2020 (1) TMI 486 - AT - Central Excise

CENVAT Credit - inputs/capital goods - MS Angles, channels, flats, beam, CR coils, HR sheets, welding electrodes etc. - period April 2003 to September 2010 - HELD THAT - In order to justify the claim the appellants have to prove the receipt, storage and consumption of such inputs / capital goods in the manufacture of final products or intermediate products used in the final products - Learned Commissioner has found that the appellants, at the time of availing the exemption contained under Notification 67/95, have not given any indication of the capital goods captively manufactured and used. We hold that benefit, if otherwise available to the appellants cannot be denied only for the reason that they have not indicated at the time of availing. While holding that the credit of disputed items is eligible to be availed, when used as inputs or capital goods used in the manufacture of final products, we find that it is incumbent upon the appellant to prove to the satisfaction of the proper officer that such inputs/capital goods have been purchased and utilised in the factory. In the absence of such records credit cannot be given just on the claim of the appellants - As per the records made available before us, the Bench is not in a position to arrive at the fact as to whether the appellant have produced any record of receipt and usage of the said inputs/capital goods in their factory. However, the appellants have a strong case on merits. The issue requires to go back to the original Authority to allow credit, after going through records/returns that may be submitted by the appellants - Appeal allowed by way of remand.

Summary

Issues:
1. Denial of Cenvat credit on various items by the department.
2. Disallowance of credit by the Commissioner along with penalties.
3. Appellant's submission regarding allowed credit in previous cases.
4. Lack of indication by the appellant at the time of availing exemption.
5. Requirement for proof of receipt and utilization of inputs/capital goods.
6. Decision to remand the case for re-examination of the claim of credit.

Analysis:
1. The case involved the denial of Cenvat credit to M/s. Tata Refractories Ltd for availing credit on items like MS Angles, channels, flats, beam, CR coils, HR sheets, welding electrodes as inputs or capital goods. The department issued 9 show cause notices seeking to deny the credit based on Rule 2 (k) and Rule 2 (a)(A) of Cenvat Credit Rules, 2004, and imposed penalties. The Commissioner disallowed credit of a specific amount along with interest, leading to the appeals.

2. The appellant's counsel argued that in previous cases, credit was allowed by the department for similar demands. The Commissioner found discrepancies in the appellant's compliance with eligibility conditions and maintenance of required records. However, the appellant claimed that the disputed capital goods/inputs were used in the manufacture of final products, emphasizing the purpose of their utilization.

3. The Authorized Representative for the department reiterated the findings of the Original Adjudicating Authority and Original Inquiry Authority. The appellant cited various judicial decisions where similar items were considered eligible for credit, highlighting precedents supporting their claim.

4. The Tribunal acknowledged the precedents cited by the appellant and held that while the credit claim is not absolute, the appellant must prove the receipt, storage, and consumption of inputs/capital goods in the manufacturing process. The Tribunal noted the lack of indication by the appellant at the time of availing the exemption but emphasized that such benefit cannot be denied solely based on this reason.

5. The Tribunal emphasized the need for the appellant to provide proof of receipt and utilization of the disputed inputs/capital goods in their factory to justify the credit claim. Due to insufficient records before the Bench, the case was remanded to the Original Authority for re-examination. The Original Authority was directed to allow credit based on reasonable proof provided by the appellant within a specified timeframe.

6. Consequently, the impugned order denying Cenvat credit was set aside, and the appeal was allowed by way of remand. The Lower Authority was instructed to review the appellant's claim based on submitted records and complete the examination within a specified period. The appellants were directed to submit necessary documents supporting their claim to the Original Authority within a given timeframe.