2017 (1) TMI 1482 - AT - Central Excise

CENVAT credit - shortage of the raw material - Rule 9(2) of the CCR, 2004 - Held that - it appears that the appellant has availed the credit of ₹ 45,789/- on the basis of Xerox copy of invoices which was not accepted by the lower officers and they have raised the demand - in the case of Cords Cable Industries Ltd. v. CCE, Jaipur-I 2013 (11) TMI 983 - CESTAT NEW DELHI the Tribunal allowed carbon copy/extra copy of the invoices as basis to avail the Cenvat credit. Though the appellant has submitted Xerox copies, the authorities have not provided any opportunity to them to provide the original copies. If the primary evidence is not given, then secondary evidence is admissible as per the proviso to Section 63 of the Indian Evidence Act, 1872. Appeal allowed in part.

Summary

Issues:
1. Cenvat credit on capital goods purchased before registration.
2. Duty demand due to shortage of raw material.
3. Reversal of Cenvat credit based on Xerox copies of invoices.

Analysis:

1. Cenvat credit on capital goods purchased before registration:
The appellant claimed Cenvat credit on capital goods purchased before registration, with 50% claimed prior to registration and 50% at the time of registration. The Department allowed only 50% credit at the time of registration as per Rule 4(2) of the Cenvat Credit Rules, 2004. The appellant challenged this decision, citing a similar case before the Karnataka High Court where it was held that the 50% credit can be availed in the year of receipt of capital goods even before registration. The Tribunal, following the Karnataka High Court's decision, allowed the credit of 50% for the period prior to registration in favor of the appellant.

2. Duty demand due to shortage of raw material:
A duty demand of ?64,513 arose due to a shortage of raw material during a physical verification. The appellant contested the verification process, claiming it was not done thoroughly. However, the Tribunal noted that the verification was conducted in the presence of the appellant, and since a shortage was found, the appellant could not challenge it at the appeal stage. Therefore, the Tribunal upheld the duty demand regarding the shortage of raw material.

3. Reversal of Cenvat credit based on Xerox copies of invoices:
The appellant's Cenvat credit reversal was based on Xerox copies of invoices, which were not accepted by the lower officers. The appellant relied on a precedent where the Tribunal allowed the use of carbon copy/extra copy of invoices to avail Cenvat credit. The Tribunal noted that the authorities did not provide the appellant with the opportunity to submit original copies of the invoices. Considering the admissibility of secondary evidence as per the proviso to Section 63 of the Indian Evidence Act, 1872, the Tribunal set aside the decision to reverse the Cenvat credit based on Xerox copies and allowed the appeal of the appellant.

In conclusion, the Tribunal partially allowed and partially rejected the appeal filed by the appellant, ruling in favor of the appellant regarding the Cenvat credit on capital goods purchased before registration and the reversal of Cenvat credit based on Xerox copies of invoices, but upholding the duty demand due to the shortage of raw material.