2017 (8) TMI 94 - AT - Central Excise

CENVAT credit - receipt of rejected goods - rejection of credit on the ground that the appellant had not maintained separate records of receipt use and disposal of the rejected/returned goods nor they could establish that these goods were rejected by the customer and later received in the factory - Held that - Ld. advocate for the appellant placed a chartered accountant s certificate to show that all these rejected goods were appear on payment of duty after the removal of the defects and the duty paid was more than the credit availed on the rejected goods. All these claims and counter claims need to be scrutinized in detail by the adjudicating authority. For verification of the said facts both sides fairly accept that the matter needs to be remanded to the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
Appeal against disallowance of Cenvat credit on rejected goods due to lack of separate records of receipt and disposal.

Analysis:
The appellant, engaged in manufacturing Mosaic Tiles and Solid Paver Blocks, availed Cenvat credit on rejected finished goods without maintaining proper records. The demand notice for recovery of credit, interest, and penalty was issued as no records of receipt and disposal were maintained. The appellant contended that rejected goods were directly entered in their register and sold after payment of duty, supporting their claim with a Chartered Accountant's certificate and sales invoices.

The Revenue argued that some sales invoices were ante-dated, questioning the legitimacy of the credit claimed. Both authorities disallowed the credit due to lack of maintained records. The issue was whether the appellant received rejected goods and correctly availed Cenvat credit. The appellant insisted on the receipt and processing of rejected goods, while the Revenue pointed out discrepancies in the invoices.

After hearing both sides, the Tribunal found the need for detailed scrutiny regarding the receipt, processing, and sale of rejected goods. The matter was remanded to the adjudicating authority for further examination. The appellant was granted a reasonable opportunity of hearing, and the appeal was allowed for remand to the adjudicating authority for a fresh decision.