2011 (7) TMI 735 - AT - Central Excise

Demand - the show cause notice was issued to the appellants for contravention of Rule 3(3) of Cenvat Credit Rules, 2002 read with Rule 12 of Cenvat Credit Rules, 2002 - Held that in this case the demand has been made on two grounds i.e. (a) for demand of August, 2003 has been made on the ground that the same has been paid by utilizing the credit attributable to them for the month of September, 2003 and (b) for duty paid for September, 2003 in the month of October, 2003 whether the goods have been received physically by the appellants on 30.09.2003 or not - as per provisions of Rule 3 (3) of Cenvat Credit Rules, 2002, the appellants are not entitled to utilize the credit attributable for the month of September, 2003 - Decided against the assessee Commissioner (Appeals) has discussed in the impugned order in detail that the claim of the appellants is not sustainable that they have received the goods on 30.09.2003 in their factory as they failed to produce any documentary evidence to support their claim - Held that the credit of Rs.81,810/- is available to the appellants for payment of duty for the month of September, 2003. Therefore the appellants can utilise this credit of Rs.81,810/- for payment of Rs.20,329 - Decided in favor of the assessee

Summary

Issues:
- Appeal against confirmation of demand only
- Contravention of Rule 3(3) of Cenvat Credit Rules, 2002
- Imposition of penalty under Rule 13 of Cenvat Credit Rules, 2002
- Utilization of cenvat credit account for payment of duty
- Applicability of Rule 3(3) of Cenvat Credit Rules, 2002
- Physical receipt of goods for credit attribution
- Admissibility of documentary evidence

Analysis:

The appellants appealed against the confirmation of demand only, contesting the contravention of Rule 3(3) of Cenvat Credit Rules, 2002 and the imposition of penalty under Rule 13 of the same rules. The case involved the appellants' utilization of the cenvat credit account for payment of duty, specifically in scenarios related to the months of August and September 2003. The dispute centered around the applicability of Rule 3(3) of Cenvat Credit Rules, 2002 concerning the utilization of credit for duty payment and the physical receipt of goods for credit attribution.

The appellants argued that they had paid the duty in full, rendering the demands unsustainable. They contended that the provisions of Rule 3(3) of Cenvat Credit Rules did not apply to their case as they had utilized available credit for duty payment. Additionally, they claimed that the credit for September 2003 was attributable to them as they physically received the goods in their factory on 30.09.2003, citing a relevant tribunal decision to support their position.

On the contrary, the Revenue asserted that no credit was available to the appellants for the defaulting period, emphasizing the necessity of complying with Rule 3(3) of Cenvat Credit Rules. They disputed the appellants' claim of physically receiving goods on 30.09.2003, highlighting the absence of supporting documentation such as a gate pass for goods entry. The Revenue maintained that the demands were justified based on the applicable rules and factual discrepancies regarding the goods' receipt.

After considering both parties' submissions, the judge found that the demand for August 2003 was valid as the appellants had not discharged their duty liability under Rule 8 of Central Excise Rules, thus precluding them from utilizing credit for September 2003. However, regarding the demand for September 2003, the judge agreed with the Commissioner (Appeals) that the appellants had failed to substantiate their claim of physically receiving goods on 30.09.2003. Consequently, the judge upheld the demand for August 2003 but dropped the demand for September 2003, allowing the appellants to utilize the available credit for duty payment.

The judge dismissed the applicability of the cited case law to the present case and disposed of the appeal accordingly, concluding the matter based on the specific circumstances and legal provisions at hand.