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2017 (8) TMI 98 - AT - Central ExciseCENVAT credit - rejected goods - whether the appellants are eligible to avail credit on the rejected goods under Rule 16(1) of the CCR, 2002? - Held that - the duty paid on the transaction value was more than the credit availed on the rejected goods, whereas in few cases, there was marginal short payment of credit, totalling to ₹ 36,803/-. The Ld. Advocate fairly accepts that in the event, the process is considered is not amounting to manufacture than as per Rule 16 (2) of CCR, 2002, they are required to reverse the credit availed on the rejected goods. Therefore, the appellant is required to reverse excess credit of ₹ 36,803/-. Penalty - Held that - the appellant had duly maintained registers/records in the receipt and disposal of the rejected goods supported by evidences like rejected Memos, LRs etc. Thus, they have correctly availed the Cenvat credit; accordingly, imposition of penalty under Rule 15 (2) of CCR, 2002 readwith Section 11AC of the CEA, 1944 is unwarranted/unjustified. Decided partly in favor of appellant.
Issues:
- Appeal against OIA No SRP/135/DMN/2013-14 dated 17.07.2013 by Commissioner (Appeals) - Denial of credit under Rule 16 of CER, 2002 for availed credit on rejected goods - Requirement of evidences to establish receipt of rejected goods in the factory - Imposition of penalty under Rule 15 (2) of CCR, 2002 read with Section 11AC of the CEA, 1944 Analysis: 1. Appeal Against OIA: The appeal was filed against the Order-in-Original (OIA) No SRP/135/DMN/2013-14 dated 17.07.2013 by the Commissioner (Appeals) of Central Excise, Customs & Service Tax-Daman. The appellant, engaged in the manufacture of copper products, received rejected finished goods cleared earlier on payment of duty, availed credit under Rule 16 of CER, 2002. A demand notice was issued for recovery of the credit, which was confirmed with interest and penalty. The appellant appealed against this decision. 2. Denial of Credit on Rejected Goods: The main issue revolved around whether the appellants were eligible to avail credit on the rejected goods under Rule 16(1) of the CCR, 2002. The authorities had denied credit due to insufficient evidence establishing the receipt of the rejected goods in the factory. The appellant contended that they had accounted for the rejected goods in their books, submitted a detailed statement with supporting evidence, and cleared the goods after reconditioning on payment of duty. The appellate tribunal found that the appellant had indeed received the rejected goods, availed credit, and cleared the goods after rectification. The tribunal noted that in cases where the duty paid on the transaction value exceeded the credit availed, the appellant agreed to reverse the excess credit. 3. Requirement of Evidences: The tribunal observed that the appellant had submitted a detailed statement along with evidence such as input invoices, rejection letters, and transporter's challans to support their claim of receiving and reconditioning the rejected goods. The tribunal found that the appellant had maintained proper records and registers documenting the receipt and disposal of rejected goods, which supported their claim for availing the Cenvat credit. The tribunal concluded that the denial of credit based on lack of evidence was unfounded, as the appellant had provided sufficient documentation to establish the receipt and processing of the rejected goods. 4. Imposition of Penalty: Regarding the imposition of penalty under Rule 15(2) of CCR, 2002 read with Section 11AC of the CEA, 1944, the tribunal held that the appellant had maintained accurate records and registers related to the rejected goods, supported by evidence like rejected memos and LR numbers. As the appellant had correctly availed the Cenvat credit and had sufficient documentation to support their claim, the tribunal deemed the imposition of penalty unwarranted and unjustified. Therefore, the tribunal disposed of the appeal by requiring the appellant to reverse the excess credit availed and by rejecting the imposition of penalty. In conclusion, the appellate tribunal ruled in favor of the appellant, allowing them to avail credit on the rejected goods under Rule 16(1) of the CCR, 2002, based on the evidence provided and the proper maintenance of records. The tribunal also found the penalty imposed to be unjustified, given the appellant's compliance with the necessary documentation requirements.
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