2014 (1) TMI 417 - AT - Central Excise

Capital goods cleared as scrap Notice issued under Rule 57S(2)(C) of Central Excise Rules, 1944 Duty demand on transaction value of the scrap Held that - The demand has been confirmed by invoking Rule 57S (2)(C) of the Central Excise Rules 1944 on the ground that scrapped capital goods were Cenvat credit availed - There is absolutely no evidence on record to show that the Cenvat Credit had been availed in respect of the capital goods which were subsequently cleared as scrap - if the department alleges that the scrap of capital goods was Cenvat credit availed, it was for the department to prove so Following Shahabad Coop. Sugar Mills Ltd. vs. CCE, Panchkula 2010 (8) TMI 561 - CESTAT, NEW DELHI Orders set aside Decided in favour of Assessee.

Summary

Issues:
Demand of excise duty on scrap of capital goods cleared by the appellant invoking Rule 57S(2)(C) of Central Excise Rules, 1944 based on the ground of Cenvat credit availed.

Analysis:

Issue 1: Demand of excise duty on scrap of capital goods

The appellant cleared scrap of capital goods from April 1996 to March 2000, and a show cause notice was issued by the department invoking Rule 57S(2)(C) of the Central Excise Rules, 1944 for demanding an amount equal to the excise duty on the transaction value of the scrap. The basis for this demand was that the capital goods cleared as scrap had availed Cenvat credit. The jurisdictional Additional Commissioner confirmed this demand through an order dated 23.9.03, which was further upheld by the Commissioner (Appeals) in an order dated 25.10.04, leading to the filing of the current appeal.

Issue 2: Lack of evidence for Cenvat credit availed

Upon hearing both sides and examining the records, the Tribunal found that the demand was confirmed under Rule 57S(2)(C) on the premise that the scrapped capital goods had availed Cenvat credit. However, the Tribunal noted a crucial lack of evidence on record to substantiate that Cenvat credit had indeed been availed concerning the capital goods subsequently cleared as scrap. It was emphasized that when the department alleges that scrap of capital goods was Cenvat credit availed, the burden of proof lies with the department. In the absence of such evidence, the Tribunal found the impugned order unsustainable. The Tribunal referred to a similar view taken in the case of Shahabad Coop. Sugar Mills Ltd. vs. CCE, Panchkula, Final order No. 966/10-SM dated 27.8.2010, reinforcing the requirement for the department to establish the availing of Cenvat credit, which was not met in the present case. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

This judgment highlights the importance of substantiating allegations with concrete evidence and upholding the principle that the burden of proof rests with the party making the claim. The decision underscores the necessity for the department to establish claims such as Cenvat credit availed through sufficient evidence to support their demands effectively.