2015 (11) TMI 1569 - AT - Central Excise

Cenvat demand - inputs received in the factory under the cover of Central Excise invoices, were not the same which were removed from the factory - appellant s claimed that inputs removed as such from the factory under Rule 3(5) of the Cenvat Credit Rules, 2004 - Held that - the matter should go back to the original authority for a proper verification of the documents of the inputs. If the documents show that the inputs were not removed as such, but were removed after processing of inputs, then the duty demand already confirmed shall hold good. - Matter remanded back and appeal disposed of

Summary

Issues:
1. Interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004 regarding removal of input from the factory.
2. Consideration of evidence regarding the removal of inputs as such from the factory.
3. Verification of documents to determine if inputs were removed as such or after processing.

Analysis:

1. The judgment revolves around the interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004 concerning the removal of input from the factory. The appellant was facing a cenvat demand due to the contention that the inputs received in the factory, which were later removed, lost their identity 'as input as such' after processing. The Department argued that Rule 3(5) would not apply in such a scenario, necessitating the payment of Central Excise duty on the transaction value.

2. The appellant, through their advocate, had produced details of invoices to demonstrate that the goods received in the factory were indeed removed as such. However, these details were allegedly not considered by the authorities while passing the orders. The Ld. Advocate contended that the inputs were removed as such, contrary to the findings in the impugned order.

3. The Ld. DR for the Revenue reiterated the findings of the impugned order, emphasizing that the processed inputs were sold in the market after being received in the factory. It was argued that processed inputs cannot be deemed as 'input as such,' placing the appellant outside the scope of Rule 3(5) of the Rules. The Tribunal, after hearing both sides, concluded that a proper verification of the documents related to the inputs was necessary. The matter was remanded to the original authority for this purpose, with a directive to complete the verification and adjudication order within three months from the date of the order.

In summary, the judgment delves into the application and interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004, focusing on whether the inputs were removed from the factory 'as such' or after processing. The need for a thorough verification of documents to determine the nature of input removal was emphasized, leading to the remand of the matter to the original authority for further adjudication.