2016 (9) TMI 42 - AT - Central Excise

Cenvat credit - rejected/returned goods - credit took on the RBA series invoices and linked to their own original invoices reference - invokation of extended period of limitation - Held that - wherever the appellant has been able to produce the documents correlating the return of the goods, he has been given benefit of the same and wherever the appellant has not been able to produce any document to substantiate their claim of return of the goods to the assessee as ordered by the Tribunal and the Commissioner (Appeals) and based on copies of the RBA invoices, this could not be established or proved that the goods were actually received by the appellant. Further, the extended period has rightly been invoked as the appellant has suppressed the facts from the department that he was availing credit on the RBA series of invoices. - Decided against the appellant

Summary

Issues:
- Disallowance of Cenvat credit on returned goods
- Invocation of extended period for demand under Central Excise Act, 1944

Disallowance of Cenvat credit on returned goods:
The case involved the appellant, a manufacturer of Industrial Paints, Thinners, and Powder Coatings, who received goods rejected by customers as sales returns during September 2004 to September 2005. The appellant had taken credit based on RBA series invoices but did not possess the original duty paying documents or invoices from customers. The Department objected to the credit availed, citing contravention of Rule 9(1)(a) of Cenvat Credit Rules, 2004. A show-cause notice was issued, leading to disallowance of Cenvat credit by the Joint Commissioner of Central Excise. The Commissioner (Appeals) upheld the order-in-original, prompting the appellant to appeal before CESTAT, Bangalore.

Invocation of extended period for demand under Central Excise Act, 1944:
The CESTAT remanded the case to verify the correctness of documents furnished by the appellant. Despite producing xerox copies of RBA and IBA invoices, the original documents were not available. The adjudicating authority confirmed the demand with interest and penalty. The Commissioner (Appeals) allowed partial credit but disallowed a significant amount. The appellant contended that the denial of credit was beyond the scope of the show-cause notice. The appellant also argued that the extended period was wrongly invoked, emphasizing no suppression of facts. The Commissioner (A.R.) supported the findings of the Commissioner (Appeals), stating that the impugned order was lawful after examining all documents.

In the final judgment, the Tribunal noted that the appellant had failed to provide sufficient evidence to substantiate the return of goods. The Tribunal upheld the disallowance of Cenvat credit where no corroborative evidence was presented by the appellant. The extended period was deemed rightly invoked due to the appellant's failure to disclose availing credit on RBA series of invoices. The Tribunal dismissed the appeal, affirming the order disallowing a portion of the credit.