2010 (1) TMI 1020 - AT - Central Excise

Summary

Issues involved: Alleged fraudulent availing of Cenvat Credit on imported goods, denial of credit to the appellant, rejection of refund claim.

Issue 1: Alleged fraudulent availing of Cenvat Credit:
The appellant imported 14000 kg of "Indigo Powder" from China, cleared on payment of appropriate duties. Subsequently, discrepancies were found in the stock at the appellant's factory, leading to a show-cause notice alleging that a portion of the goods did not belong to the Bill of Entry. The original authority confirmed duty demand, penalty, and interest, which was upheld by the Commissioner (Appeals).

Issue 2: Denial of credit to the appellant:
The appellant filed a refund claim stating they were not liable to reverse the Cenvat Credit of CVD paid on the imported goods. The claim was rejected by the authorities, citing discrepancies between the goods and import documents. The appellant contested this denial, arguing that all conditions for Cenvat Credit were met.

Comprehensive Details:
The Hon'ble High Court remanded the case for fresh consideration. The main contention was the denial of credit without evidence of illicit import or non-use in manufacturing. The department alleged that 9700 kg of "Indigo Powder" found did not belong to the Bill of Entry, justifying denial of Cenvat Credit. However, the appellant argued that all imported goods were covered by the Bill of Entry, satisfying duty payment and usage as input in manufacturing.

The Commissioner (Appeals) upheld the department's allegation without a specific finding. The appellant contended that if a portion of the goods belonged to the Bill of Entry, the entire quantity should be considered covered. As all conditions for Cenvat Credit were met, the denial of credit was deemed unjustifiable.

Judgement:
The denial of credit to the appellant was deemed illegal, and appeal E/1264/07 was allowed. The appellant was entitled to a refund subject to fulfilling relevant conditions. Appeal E/167/06 was allowed for a remand to consider the refund claim after the main dispute was settled. The original authority was directed to pass a speaking order on the refund claim after providing a reasonable opportunity for the appellant to be heard.