2015 (10) TMI 1330 - AT - Central Excise

Denial of CENVAT Credit - Capital goods - whether credit on certain capital goods and inputs is admissible to appellant s Unit -III for the documents where the name of unit No. I & II was mentioned - Held that - The original objection that documents are in the name of the other units of the appellant was condoned by the first appellate authority. But in the remand proceedings a case was made out that neither the capital goods nor the inputs are received in appellant s Unit-III when it was not at all a fact taken either in the audit objection or in the show cause notice. A letter dated 02.2.2009 was mentioned in the proceedings to hold that the capital goods and inputs were not available in the factory when the same was closed and also when the credit was taken in 2003. A copy of such verification report was also not made available to the appellant. Appellant did produce copies of RG-23 Part-I & II of the credit taking registers to establish that capital goods and inputs were received in the factory of the appellant. The details of the raw material consumption were also made available by the appellant. It is not coming out of the discussion of the adjudicating authority as to why the records maintained by the appellant are not acceptable. The statutory CENVAT taking records are the only authentic documents to establish that capital goods and inputs were received by the appellant when manipulation of records or diversion of inputs/ capital goods are not alleged in the show cause notice. Under the above facts and circumstances appellant has brought on record the fact of receipt and utilisation of capital goods and inputs in the factory premises of the appellant. Minor procedural lapses can not be made the basis of denying the CENVAT credit when the name of other units of the appellant in the documents was also condoned. Extended period is also not invokable in this case. - Decided in favour of assessee.

Summary

Issues:
- Denial of CENVAT credit on capital goods and inputs for Unit-III based on documents mentioning Unit No. I & II.
- Lack of evidence regarding non-receipt of capital goods/inputs in Unit-III.
- Admissibility of credit based on statutory CENVAT records.
- Consideration of procedural lapses in denying CENVAT credit.

Analysis:
The appeal was filed against the order upholding the denial of CENVAT credit of &8377; 4,19,233/- along with interest and penalty. The appellant's representative argued that the credit was denied based on the presumption that inputs and capital goods were never received in Unit-III, even though minor clerical mistakes should not lead to credit denial. The appellant contended that the entire credit was proposed to be denied without providing evidence, as neither the audit report nor the show cause notice indicated non-receipt of goods. The appellant presented RG-23 Part I & II records and consumption accounts to prove receipt and utilization of goods.

The Revenue's representative argued that the capital goods and inputs were not available in Unit-III, justifying the denial of credit. However, the Tribunal noted that the issue was whether credit on capital goods and inputs was admissible to Unit-III despite documents mentioning Unit No. I & II. The first appellate authority condoned the objection regarding documents in the name of other units. The Tribunal highlighted that the records maintained by the appellant, including statutory CENVAT records, were crucial in establishing receipt and utilization of goods. Procedural lapses should not be the basis for denying CENVAT credit, especially when the appellant's records indicated receipt of goods.

After hearing both sides and examining the case records, the Tribunal found that the appellant had demonstrated the receipt and utilization of capital goods and inputs in their factory premises, contradicting the denial of credit. The Tribunal concluded that the denial of credit was not justified, especially considering the lack of evidence regarding non-receipt of goods in Unit-III. Therefore, the appeal was allowed, emphasizing the importance of authentic records in establishing CENVAT credit eligibility and dismissing the invocation of the extended period for the case.