2017 (5) TMI 1759 - AT - Central Excise

CENVAT Credit - diversion of inputs at Jaipur unit or not - HR Coils - allegations made against the appellant is that inputs HR Coils were procured by them and sent directly to the cutters in Jaipur but the Cenvat credit was availed for such inputs - HELD THAT - Even though specific evidence are not forthcoming from the records evidencing receipt of the cut HR coils in the appellants factory the appellant has submitted that they have issued 45 invoices for clearance of the inputs as such and have also paid the Excise duty leviable thereof. From the Chartered Accountants certificate submitted by the appellants it emerges that out of total raw material procured during the disputed period the significant part has been consumed in the production of final product. It is further evident that books of accounts indicated sale of inputs as such. The duty payment on 45 invoices used by the appellant evidencing clearance of the inputs is not disputed. The total demand raised in the show cause notice and upheld by the lower authorities need to be reduced to the extent of duty already paid for inputs cleared as such - the matter remanded to the original adjudicating authority for considering the plea of the appellant for such reduction of the duty demand. The appellant is free to submit evidence in their possession to substantiate their claim. Appeal allowed by way of remand.

Summary

Issues:
1. Availing Cenvat credit on HR coils without bringing them to the factory.
2. Allegations of diverting inputs without proper documentation.
3. Disputed duty demand and clearance of inputs.

Analysis:

Issue 1: Availing Cenvat credit on HR coils
The appellant, a steel tube manufacturer, availed Cenvat credit on HR coils purchased from SAIL depots without bringing them to their factory. The DGCEI alleged diversion of coils without bringing them to the factory, leading to a Show Cause Notice proposing to deny Cenvat credit. The appellant contended that after cutting the coils, they were brought to the factory for further use in manufacturing, but in some cases, coils were sold directly from Jaipur. The department focused on one invoice, disregarding others related to the matter. The impugned order was challenged on these grounds.

Issue 2: Allegations of diverting inputs
The Revenue argued that the appellant failed to provide documentary evidence of receiving cut HR coils from Jaipur cutters, leading to the rejection of their claim regarding the sale of inputs and reversal of credit. The investigation suggested diversion of inputs at Jaipur without reaching the factory. The lower authorities upheld the decision due to lack of evidence supporting the appellant's submissions.

Issue 3: Disputed duty demand and clearance of inputs
The Chartered Accountant's certificate submitted by the appellant certified the material procured, consumed, and cleared as such, amounting to nearly Rs. 30 lakhs paid as Excise duty. The tribunal acknowledged the duty payment on 45 invoices for input clearance. Considering the evidence and submissions, the tribunal remanded the matter to reevaluate the total demand, allowing the appellant to provide further evidence to support their claim. The tribunal emphasized reducing the duty demand to the extent of duty already paid for inputs cleared as such, directing the adjudicating authority to conduct de novo proceedings.

In conclusion, the tribunal set aside the impugned order and remanded the case for reevaluation, emphasizing the need for the appellant to substantiate their claim with evidence. The decision highlighted the importance of proper documentation and evidence in availing Cenvat credit and clearing inputs to resolve the disputed duty demand effectively.