2017 (8) TMI 589 - AT - Central Excise

CENVAT credit - inputs written off in Balance Sheet - demand has been confirmed against the appellant on the finding that they have not been able to establish the possession of written off inputs as directed by the Tribunal in the first round of litigation - Held that - There cannot be any doubt to the legal issue that such establishment is required to be done by the appellant himself as the onus is upon him. When the factual verification of inputs was conducted by the Revenue only 31 part nos. were found in their stock. The appellant has not been able to explain the use or removal of the balance 484 nos. of parts. If it is the appellant s stand that such parts were used by them in the manufacture of their final products, it is for them to establish the same by production of the relevant documents. Merely because certain issuance of the parts has been reflected in their statutory records, the same does not automatically leave to the inevitable conclusion that such issuance was in respect of the very same written of inputs - appeal dismissed - decided against appellant.

Summary

Issues:
1. Demand raised on written-off inputs during 1996-98.
2. Fresh demand initiated due to unavailability of inputs.
3. Verification revealing availability of only 31 out of 515 part numbers.
4. Commissioner (Appeals) order regarding re-crediting Cenvat credit.
5. Appellant's failure to establish possession or use of written-off inputs.
6. Opportunity provided by Commissioner (Appeals) to establish use or clearance of obsolete parts.

Analysis:

Issue 1:
The appellants faced a demand raised by Revenue on inputs written off during 1996-98. The Tribunal's decision allowed the appeal but granted Revenue the liberty to raise fresh demands if inputs were removed or unavailable.

Issue 2:
Revenue initiated fresh proceedings via a Show Cause Notice, alleging unavailability of inputs based on a verification report. A demand of ?14,73,809/- was confirmed, upheld by the Commissioner (Appeals), leading to the present appeal.

Issue 3:
Verification revealed only 31 out of 515 part numbers were available with the appellant. Lack of stock for the remaining parts raised questions regarding their use or removal, as explained in the impugned order.

Issue 4:
The Commissioner (Appeals) ordered re-crediting Cenvat credit based on specific conditions for different part numbers, emphasizing the need for material evidence to support claims regarding obsolete items.

Issue 5:
The appellant failed to establish possession or use of written-off inputs, as acknowledged by their advocate. The onus was on the appellant to provide evidence, and the lack of requisition or issuance slips hindered their case.

Issue 6:
Despite the appellant's inability to prove the use of obsolete parts, the Commissioner (Appeals) provided an opportunity to establish this with material evidence. The order was deemed judicious and in line with principles of natural justice, leading to the rejection of the appellant's appeal.