2018 (12) TMI 362 - AT - Central Excise

CENVAT Credit - inputs returned by the job worker, but, these goods have not been returned by the buyer to whom the appellant sold these goods - Held that - Held that - It is not disputed the fact that the goods in question has not been received by the appellant, therefore, on the receipt of the said goods which were sold by the appellant under invoices issued by the buyer, the appellant is entitled to avail cenvat credit on such returned goods - credit allowed. CENVAT Credit sought to be denied on the allegation of diversion of the goods which the appellant has admitted and reversed alongwith interest - appellant has also paid 25% of the cenvat credit as penalty under Section 11 AC of the Central Excise Act, 1944 - Held that - Admittedly, the said payments have made by the appellant before passing the adjudication order, therefore, in terms of provisions of Section 11 AC of the Act, the appellant is entitled for the benefit of 25% cenvat credit as penalty and which has been done by the appellant. Therefore, the appellant is entitled for the benefit of 75% cenvat credit as penalty. Accordingly, the penalty is reduced to 25% of cenvat credit in question. CENVAT Credit - denial on the premise that the same cannot be input to manufacture their final product - Held that - The revenue has not able to produce any evidence on record that these goods are not received by the appellant or have been diverted by the appellant. On the contrary, the appellant is able to show that as per the expert s opinion, the said goods can be used as inputs i.e. fuel for manufacture their final product - credit allowed. The appellant is entitled for cenvat credit of ₹ 2,52,133 and ₹ 28,853/- and reduced penalty of 25% of cenvat credit of ₹ 16,552/- - appeal disposed off.

Summary

Issues:
Appeal against denial of cenvat credit.

Analysis:
The appellant, engaged in manufacturing steel items, appealed against the denial of cenvat credit on various grounds. The first issue revolved around the denial of credit amounting to ?2,52,133 on inputs returned by a job worker, which the buyer had not returned to the appellant. The appellant argued that the goods were returned by the job worker directly to them after being found unsatisfactory, and they were entitled to the credit as they received the goods back. The Tribunal agreed, allowing the credit.

The second issue concerned the denial of ?16,552 cenvat credit due to the alleged diversion of goods, which the appellant admitted and reversed, paying a penalty. The Tribunal acknowledged the appellant's actions in reversing the credit and paying the penalty, reducing the penalty to 25% of the credit amount as per Section 11 AC of the Central Excise Act, 1944.

The final issue involved the denial of ?28,853 cenvat credit on Rubber Processing Oil, with the Revenue failing to provide evidence of non-receipt or diversion by the appellant. The appellant demonstrated that the oil was used as fuel in their factory, supported by expert opinion. As the Revenue could not refute this, the Tribunal ruled in favor of the appellant, allowing the credit.

In conclusion, the Tribunal held that the appellant was entitled to cenvat credits of ?2,52,133 and ?28,853, while reducing the penalty on the denied credit of ?16,552 to 25%. The appeal was disposed of accordingly.