2016 (8) TMI 620 - AT - Central Excise

Cenvat credit - availment of second 50% of credit on various capital goods - non-maintainance of proper records and non-production of relevant documents in support of these credits - Held that - out of 242 invoices, 210 original documents were produced. For the remaining, photocopies of the documents were produced. These documents in original alongwith the register/records relating to capital goods were taken over by the officers of Central Excise Intelligence in October 2009 in connection with certain investigations. It is seen from the Annexure to the seizure Panchnama dated 20/8/2009, the various connected documents relevant to the disputed credit were taken over by the officers. Even otherwise, I find no justification for the denial of credit as the first portion of 50% credit on various capital goods, components and spare parts have been duly allowed with no objection whatsoever by the Revenue. There is no allegation of diversion of any goods on which these credits have been availed. There is no allegation regarding non-availability of any goods on which credit has been taken. In the absence of such allegation, no justification found in denying the second half of credit on the reasons stated in the impugned order. - Decided in favour of assessee

Summary

Issues:
- Denial of Cenvat credit on capital goods due to lack of proper records maintenance.
- Dispute over availing the second 50% credit on capital goods.
- Allegation of non-availability of original documents for some invoices.

Analysis:

Issue 1: Denial of Cenvat credit on capital goods
The appellants, engaged in manufacturing excisable goods, availed Cenvat credit on capital goods. The Revenue initiated proceedings against them, denying credit due to alleged failure in maintaining proper records as per Cenvat Credit Rules. The Original Authority observed that original documents for certain credits were not produced, leading to the denial of credit.

Issue 2: Dispute over availing the second 50% credit
The appellant contended that the first 50% credit on capital goods had been availed without objection over the years. However, the Revenue questioned the availing of the second 50% credit in August 2011, citing non-availability of records for past periods and absence of some original invoices. The appellant argued that the credit availability had never been challenged on merit, and there were no allegations of diversion of items for which credit was taken.

Issue 3: Allegation of non-availability of original documents
The lower Authorities, supported by the Authorized Representative, maintained their findings regarding the denial of credit based on the lack of original documents for certain invoices. However, during the hearing, it was revealed that out of 242 invoices, 210 original documents were produced, while photocopies were provided for the remainder. The officers of Central Excise Intelligence had taken over the original documents and records in connection with investigations in 2009.

The Member (Technical) examined the appeal records and found that the availability of credit on capital goods was not disputed on merit. The first 50% credit had been availed and utilized without any objection from the Revenue. Despite the non-availability of some original documents, the Member noted that there were no allegations of diversion of goods or non-availability of items for which credit was taken. The Member concluded that there was no justification for denying the second half of the credit based on the reasons stated in the impugned order. Consequently, the impugned order was set aside, and the appeal was allowed.