2016 (12) TMI 1444 - AT - Central Excise

Reversal of CENVAT credit - Interest - Penalty - Held that - conclusion arrived at by the Commissioner (Appeals) that the invoice No.s147, 148 & 151 dated 16/10/97 are not for reversal of duty on the pipes but are for some different products is fair and justified. As regards the demand for reversal of credit on capital goods - Held that - the certificate of the Chartered Accountant is not based on the visit of the CA to the factory but it is based on the books of accounts and the balance sheet. The credit cannot be allowed simply on the basis of the entry made in the books of accounts without actual receipt of the goods. The appellants have failed to produce any evidence to establish the said capital goods are available in the factory. As regards the demand of scrap of ₹ 36,867/- I find that defence of the appellant is that there is no calculation given by the revenue as to how they are arrived at the quantity. The revenue has relied largely on a submission by the appellant during earlier adjudication to assert that there has been some generation of scrap and admission of duty. I find that without any evidence, the demand of duty on scrap cannot be sustained - Appeal partly allowed.

Issues Involved:
1. Demand of duty on credit taken on pipes bought from M/s. Man Industries.
2. Demand for reversal of capital goods credit of ?7,953/- for machinery not found in the premises.
3. Demand of duty on scrap generated at job workers' premises but not returned to the appellants.
4. Cenvat Credit taken on welding electrodes amounting to ?42,531/- on the strength of Bills of Entry allegedly not received in the factory.

Detailed Analysis:

1. Demand of Duty on Credit Taken on Pipes from M/s. Man Industries:
The appellant argued that the MS/CS Saw Pipes were directly supplied to their site at Vishakhapatnam and the credit taken on these invoices was reversed by three invoices for goods cleared from their factory. However, the Commissioner (Appeals) found discrepancies in the description, job number, value, and sub-heading number between the invoices received from M/s. Man Industries and those issued by the appellants. The Tribunal upheld this finding, noting that the description under heading 7208.11 could not possibly cover pipes or any product manufactured from pipes. Thus, the demand for duty on the pipes was justified and sustained.

2. Demand for Reversal of Capital Goods Credit of ?7,953/-:
The appellant contended that the welding machine, for which capital goods credit was taken, was always in the factory, supported by a Chartered Accountant’s certificate. However, the Tribunal found that the certificate was based on the books of accounts and balance sheet, not on a physical visit to the factory. The Tribunal concluded that credit could not be allowed merely based on accounting entries without evidence of the actual receipt of goods. Therefore, the demand for reversal of capital goods credit was upheld.

3. Demand of Duty on Scrap Generated at Job Workers' Premises:
The appellant argued that no worksheet or calculation was provided to justify the demand for duty on scrap allegedly not returned from job workers. The Tribunal found that the revenue had largely relied on a previous submission by the appellant, which admitted some generation of scrap and duty. However, in the absence of concrete evidence, the Tribunal concluded that the demand for duty on scrap could not be sustained. Therefore, this part of the appeal was allowed.

4. Cenvat Credit on Welding Electrodes Amounting to ?42,531/-:
The appellant claimed that the welding electrodes were received in their factory, but the revenue relied on the delivery challan from M/s. Rajesh Clearing & Forwarding Agents, indicating delivery at Tarapore. The Tribunal noted that the appellant failed to provide evidence showing that the goods were received in their factory. Consequently, the credit on these goods was disallowed, and the demand was upheld.

Conclusion:
The appeal was partly allowed. The demand of duty on scraps generated at job workers' premises was set aside. However, the demands related to the credit taken on pipes, reversal of capital goods credit, and Cenvat credit on welding electrodes were upheld. Penalty and interest were revised accordingly.

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