2017 (12) TMI 896 - AT - Central Excise

CENVAT credit - Removal of goods - It is the allegation of the department that the appellant after receipt of the said goods from the buyer, removed the same as such and accordingly, the appellant was liable to reverse the equivalent amount of Cenvat credit taken by it at the time of receipt of the finished goods from the buyers - Held that - Since the onus lies on the appellant to show that the finished goods received from the buyers were in fact subjected to certain processes carried out in its factory, I am of the view that the plea raised by the appellant that goods were removed as such, cannot be accepted. Considering the submission of the ld. Advocate that the appellant is in possession of adequate material to demonstrate that the goods received from the buyer were further processed in its factory and thereafter, were sold to the buyers, the matter can be remanded to the original authority for verification of the documents to be produced by the appellant - appeal allowed by way of remand.

Summary

Issues:
Appeal against order passed by Commissioner (Appeals) regarding availing Cenvat credit and duty payment on returned goods.

Analysis:
The appellant, engaged in steel forgings manufacture, availed Cenvat credit for Central Excise duty paid on inputs and service tax on input services. During 2010-2011, finished goods removed from factory were returned by buyers, and appellant availed Cenvat credit on re-receipt. Department alleged removal of goods without reversing Cenvat credit, leading to show cause proceedings. Commissioner (Appeals) upheld demand of differential duty, interest, and penalty. Appellant argued goods underwent processes before removal, not in as-it-is condition, hence sub rule (2) of Rule 16 not applicable. Revenue contended lack of evidence on specific operations conducted on returned goods. Tribunal found appellant failed to provide evidence of manufacturing activities on returned goods, shifting onus to appellant to demonstrate processing before sale. Remanded matter to original authority for verification based on documents to be submitted by appellant. If proven that goods underwent further processing before sale, duty under transaction value to be applied.

This judgment emphasizes the importance of providing evidence to support claims regarding processing of goods before sale to avail benefits under Central Excise rules. It highlights the need for clear documentation and verification to establish compliance with duty payment regulations. The decision to remand the matter for further verification underscores the significance of substantiating claims with adequate material to ensure fair adjudication.