2012 (11) TMI 1030 - AT - Central Excise

Denial of CENVAT Credit - Difference in stock - Burden of proof - Held that - The basis of duty demand and the Modvat credit demand in this case is that though in terms of the condition of Notification, the appellant were required to maintain account regarding end-use of the material imported at concessional rate, the end-use register was not properly maintained and that entries in end-use register did not explain the user of 710 imported copper clad laminated sheets. Since the appellant have availed concessional rate under Notification No. 13/97-Cus. and this exemption is subject to end-use condition, the burden is on the appellant to prove that imported material was used for the intended purpose. Since in this case, the records do not show that imported material was used for the intended purpose, we are thus of the view that concessional rate of duty in respect of 710 imported copper clad laminated sheets has been correctly denied as it cannot be said that the same were used for the intended purpose. For the same reason we are of the view that the Cenvat credit of the additional customs duty availed in respect of those laminated sheets has been correctly denied - Decided against assessee.

Summary

Issues:
Import of copper clad laminated sheets under exemption Notification No. 13/97-Cus., duty payment, Cenvat credit availed, discrepancy in accounting for sheets, show cause notice for duty demand, order-in-original, review by Commissioner, appeal before Commissioner (Appeals), grounds of appeal, end-use register maintenance, Modvat credit demand, plea of RUD not supplied, burden of proof on appellant, denial of concessional rate and Cenvat credit.

Analysis:
The case involved the appellant, a manufacturer of printed circuit boards, who imported copper clad laminated sheets under an exemption notification subject to using them for manufacturing printed circuit boards. The appellant imported sheets, availed Cenvat credit, but failed to account for 710 sheets during an inspection, leading to a duty demand and denial of Modvat credit. The Additional Commissioner initially dropped the proceedings, but the Commissioner reviewed and upheld the duty demand and credit denial. The appeal was filed against the Commissioner (Appeals) order.

During the hearing, the appellant's consultant argued that the order ignored relevant facts, emphasizing the lack of investigation on the missing sheets and the existence of registers recording sheet consumption. The Department's representative supported the order, stating the appellant failed to maintain the required end-use register under the exemption notification, justifying the duty demand and credit denial. The appellant's inability to prove the actual use of the sheets due to seized records was highlighted.

Upon review, the Tribunal found that the appellant did not maintain the end-use register properly, failing to explain the use of the 710 imported sheets as required by the exemption condition. As the burden of proof rested on the appellant to demonstrate the intended use of the imported material, and since records did not support such use, the Tribunal upheld the denial of concessional duty rate and Cenvat credit for the 710 sheets. Consequently, the appeal was dismissed based on the correctness of the duty demand and credit denial upheld in the impugned order.