2019 (12) TMI 53 - AT - Central Excise

Clandestine removal of finished goods - No corroborative evidences - CENVAT credit - HELD THAT - There is no categorical admission of clandestine removal by the Director of the appellant. This Tribunal have held that only for the shortage found at the time of physical verification, does not lead to the conclusive evidence of clandestine removal - Accordingly, the charge of clandestine removal is not sustained, there is no corroborative evidence against the appellant. CENVAT Credit - duty paying invoices - credit availed on supplementary invoices raised by South Eastern Coalfields Limited (a PSU) for supply of coal to the appellant - HELD THAT - Credit is allowed placing reliance in the case of M/S JAYPEE REWA PLANT VERSUS CCE ST, JABALPUR 2018 (10) TMI 391 - CESTAT NEW DELHI where it was held that the appellant is entitled to take cenvat credit on the supplementary invoices - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Clandestine removal of finished goods against the appellant.
2. Cenvat credit on supplementary invoices raised by South Eastern Coalfields Limited for supply of coal.

Issue 1: Clandestine Removal of Finished Goods:
The appellant, engaged in manufacturing iron and steel products, faced allegations of clandestine removal of finished goods and raw materials after a physical verification revealed shortages. The Revenue calculated a total value of ?40,72,635 for the removed goods, leading to a Central Excise duty liability. The Director's statement acknowledged the shortage and accepted the liability, leading to a show cause notice and subsequent demand. The appellant contested the allegations, arguing that their stockkeeping method based on estimates and volume basis naturally led to variations. They cited a Tribunal precedent where shortages alone did not establish clandestine removal without concrete evidence. The Tribunal found no conclusive evidence of clandestine removal and ruled in favor of the appellant.

Issue 2: Cenvat Credit on Supplementary Invoices:
The Revenue also raised a demand for disallowance of cenvat credit on supplementary invoices, citing non-payment of duty on certain components. The appellant relied on a Tribunal precedent in a similar case involving South Eastern Coalfields Ltd., where the Tribunal allowed cenvat credit considering the recurring nature of the issue and the absence of fraud or suppression. The appellant's argument was supported by the Tribunal, which held that the appellant was entitled to take cenvat credit on the supplementary invoices. The Tribunal allowed both appeals, setting aside the impugned orders and providing consequential relief to the appellant.

In conclusion, the Tribunal found no substantial evidence of clandestine removal against the appellant and upheld their right to claim cenvat credit on the supplementary invoices. The judgment favored the appellant on both issues, leading to the allowance of the appeals and the reversal of the penalties imposed by the Revenue.