CX - Once returned ABS is reprocessed to remanufacture ABS, appellant is required to pay duty on date of removal - no ground to allege goods removed 'as such' requiring credit reversal: CESTAT
By TIOL News Service
NEW DELHI, SEPT 28, 2017: DURING the period March, 2008 to April, 2010 customers of the appellant BEPL returned certain quantity of Acrylonitrile Butadiene Styrene (ABS) for various reasons to Abu Road factory in Rajasthan.
Out of total quantity of 1988 MT of ABS returned, 1883 MT were received back from M/s. Jagruti Resins Pvt. Ltd. (JRPL), a major authorised dealer of BEPL.
Upon receipt of ABS, M/s. BEPL availed cenvat credit amount to Rs.4,20,27,336/- on the total quantity of 1551 MT received from M/s. JRPL and others. Such returned goods were used to manufacture ABS by mixing the same with other basic raw materials. At the time of clearance of such finished goods, M/s. BEPL paid excise duty at the rate of 8.24% as prevalent at the time of removal of these processed goods.
However, Department was of the view that the appellants should have reversed the credit that was availed at the time of receipt of goods ( i.e. at the rate of 16% / 14% / 10% ) and which had resulted in demand for short paid excise duty amounting to Rs.2,98,20,913/-.
It is also alleged that a quantity of 436 MT of ABS claimed to have been received back by the appellant from M/s. JRPL was actually never received and which has resulted in excess availment of CENVAT credit of Rs.1,22,98,442/-. Inasmuch as investigation revealed that goods claimed to be returned from M/s. JRCL was accompanied by GRs issued by M/s. Shiv Shakti Packers and Movers ; that the registration number of vehicles found in such GRs were found to be that of two wheelers, cars, light motor vehicles or non-existent motor vehicles.
Demand on both the counts were confirmed and equal penalties imposed. A penalty of Rs.1,22,98,442/- is also imposed on Arvind K Doshi, CEO of M/s. JRPL u/r 26 of the CER, 2002.
The appellants are before the CESTAT.
After considering the submissions and extracting rule 16 of the CER, 2002, the Bench observed –
A. Demand of Rs.2.98 Crores:
+ Rule 16 clearly provides that upon receipt of returned goods, the assessee is entitled to avail the cenvat credit of the same. If the process to which goods are then subjected to amounts to manufacture, the manufacturer is required to pay excise duty at the rate applicable on the date of removal.
+ The reprocessing has resulted once again in ABS, which, no doubt, is falling in the same CETH as the goods returned to the factory. However, from the process carried out in the factory, it is very clear that the same amounts to process of manufacture. Hence, Commissioner was in error to take a view that ABS has been cleared from the factory "as such".
+ BEPL was only required to pay excise duty at the rate prevalent at the time of removal of reprocessed ABS as has already been done by M/s. BEPL.
+ We find no justification in sustaining the demand of Rs.2,98,20,913/-. Consequently, the demand for Rs. 2.98 crores is set aside along with imposition of interest and penalty.
B. Demand of Rs.1.22 crores:
Cenvat credit can be availed only when the goods are accompanied by documents evidencing the details of the goods, the duty involved as well as mode of transport with registration number of vehicles. Such details are to be entered in invoice which are stipulated under Rule 11 of the Central Excise Rules, 2002. After these particulars are found to be untrue, it gives rise to irrevocable presumption about the genuineness of goods transported and the documents covered by it. The logical conclusion which will be arrived at by any prudent man is that such goods covered by GRs were never received by the appellant M/s. BEPL. Consequently, we do not find any infirmity in the order of the adjudicating authority in ordering recovery of cenvat credit amounting to Rs. 1,22,98,442/- along with interest and imposition of penalty of equal amount.
C. Penalty u/r 26 of CER, 2002:
Doshi was only an employee of M/s. JRPL. Nothing on record to indicate that Arvind K Doshi, CEO of M/s. JRPL was instrumental in such activity. In the absence of any notice issued to M/s. JRPL, no penalty is imposable on him.
The appeal was partially allowed.
(See 2017-TIOL-3520-CESTAT-DEL)
