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2018 (8) TMI 688 - AT - Central ExciseMODVAT/CENVAT credit - Department contended that they have cleared the waste and scrap of inputs and capital goods and rejected/damaged inputs on which they had availed CENVAT credit and have not reversed the credit availed on such inputs while clearing such wastes and scraps from the factory in contravention of CENVAT Credit Rules, 2004 - Held that - The Department has not adduced any evidence to show that the credit has been availed by the appellants. Having alleged that the appellants have availed CENVAT credit on the items removed as waste and scrap, the onus is on the department to prove that such credit was availed by the appellants. This burden has not at all been discharged by the department. On perusal of the documents, the items cleared by the appellants appear to be in guise rubber, washer, scrap of MS angles, plastic scrap, mixed metals scrap, CS pipe cut pieces, etc. When the appellants have given elaborate list of items cleared by them as alleged in the show-cause notice, it was incumbent upon the department to verify whether credit was availed or not. There are no reasons to disbelieve the claim of the appellants that they have not availed CENVAT credit. The appellants being public sector undertaking, a fact which is not disputed by the department, it cannot be alleged that they have a mala fide intention in availing the CENVAT credit and have removed the capital goods or inputs in the guise of waste and scrap. Appeal allowed - decided in favor of appellant.
Issues:
1. Alleged contravention of CENVAT Credit Rules, 2004 regarding clearance of waste and scrap without reversing credit. 2. Appeal against Order-in-Appeal holding duty payment on capital goods cleared as waste and scrap. 3. Commissioner's alleged error in not considering appellant's submissions and verification. 4. Burden of proof on Revenue for availing CENVAT credit. 5. Appellant's reliance on various case laws and public sector undertaking status. Analysis: Issue 1: The case involved the appellant, engaged in manufacturing petroleum products, clearing waste and scrap without reversing the CENVAT credit availed on inputs and capital goods. The department issued 13 show-cause notices covering the period 2002-07, alleging contravention of CENVAT Credit Rules, 2004. Issue 2: The Commissioner (A) allowed the departmental appeal, holding the appellants liable to pay duty on capital goods cleared as waste and scrap in three show-cause notices. The appellants contested this decision, arguing that the waste and scrap items were not capital goods, and no credit was availed on them. They also criticized the lack of factual verification by the Commissioner (A). Issue 3: The appellants contended that the Commissioner (A) erred in not considering their detailed submissions and justification, which clarified that no credit was availed on the waste and scrap items. They also argued against the acceptance of the department's excuses without factual verification. Issue 4: The appellant emphasized that the burden of proving CENVAT credit availed lies with the Revenue. They cited several case laws supporting this argument and highlighted the lack of evidence provided by the department to substantiate their claims. Issue 5: The appellant's status as a public sector undertaking was emphasized, indicating no mala fide intention in availing irregular credit. The Tribunal noted the absence of evidence from the department to prove credit availed by the appellants, ultimately ruling in favor of the appellants due to the department's failure to discharge the burden of proof. In conclusion, the Tribunal set aside the impugned order, holding that the department's allegations lacked concrete proof and did not meet the burden of proof required. The appellants were granted consequential relief as entitled.
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