2015 (2) TMI 516 - AT - Central Excise

Availment of SSI exemption - CENVAT Credit - Suppression of stock - Held that - Counsel submitted a worksheet according to which it is seen that CENVAT inputs contained in the closing stock of the final product is only 18,087 kilogram and duty payable on that quantity is only ₹ 40,166/-. The learned counsel drew my attention to another worksheet which showed the details of invoices on which credit was taken and the learned counsel submitted that appellant had followed FIFO method and arrived at the quantum of cenvated inputs used in the final products and such cenvated inputs contained in the final product lying in stock. Prima facie, I found that worksheet to be in order and even though learned AR requested that the matter may be remanded for verification, I find that in view of the submissions by the learned counsel that the figures are correct and the unit has closed down and now it may not be possible to do any further verification also even though learned counsel promised to produce records. Accordingly, the appellant is directed to deposit the amount of CENVAT credit worked out by them with interest within eight weeks and report compliance on 6.3.2015. After noting the compliance, the matter will be finally decided. Prima facie, I have also taken a view that this is not a case where penalty should be imposed since this type of mistake can be made by SSI units. - Decided partly in favour of assessee.

Summary

Issues:
1. Failure to reverse CENVAT credit of duty taken in respect of closing stock as on 31.3.2010.
2. Erroneous quantification of demand for duty.
3. Allegation of suppression.
4. Contradictory findings in show cause notice.

Analysis:
1. The Appellant, a Small Scale Industry (SSI) unit, faced proceedings for not reversing the CENVAT credit of duty taken in relation to the closing stock as of 31.3.2010. The Department issued a show cause notice (SCN) for the recovery of CENVAT credit on the assumption that 80% of the pig iron in the closing stock was of CENVAT availed quantity. However, the Appellant contended that the actual CENVAT contained stock was only 18,087 kilograms, not the 50,778 kilograms assumed by the Department.

2. The learned counsel for the Appellant presented a worksheet showing that the duty payable on the actual CENVAT inputs in the closing stock was only &8377; 40,166, contrary to the Department's demand of &8377; 1,12,732. The counsel demonstrated that the Appellant had followed the FIFO method to calculate the CENVAT inputs used in the final products and in stock. Despite the Department's request for remand for verification, the Tribunal found the figures provided by the counsel to be correct, considering the Appellant's closure and the impracticality of further verification.

3. The Tribunal acknowledged that the closing stock was reflected in the ER-3 return for the quarter ending March 2010, dismissing the allegation of suppression. The Tribunal also noted the contradiction between the findings in the SCN and the evidence presented by the Appellant, emphasizing the correctness of the worksheet submitted by the Appellant's counsel.

4. Ultimately, the Tribunal directed the Appellant to deposit the calculated amount of CENVAT credit with interest within eight weeks and report compliance. The Tribunal expressed a preliminary view that no penalty should be imposed, recognizing that such mistakes could occur, especially for SSI units. The Tribunal aimed to resolve the matter promptly to avoid unnecessary prolongation and inconvenience to both the Appellant and the Department.