2019 (10) TMI 1031 - AT - Central Excise

Cenvat Credit - 100% EOU - inputs which was stored outside the factory premises, however the same was accounted for in their books of accounts. - Commissioner (Appeals) rejected the appeal on the ground that the appellant being a 100% EOU was not entitled to cenvat credit prior to issuance of Board Circular No. 799/32/2004-CX dated 23.09.2004 HELD THAT - The Commissioner has not denied the cenvat credit on the ground of suppression. Moreover, the appellant has claimed that they have recorded the goods, which was lying outside the factory premises, in their books of accounts, therefore, it cannot be said that there is suppression. - the Board is not the authority to make law whether the credit is admissible or not. The Board has only clarified the existing law regarding entitlement of the cenvat credit, therefore, the Board clarification is a retrospective and not the prospective. Since the lower authorities have not verified the records that whether the goods had been recorded in the books of accounts and other excise records by the appellant, the matter needs to be remitted back only for verification purpose. Appeal allowed by way of remand.

Summary

Issues:
1. Claim of cenvat credit by a 100% EOU on goods stored outside factory premises.
2. Denial of cenvat credit by lower authorities based on Board Circular No. 799/32/2004-CX.
3. Allegations of fraud by Revenue due to investigation by DGCEI and approach to Settlement Commission.

Analysis:
Issue 1: The appellant, a 100% EOU, stored goods outside the factory premises and claimed exemption while importing them. The department alleged liability for duty as goods were removed from EOU. Settlement Commission ordered duty payment, after which appellant sought cenvat credit. Lower authorities rejected the claim citing lack of provision for cenvat credit to EOUs. Appellant argued that goods were accounted for, denying suppression. Tribunal found denial based on Board Circular incorrect, clarifying that Board cannot make laws but only clarify existing provisions. The matter was remanded for verification of records.

Issue 2: Lower authorities denied cenvat credit to appellant, a 100% EOU, based on Board Circular No. 799/32/2004-CX, stating credit was not permissible before issuance. Tribunal rejected this reasoning, emphasizing that Board clarifications are retrospective, not prospective. Tribunal held that denial solely based on circular was incorrect, as the Board cannot determine credit entitlement but only clarify existing laws. The matter was remanded for verification of records to determine credit eligibility.

Issue 3: Revenue alleged fraud due to DGCEI investigation and Settlement Commission approach by appellant. Tribunal noted that denial of cenvat credit was not due to suppression, as goods were accounted for in appellant's records. Tribunal dismissed the fraud allegations, emphasizing the need for verification of records by lower authorities. The matter was remanded for a fresh order based on verified facts, setting aside the previous decision.

In conclusion, the Tribunal remanded the case for verification of records to determine the eligibility of cenvat credit for the appellant, a 100% EOU, stored goods outside the factory premises, emphasizing that denial based solely on a Board Circular was incorrect as it clarified existing laws retrospectively.