2014 (10) TMI 232 - AT - Central Excise

Benefit of Cenvat credit of duty paid - Non receipts of inputs - Held that - Commissioner has scrutinized the appeals records and found that the inputs received under the cover of invoice No. 13 and 14 both dated 5-5-2004 were entered in the RG 1 part 23A register and were issued for use either on the very same day or on the next date. However, he has observed that since the debit note for the lower quality goods was issued by the appellants, after a period of 4 months from the date of receipt and use of the inputs in the factory, and inasmuch as the raw materials received by the appellants were used in the factory without any complaint about the quality and as the appellant never lodged written complaint with the supplier, it has to be held that he has not received the inputs - no inputs were received by the appellant, has not been passed on any concrete evidence. There is nothing on record to show that the appellant has not received the goods. In fact the appellants have shown the receipt of the goods in their statutory RG 1 part 23A documents and has also shown the use of the same in the manufacture of final product and the final product stand cleared by them on payment of duty. As such, I find no merits in the Revenue s stand that the appellant s has not received the inputs. Accordingly, the impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Availment of Cenvat credit on aluminum ingots.
2. Quality of raw materials received.
3. Dispute over the receipt of inputs.

Analysis:
1. The appellant, engaged in manufacturing aluminum alloy ingots, procured aluminum sections and ingots from a supplier, availing Cenvat credit of duty paid by the supplier. Investigation revealed the supplier's inadequate manufacturing infrastructure.

2. Central Excise officers visited the appellant's factory and found they availed credit based on invoices from the supplier. The appellant admitted purchasing raw materials from the supplier, which were found to be sub-standard. A debit note was issued to the supplier for sub-standard goods used in the final product cleared after duty payment.

3. Proceedings were initiated against the appellant for availing credit based on questionable invoices, leading to a demand for duty payment and penalty imposition. The Commissioner upheld the decision, citing delayed issuance of debit note as evidence of non-receipt of inputs.

4. The appellate tribunal overturned the decision, noting that the delay in issuing the debit note did not negate the receipt of inputs. The tribunal found no concrete evidence supporting the Revenue's claim that the appellant did not receive the goods. The appellant's records and use of inputs in manufacturing final products, cleared after duty payment, indicated receipt of inputs.

5. The tribunal concluded that the dispute over the quality of inputs and subsequent actions did not prove non-receipt of inputs. The Revenue's stance lacked merit as the appellant's statutory documents and manufacturing process demonstrated receipt and utilization of inputs. The tribunal set aside the order, allowing the appeal in favor of the appellant.