By TIOL News Service

MUMBAI, MAY 25, 2018: THESE are Revenue appeals.

It was noticed that the assessee had claimed CENVAT credit on base oil as per the invoice quantity but the same was in excess of that entered in the internal records of the appellant viz. AC-13 and out-turn report.

The jurisdictional authorities denied CENVAT credit to the extent of quantity allegedly received short, citing rule 3 of the CCR, 2004. Penalty in equal measure was also imposed.

In appeal, the lower appellate authority allowed availment to the extent of permitted tolerance and also directed re-credit of duty that had been discharged on the short-receipts.

As mentioned, Revenue is aggrieved.

The Bench observed that the issue is covered by the decision of the Larger Bench of the Tribunal in Bhuwalka Steel Industries Ltd. - 2010-TIOL-19-CESTAT-MAD-LB and wherein it was observed that different types of shortages cannot be dealt with according to any one inflexible and fixed standard for the purpose of allowing credit under Rule 3(1) of the CENVAT Credit Rules.

Inasmuch it was held by the Larger Bench that the decision to allow or not to allow credit in any particular case would depend on various factors such as -

(i) Whether the inputs/capital goods have been diverted en-route or the entire quantity with the packing intact has been received and put to the intended use at the recipient factory.

(ii) Whether the impugned goods are hygroscopic in nature or are amenable to transit loss by way of evaporation etc.

(iii) Whether the impugned goods comprise countable number of pieces or packages and whether all such packages and pieces have been received and accounted for at the receiving end.

(iv) Whether the difference in weight in any particular case is on account of weighment on different scales at the despatch and receiving ends and whether the same is within the tolerance limits with reference to the Standards of Weights and Measures Act, 1976.

(v) Whether the recipient assessee has claimed compensation for the shortage of goods either from the supplier or from the transporter or the insurer of the cargo.

The CESTAT, therefore, held that, in the present case, in the absence of any such exercise having been carried out before issue of the show cause notice or examination in the orders of the lower authorities, the claim of Revenue to set aside the impugned orders was not tenable.

In fine, the Revenue appeals were dismissed.

(See 2018-TIOL-1618-CESTAT-MUM)