2015 (9) TMI 1439 - AT - Central Excise

Excess Cenvat credit claimed - appellants have taken excess Cenvat credit is the balance sheet figures whereas as per the Rule 9 of Cenvat Credit Rules, 2004, Cenvat credit is available on the basis of invoices issued by the input supplier - Held that - From the show cause notice as well as the impugned order, it is not coming out whether the audit team has verified the Cenvat credit account corresponding to the invoices received by the appellants for inputs which is the prime document for availment of Cenvat credit. Therefore, I hold that show cause notice is defective for want of evidence, i.e., invoices and it is not coming out from the investigation whether the Cenvat credit account has been verified to the corresponding invoices or not. Therefore, quantification of duty admissible on Cenvat credit on the strength of balance sheet figures is incorrect. Therefore, the charge of availment of excess Cenvat credit on the appellant is not sustainable. Consequently, Cenvat credit availed by the appellant cannot be denied in the absence of any supportive evidence. In these circumstances, the Cenvat credit availed by the appellant is correct. Consequently, duty along with interest, entire demand and penalties are not imposable. With these observations, impugned order is set aside. Appeals are allowed with consequential relief, if any.

Summary

Issues:
Appeal against denial of Cenvat credit, demand of duty, interest, and penalty.

Analysis:
The appellants challenged the impugned order denying Cenvat credit, demanding duty, interest, and imposing penalties. The matter was listed for hearing multiple times, with no appearance from the appellants or requests for adjournment. The case involved an internal audit in the factory for specific periods, where discrepancies in Cenvat credit availed were alleged. The show cause notice was issued based on the balance sheet figures, claiming excess credit availed by the appellants. However, the Rule 9 of Cenvat Credit Rules, 2004 mandates credit availability based on invoices from input suppliers. The tribunal noted a lack of evidence regarding verification of Cenvat credit accounts against invoices by the audit team. Consequently, the tribunal found the show cause notice defective due to insufficient evidence, rendering the charge of excess Cenvat credit unsustainable. As a result, the denial of Cenvat credit, duty demand, interest, and penalties were deemed incorrect. The tribunal set aside the impugned order, allowing the appeals with consequential relief, if any.