2014 (8) TMI 180 - AT - Central Excise

Denial of CENVAT Credit - input credit on cement received in their factory - difference of weighment shown in the invoice and actually done in assessee s factory - Held that - Appellant have taken the credit on the basis of invoices issued by the supplier and quantity mentioned therein. There is no allegation against the appellant that the goods have been diverted during the transit or there is any pilferage of the goods during the course of transportation. Further, if the appellant had not weighed the inputs in their factory, they were entitled to take credit on the quantity mentioned in the invoice issued by the supplier. As there is no allegation of diversion or pilferage and considering the fact that in some cases weight is short and weight is excess, it is held that it occurred only due to the various method of weighment of the goods. Moreover, considering the fact that the goods in question is cement , there may be a transit loss of the goods like cement. Therefore, considering the fact that the shortage of input on weighment is found near about 2% of the total quantity and in some cases it was found to be excess, the loss of 2% of cement during the course of transportation is to be held as mirage. In these circumstances, the Cenvat credit cannot be denied. As the appellant has taken the Cenvat credit on the basis of invoice issued by the supplier and the quantity mentioned therein, therefore, the appellant are entitled for the Cenvat credit - Decided in favour of assessee.

Summary

Issues: Denial of input credit on cement due to difference in weighment shown in the invoice and actually done in the factory.

Analysis:
The appellant, a cement manufacturer, appealed against the denial of input credit on cement received in their factory due to discrepancies in weighment. The goods were transported from the mother plant in Gujarat to Navi Mumbai through water channels and road tankers. The weighment of the loaded tankers before and after unloading showed variations in weight, leading to the denial of Cenvat credit by the department. The appellant argued that the differences were due to various weighment methods, with a maximum difference of 2% of the total quantity. They contended that they had paid duty as per supplier invoices and should be allowed the credit. The department, however, insisted that credit should only be allowed for the quantity physically received by the appellant.

Upon hearing both sides, the tribunal considered the submissions. It was noted that there were no allegations of diversion or pilferage during transit, and the discrepancies in weight were attributed to different weighment methods and potential transit losses for cement. Given that the appellant had taken credit based on supplier invoices and the absence of evidence of wrongdoing, the tribunal held that the discrepancies were within acceptable limits. The tribunal concluded that the denial of Cenvat credit was unwarranted, setting aside the impugned orders and allowing the appeals with consequential relief.