2014 (9) TMI 867 - AT - Central Excise

Discrepancy in RG-1 Register - Non supply of documents - Held that - Though the appellant have requested for supply of copy of RG-1 register, the same has not been supplied and according to the appellant, on the basis of the copies of the invoices available with them, they can prove that there is no discrepancy between the consumption of the raw material as recorded in RG 23A register and the raw material consumption based on the manufacture and clearance of the final product. The Commissioner has not given any finding on the appellant s request for supply of copies of the RG-1 register. In view of this, we are of the view that the impugned order is not correct. The same is set aside and the matter is remanded to the Commissioner for denovo decision after supplying the copies of the RG-1 register and other relied upon documents and also taking into account the invoices submitted by the appellant - Decided in favour of assessee.

Summary

Issues: Alleged wrongful availment of Cenvat credit on raw materials; discrepancy in raw material consumption records; appeal against order confirming demand, interest, and penalties.

The judgment addresses the issue of alleged wrongful availment of Cenvat credit on raw materials by a company manufacturing Armored and un-armored cables chargeable to Central Excise duty. The Central Excise officers visited the company's unit and determined the quantity of raw materials - copper and aluminum - received, against which Cenvat credit had been availed. The officers calculated raw material consumption based on an input-output ratio, alleging that the company showed a higher consumption of raw materials than should have been based on their production output. Consequently, a demand of Rs. 59,78,101 was confirmed for the period from 2006-2007 to 2008-2009, along with interest and penalties imposed on the company and a partner.

The judgment also discusses the arguments presented by both sides during the hearing. The company's counsel contended that the demand was based on incorrect consumption calculations, as there was no significant discrepancy between the raw material consumption recorded in the registers and the actual consumption based on finished product quantities. The company claimed that the discrepancy could be explained by factors like burning loss. In contrast, the Department defended its findings based on the Commissioner's conclusions.

Upon reviewing the submissions and records, the tribunal found that the company consistently maintained that there was no discrepancy in raw material consumption records. The tribunal noted that the company had requested a copy of the RG-1 register, which was not provided, hindering their ability to demonstrate the accuracy of their consumption records. As a result, the tribunal set aside the impugned order and remanded the matter to the Commissioner for a fresh decision. The tribunal directed the Commissioner to provide the requested documents and consider the invoices submitted by the company before making a new determination. Consequently, the appeals and stay applications were disposed of accordingly.