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2016 (6) TMI 228 - AT - Central ExciseCenvat credit availed on capital goods - eligibility - procedure irregularity - Demand of interest and imposition of penalty - Section 11AC of Central Excise Act, 1944 - Held that - merely levelling an allegation based on presumption without actual verification, will not help the case of the revenue to deny credit to the appellant - the Chartered Engineer s certificate produced by the appellant in their defence to prove that the impugned inputs have been used in the furnace and consumed in due course accepted - credit allowed. Procedural irregularity - Held that - appellant had not declared the fabrication of any capital goods /sub-assemblies of capital goods in the ER-1 filed during the relevant period. When the appellant was aware that such goods, on which credit was being taken, were items of general use , they were expected to maintain proper records like issue slip, records showing details of various capital goods / machinery items fabricated during the relevant period , quantity of material issued for fabrication, quantity of scrap generated , documents evidencing installations etc. to show beyond the receipt, consumption and inventory of such goods (MS items) as mandatorily required under Rule 9(5) of the CCR , 2004. Appellant has not taken care to give details of the items which are of general use for which the revenue should not suffer, and at the same time the appellant also should not suffer for not furnishing certain details which are required by the revenue - Decided in favor of assessee by way of remand.
Issues Involved:
1. Eligibility of Cenvat credit on inputs. 2. Eligibility of Cenvat credit on capital goods. 3. Procedural adherence and evidence submission. Detailed Analysis: 1. Eligibility of Cenvat Credit on Inputs: The appellants, manufacturers of TMT Bars, CTD Bars, M.S. Rounds, and M.S. Ingots, availed Cenvat credit on inputs and capital goods used in their manufacturing process. The department alleged wrong availment of Cenvat credit on inputs amounting to ?10,49,211 for the period October 2006 to May 2011. The Commissioner (Appeals) allowed the credit on these inputs, setting aside the demand for interest and penalty. The Revenue's appeal against this decision was based on the argument that the Commissioner (Appeals) failed to consider the allegations in the show cause notice properly. However, the Tribunal upheld the Commissioner (Appeals)'s decision, stating that the inputs were indeed used in the manufacturing process as claimed by the appellants and supported by a Chartered Engineer’s certificate. The Tribunal dismissed the Revenue's appeal, emphasizing that mere allegations without verification cannot deny credit. 2. Eligibility of Cenvat Credit on Capital Goods: The appellants also availed Cenvat credit on capital goods amounting to ?3,11,335, which was denied by the adjudicating authority and upheld by the Commissioner (Appeals). The Commissioner (Appeals) observed that items such as MS Rounds, HR coils, HR plates, MS channels, HR sheets, and MS rectangular bars were of general use and did not qualify as capital goods under Rule 2(a)(A) of CCR, 2004. The Tribunal noted that the appellants failed to maintain proper records and documentation to prove the use of these items as capital goods. The Tribunal remanded the matter to the original authority for a thorough examination and a speaking order, citing the need for factual verification. 3. Procedural Adherence and Evidence Submission: The Tribunal addressed the procedural aspects raised by both parties. The appellants argued that the Commissioner (Appeals) raised issues beyond the scope of the show cause notice, specifically the mandatory requirement under Rule 9(5) of CCR 2004, which was not mentioned in the SCN. The Tribunal agreed that procedural lapses alone cannot be grounds for denial of credit if the substantive requirements are met. The Tribunal also considered the Chartered Engineer's certificate submitted by the appellants, noting that the Revenue did not provide contrary evidence to dispute its validity. Conclusion: The Tribunal dismissed the Revenue's appeal regarding the eligibility of Cenvat credit on inputs, affirming the Commissioner (Appeals)'s decision. The appeals by the assessee concerning the denial of credit on capital goods were allowed by way of remand for further factual verification by the original authority. The Tribunal emphasized the importance of maintaining proper records and documentation to substantiate claims for Cenvat credit and the necessity of a thorough examination of facts in such cases. Orders: 1. The Revenue's appeal is dismissed. 2. The assessee's appeals are allowed by way of remand for further examination by the original authority.
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