2010 (11) TMI 62 - HC - Central Excise

Assessee is engaged in the manufacture of components of railway coaches and supply the same exclusively to the Railways - Modvat / Cenvat credit on the goods - discrepancies in the thickness of the inputs - duty on the HR & CR sheets are not paid on the basis of the thickness, but the duty is paid on the weight basis and, therefore, the discrepancy in the thickness if any, has no bearing on availing the Cenvat credit - Held that - assessing officer was not justified in denying the credit of duty on account of alleged discrepancies in the thickness of HR & CR sheets cannot be faulted - There was neither suppression nor misdeclaration - Accordingly, dispose of the appeal

Summary

Issues:
1. Availment of Modvat/Cenvat credit on goods not received by the assessee in their factory.
2. Invocation of extended period of limitation for showcause notice due to discrepancies in goods received.

Analysis:
1. The respondent, engaged in manufacturing components for railways, used duty paid HR & CR sheets as inputs. Discrepancies in sheet thickness were found during a DRI visit, leading to a showcause notice for recovery of duty credit and imposition of a penalty.

2. The assessing officer confirmed the demand and penalty, but the CESTAT later set aside the order. The Revenue's case relied on thickness discrepancies in the sheets found at the factory, comparing them with details from registered dealers and purchase documents. However, the Tribunal found that duty payment was weight-based, not thickness-based, and discrepancies in thickness did not affect Cenvat credit eligibility.

3. The Tribunal concluded that denying credit based solely on thickness discrepancies was unjustified, especially since the purchase documents did not specify thickness, and duty payment was not linked to thickness. The Revenue failed to prove lesser quantity or non-payment of duty, indicating no suppression or misdeclaration by the assessee.

4. The High Court upheld the Tribunal's decision, stating that the assessing officer erred in denying duty credit based on thickness differences. As there was no suppression or misdeclaration, and the assessee received the duty-paid inputs for which credit was claimed, the appeal was disposed of with no costs awarded.