2018 (5) TMI 180 - AT - Central Excise

Clandestine removal - short receipt of the inputs - Held that - the amount debited was due to purity difference and not on account of short receipt of the inputs - As far as demand of credit relating to clearance of waste and scrap of capital goods is concerned, I find that the appellant has accepted an amount of ₹ 27,877/- pertains to metal scrap arising out of capital goods on which credit availed. In relation balance amount of credit they vehemently claimed that it pertains to clearance of fly ash and other scrap being not arose out of discarding the capital goods on which credit availed and accordingly duty is not required to paid on the scrap value - to ascertain the facts, the matter needs to be remanded to the Adjudicating Authority - appeal allowed by way of remand.

Summary

Issues:
1. Denial of Cenvat Credit
2. Demand of Duty on alleged clearance of scrap
3. Remand to Adjudicating Authority

Denial of Cenvat Credit:
The appellant contested the denial of credit of ?39,711 due to alleged short receipt of inputs, arguing that the amount was debited due to purity difference, not short receipt. They claimed that no duty shown on the invoice was varied, and after a chemical test, they issued debit notes to the input supplier for the purity difference. The Tribunal observed that the denial of credit based on short receipt was not sustainable, as the amount was debited due to quality variation, not short receipt. The appellant's sample debit notes indicated the debited amount was due to purity difference. Therefore, the denial of credit of ?39,711 was set aside.

Demand of Duty on alleged clearance of scrap:
Regarding the demand of ?1,12,877 on clearance of scrap, the appellant argued that only ?27,237 pertained to metal scrap on which credit was availed, and they were willing to discharge duty on this amount. The remaining balance related to other scrap items and fly ash, on which credit was not availed. The Revenue supported the findings of the Commissioner (Appeals) and suggested remanding the matter to the Adjudicating Authority for verification. The Tribunal noted that while the appellant accepted the duty liability on the metal scrap, they contested the duty on other scrap items and fly ash. To ascertain the facts, the Tribunal decided to remand the matter to the Adjudicating Authority for further investigation. Therefore, the Tribunal set aside the denial of credit related to short receipt of input and remanded the matter concerning the duty on scrap value to the Adjudicating Authority for further assessment.

Remand to Adjudicating Authority:
The Tribunal concluded that the matter needed to be remanded to the Adjudicating Authority to determine the liability concerning the balance amount of credit related to the clearance of scrap items other than metal scrap. The Tribunal disposed of the appeal accordingly, emphasizing the need for further investigation by the Adjudicating Authority to ascertain the liability on the remaining scrap items and fly ash.