2016 (10) TMI 952 - AT - Central Excise

Denial of CENVAT credit - demand of duty along with interest and penalty - Stainless Steel Pipes - entries in RG-1 register - Held that - The appellant has brought in duty paid pipes and availed the Cenvat credit of the duty paid thereon. However they appeared to have made a procedural mistake in making entry directly in RG-1 instead of making entry in RG-23 Pt. I. From the elaborate reconciliation chart produced by the appellant of which some sample entries have been verified by me it is seen that the pipes imported are subjected to further processes such as drawing annealing heat treatment etc. the resultant pipes of different dimensions have also been cleared on payment of duty. It also prima facie appears that keeping in view the value addition at the hands of the appellant the duty paid at this stage of the finished product is likely to have been more than the duty for which credit was taken. But to come to a definite conclusion it would be necessary to go through in detail the reconciliation chart prepared elaborately by the appellant which indicates disposal of inputs bill of entrywise. For the purposes of carrying out the detailed verifications I remand the case back to the original Adjudicating Authority. The appellant is directed to render all necessary help and explanation to enable smooth verification of the same. The original Adjudicating Authority will pass orders denovo after considering the claim of the appellant. The appeal is disposed of by way of remand.

Issues:
1. Irregular Cenvat credit availed by the appellant.
2. Disallowance of Cenvat credit by the original Adjudicating Authority.
3. Appeal filed against the order of the Commissioner (Appeals) challenging the disallowance of Cenvat credit.
4. Controversy arising from the audit party's observations regarding the irregular Cenvat credit availed by the appellant.
5. Argument of the appellant regarding the import and processing of Stainless Steel Pipes.
6. Reconciliation chart submitted by the appellant to support their claim.
7. Failure of the authorities to consider the reconciliation chart.
8. Detailed explanation provided by the consultant regarding the reconciliation chart.
9. Alternate argument presented by the consultant regarding eligibility for credit under Rule 16 of the Central Excise Rules.
10. Agreement by the Authorized Representative for remand to the original Adjudicating Authority for verification.
11. Detailed analysis by the Member (Technical) of the CESTAT and decision for remand.

Analysis:
The appeal in this case was directed against the order passed by the Commissioner (Appeals), Jaipur, regarding the disallowance of irregular Cenvat credit availed by the appellant, who is engaged in the manufacture of Stainless Pipes and Tubes. The controversy arose when the audit party observed that the appellant had irregularly availed Cenvat credit for imported goods that were subsequently cleared on payment of duty. The appellant argued that the imported Stainless Steel Pipes were further processed within their factory before being cleared, justifying the Cenvat credit availed. They admitted to making entries in the wrong register but provided a reconciliation chart to support their claim, which was not considered by the authorities.

The consultant representing the appellant explained in detail the entries in the reconciliation chart, highlighting the processing of imported goods and the subsequent clearance of finished products on payment of duty. The consultant also presented an alternate argument under Rule 16 of the Central Excise Rules, allowing duty paid goods to be remade or refined. The Member (Technical) of the CESTAT analyzed the reconciliation chart and acknowledged the procedural mistake made by the appellant in recording entries. The Member found prima facie evidence of value addition by the appellant and decided to remand the case back to the original Adjudicating Authority for further verification.

The Member directed the appellant to provide necessary assistance for the verification process, emphasizing the need for a detailed examination of the reconciliation chart to reach a definitive conclusion. The decision to remand the case for denovo consideration by the original Adjudicating Authority was made to ensure a thorough review of the appellant's claim and the supporting documentation. The appeal was disposed of by way of remand, allowing for a comprehensive reassessment of the Cenvat credit issue.

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