2018 (6) TMI 632 - AT - Central Excise

CENVAT credit - overvaluation of inputs - higher credit availed as compared to Cenvat credit that could have been availed on the inputs if the said inputs were not overvalued by the supplier - Held that - There is no case of the revenue that the inputs were not duty paid nor there was any case of revenue that the inputs were not received in the factory. It was also not a case of revenue that the inputs were not used into the manufacture of Final products - it was also not the case of Revenue that the appellant has availed more Cenvat credit than that was stated in the duty paying documents of inputs. There were no need for reassessment of inputs at the end of input receiver. Therefore, the question of overvaluation of inputs does not arise. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Reassessment of inputs valuation at the end of the receiver of inputs.

Analysis:
The case involved three appeals arising from a common order passed by the Commissioner of Central Excise, Noida-II. The appellants, engaged in manufacturing M.S. Ingots and Alloys Castings, were accused of overvaluing scrap purchased as inputs, leading to higher Cenvat credit. The show cause notice alleged overvaluation of inputs purchased from specific suppliers, resulting in excess Cenvat credit. The Original Authority confirmed a demand against the main appellant and imposed penalties on all appellants. The appellants contended that the notice was based on assumptions and challenged the valuation of inputs at the receiver's end. They argued that the duty paid on inputs by the manufacturer was not disputed, and the show cause notice invoked the extended period unjustly. The Original Authority upheld the demand and penalties, leading to the appeals before the Tribunal.

The learned Counsel for the appellants argued that Cenvat credit is admissible based on duty payment documents for received inputs, disputing the Revenue's focus on valuation at the receiver's end. They cited a ruling by the Hon'ble High Court of Allahabad to support their case, emphasizing that the inputs were duly received, transported, and used in manufacturing. They criticized the Revenue's case as relying on assumptions without documentary evidence, asserting that the show cause notice was unsustainable. The Counsel highlighted the impracticality of burdening the assessee to verify records beyond the first stage dealer's maintenance, as per Rule 9(3) of Cenvat Credit Rules, 2004.

After hearing both sides, the Tribunal observed that the case revolved around reassessing inputs valuation at the receiver's end. Notably, there was no dispute regarding duty payment, receipt, or utilization of inputs in manufacturing final products. Referring to the Allahabad High Court ruling, the Tribunal concluded that there was no need for reassessment at the receiver's end, rendering the question of overvaluation irrelevant. Consequently, the impugned order was deemed unsustainable, and all appeals filed by the appellants were allowed. The appellants were granted consequential relief as per the law.

This judgment highlights the importance of adherence to legal provisions in assessing Cenvat credit claims, emphasizing the need for concrete evidence and avoiding undue burden on the assessee. The ruling serves as a precedent for cases involving valuation disputes related to input credits, providing clarity on the assessment criteria and upholding the assessee's rights in challenging unsubstantiated allegations.