2013 (9) TMI 493 - AT - Central Excise

CENVAT credit - the allegation is that the evidence of physical receipt of that quantity of alumna hydrate is not available in the appellant s record - stay - Held that - Prima facie the Commissioner confirming the receipt of the consignment of Alumina Hydrate up to the weight bridge of the factory, and also the fact that the receipt of Hydrate Alumina was being shown in the item receipt report being maintained by the appellant, the Commissioner s decision to disallow the credit on the account of appellant s failure to maintain the proper records regarding receipt of Hydrate Alumina was not correct, more so, when on comparison the receipt entries regarding Alumina in RG-23-A Register with the quantity of Alumina hydrate mentioned in the invoice, it is seen that the quantity has been entered in the RG-23 A Register after converting the weight of the Ajurnina hydrate into Calcined Alumina, When the receipt entry in the RG-23 Register regarding receipt of Aluminium was matched with the quantity of mentioned in the invoices - it was seen that the quantity of Alumina had been entered in the RG-23 A Register after dividing the weight of Alumina hydrate, as mentioned in the invoices, by 1.53 i.e. after converting the weight of Alumina Hydrate into the weight of Calcined Alumina - as per report received from the Range office, the record of receipt of Alumina Hydrate upto weight bridge was ascertained. Waiver of Pre-deposit - Prima facie the appellant have strong prima facie case and asking them to pre-deposit of the Cenvat credit demand, interest and penalty would cause undue hardship to them - Therefore, the requirement of pre-deposit was waived for hearing the appeal and recovery was stayed till the disposal of the appeal Stay Granted.

Summary

Issues:
- Dispute over availing Cenvat credit for Alumina Hydrate
- Allegation of failure to maintain proper records
- Confirmation of Cenvat credit demand, interest, and penalty by Commissioner
- Appeal against the Commissioner's order and stay application

Analysis:
- The appellant, engaged in manufacturing aluminum products, faced a dispute regarding availing Cenvat credit for Alumina Hydrate. The appellant received duty paid Alumina Hydrate but lacked physical evidence of its receipt in their records, leading to the denial of Cenvat credit. The show cause notice demanded Rs.3,35,45,318/- Cenvat credit, interest, and penalty under Cenvat Credit Rules.

- The Commissioner confirmed the entire Cenvat credit demand, interest, and imposed a penalty of Rs.5 Lakhs on the appellant. The appellant filed an appeal challenging this order, emphasizing that they maintained records of Calcined Alumina, derived from Alumina Hydrate through a specific conversion factor, and that the department acknowledged the receipt of Alumina Hydrate in the factory.

- The appellant argued that the denial of Cenvat credit based on technical grounds was unjustified. The Commissioner accepted the receipt of Alumina Hydrate up to the factory's weighment bridge but rejected the appellant's Item Receipt Report, citing non-declaration under Central Excise Rules. The appellant contended that the conversion of Alumina Hydrate to Calcined Alumina was accurately recorded in their registers.

- Upon review, the Tribunal found that the appellant had a strong prima facie case. The Tribunal observed discrepancies in the Commissioner's decision, noting the acknowledgment of Alumina Hydrate receipt and its recording in the Item Receipt Report. Considering the undue hardship pre-deposit would cause, the Tribunal waived the pre-deposit requirement and stayed the recovery pending appeal disposal. The stay application was allowed on 29.5.2012.