2013 (7) TMI 634 - AT - Central Excise

Rule 3(5) of Cenvat Credit Rules, 2004 Registration as a manufacturer and not as a dealer - Appellant imported sodium antimonite and availed the credit of duty paid thereon - Said sodium antimonite was sold by the appellant as such by reversing the entire credit so availed by them - Revenue entertained a view that inasmuch as the assessee had traded in the said sodium antimonite and inasmuch as they were not registered as dealer, they were not entitled to avail Cenvat credit Held that - Rule 3(5) of Cenvat Credit Rules, 2004 provides that when inputs, on which credit has been taken are removed; as such, from the factory, the manufacturer shall pay an amount equal to the credit availed in respect of such inputs - The Tribunal in the case of CCE, New Delhi vs. Topaze Overseas (P) Ltd. 1998 (8) TMI 384 - CEGAT, NEW DELHI has observed that the assessee s registration as manufacturer of same items and not as a dealer is sufficient for the purpose of Notification No. 32/94-CE(NT). Similarly in the case of R S Julliram Shamlal vs. CCE Calcutta 2002 (1) TMI 1070 - CEGAT, KOLKATA , it was held that when supplier of inputs is already registered as a manufacturer separate registration as a dealer is not a ground for denying the Cenvat credit - Credit availed by the assessee stand reversed by them at the time of clearance of goods from their factory and as such, the entire situation is revenue neutral Decided in favor of Assessee. Shortage found in two Raw-Materials - Shortages detected in the lead ingots and zinc ingots - The appellants immediately reversed the said credit Held that - No evidence adduced by the Revenue that the differential quantity of inputs was cleared by the appellant clandestinely - Appellants contention that such shortage may be on account of short quantity received than the invoice quantity is to be accepted - Appellants not agitated the said confirmation of demand and has deposited the same - Imposition of penalty on the appellant is not justified Decided in favor of Assessee.

Summary

Issues:
1. Denial of Cenvat credit for trading in sodium antimonite without being registered as a dealer.
2. Denial of Cenvat credit for shortages in lead and zinc ingots.

Analysis:
1. The appellant, a registered manufacturing unit, imported sodium antimonite, availed Cenvat credit, and later sold it after reversing the credit. The Revenue contended that as the appellant was not registered as a dealer, they were not entitled to the credit. However, the Tribunal cited precedents where registration as a manufacturer, not a dealer, was deemed sufficient for availing credit. The appellant paid the entire credit upon clearance, rendering the situation revenue neutral. The Tribunal found the Revenue's objection unjustified and set aside the demand for credit on sodium antimonite.

2. Regarding shortages in lead and zinc ingots, the appellant explained that the discrepancies were due to differences between invoice and received quantities. The appellant had already reversed the credit for the quantity differences. The Tribunal noted the lack of evidence of clandestine clearance by the appellant and accepted that shortages may have occurred due to lower received quantities. The appellant did not contest the demand and had deposited the amount. Consequently, the Tribunal set aside the penalty imposed on the appellant for the shortages but upheld the demand of Rs.1,47,702.

In conclusion, the Tribunal set aside the demand for credit on sodium antimonite and the penalty imposed, while upholding the demand for shortages in lead and zinc ingots. The appellant's appeal was disposed of accordingly on 25/06/13.