Roshni were M.S. Pipes and not ‘tube lights' and that MS Tubes and PVC/HDPE Tubes have been used in their effluent treatment system; that they are capital goods under rule 2(a) of CCR.The Commissioner (Appeals) observed that even if it is accepted that the appellant had received MS Tubes & not ‘tube lights' from M/s Surya Roshni there was no evidence regarding use of these and PVC/HDPE tubes in their factory.

Aggrieved, the appellant filed an appeal in the CESTAT and reiterated their submissions.

The AR did not budge.

The CESTAT observed that disallowing the credit in respect of PVC/HDPE pipes, which according to the appellant were used in effluent treatment plant, is totally wrong.

In the matter of the stand taken by the Department that the goods supplied by Surya Roshni are tube lights and not MS tube, the Bench found the said allegation to be is absurd.

The Bench remarked – “ If the Department had any doubt the necessary verification could have been done instead of disallowing the credit. The fact as to whether M/s Surya Roshni Ltd. have a steel division and manufacture steel tubes could be checked from their web-site on the internet. Moreover, when the invoice itself mentions the goods as MS tubes of heading 73063090 and from the value of the goods, the same cannot the tube lights, it is absurd to infer just on the basis of the name of the supplier that the goods supplied were tube lights and that too without making slightest effort to ascertain whether M/s Surya Roshni manufacture only the light fittings or also manufacture steel pipes also.”

The order disallowing the credit was set aside and the appeal was allowed with consequential relief.

In passing : Sparing a few moments while spending their valuable time on Whatsapp, FB, Twitter, Quikr, Sharekhan…is blasphemous!

(See 2014-TIOL-1808-CESTAT-DEL)