2017 (5) TMI 133 - AT - Central Excise

Shortage of goods - CENVAT credit - case of Revenue is that the CENVAT credit availed by the appellant is not available on that portion of the pet coke which was not received in the factory as the same has not been used in the manufacture of final products - Held that - The appellant had not intimated the short receipt of goods to the jurisdictional Central Excise Authorities and unless the Departmental officers audited the records, the said irregular availment of Cenvat Credit would not have come to the knowledge of the Department - the decision of the Adjudicating Authority in disallowing the irregularly availed Cenvat Credit and demanding of appropriate interest and also imposition of penalty u/r 15(2) of CCR, 2004 read with Section 11AC of CEA, 1944 is legal and proper - appeal dismissed - decided against appellant.

Summary

Issues: Appeal against disallowance of irregularly availed CENVAT credit on imported pet coke.

Analysis:
1. Facts of the Case: The appellant, engaged in cement manufacturing, availed CENVAT credit on imported pet coke. An audit revealed an excess credit of ?4,11,992 due to a discrepancy in the quantity received.

2. Legal Provisions: The show-cause notice invoked Rule 15(2) of CENVAT Credit Rules, 2004, and Section 11AC of the Central Excise Act, 1944 for recovery of irregularly availed credit, interest, and penalty.

3. Appellant's Argument: The appellant claimed the discrepancy was due to weighment differences, handling loss, or invisible loss, which were negligible. They cited permissible errors in weight under the Weights and Measurement Rules and contended full duty was paid on the imported inputs.

4. Department's Stand: The department argued that CENVAT credit cannot be availed on pet coke not physically received in the factory if not used in manufacturing final products.

5. Commissioner's Decision: The Commissioner upheld the disallowance of credit, emphasizing that credit eligibility arises only upon physical receipt in the factory. Referring to precedents, the Commissioner found the denial of credit legal and proper due to the shortfall in received quantity.

6. Judgment: The Tribunal, after considering submissions and case laws, upheld the Commissioner's decision. The Commissioner's specific finding highlighted the necessity of physical receipt for credit eligibility and the lack of compensation for the shortfall. Consequently, the appeal was dismissed, affirming the disallowance of irregularly availed CENVAT credit on the imported pet coke.

This detailed analysis of the judgment outlines the key legal and factual aspects considered, the arguments presented by both parties, the legal provisions invoked, and the ultimate decision rendered by the Tribunal.