2022 (4) TMI 930 - AT - Central Excise

CENVAT Credit - mismatch of address in the duty paying documents - credit denied on the account that the returned goods were not received by the Barauni unit of the Appellant - Rule 16 of CER, 2002 - HELD THAT - It is seen that the Adjudicating Authority has confirmed the demand of Cenvat credit only on the ground that the document issued by the customers for return of excise paid goods was addressed to the Giridih unit of the Appellant and thus it is not possible for the Appellant to avail Cenvat credit of duty paid goods under Rule 16(1) of the Central Excise Rules, 2002 in the Barauni unit from which goods were actually sold. Both the lower authorities have ignored the submissions of the Appellant with respect to verification of the returned goods by the Ld. Superintendent, Begusarai regarding identification of goods being returned at Barauni unit of the Appellant. Since the Appellant has been able to substantiate that the said goods were indeed received at the selling unit only i.e. Barauni by way of intimation letter dated 03/05/2011 being Exhibit M of the appeal paper book, duly supported by Chartered Accountant s Certificate in this regard, the orders of the lower authorities deserve to be set aside as there is no contrary evidence brought on record. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of excise duty, Incorrect availment of Cenvat credit, Verification of returned goods, Procedural lapses in availing credit.

Analysis:
The appeal was filed against the Order-in-Appeal confirming a demand of excise duty of ?9,07,166 for the Financial Year 2011-12 along with interest and penalty. The Appellant, engaged in the manufacture of Calcined Petroleum Coke, sold certain quantities to various industries, and due to defective supplies, some materials were rejected and returned. The rejected quantities were used for re-making as per Rule 16(1) of the Central Excise Rules, 2002. The Appellant sought to avail Cenvat Credit for these rejected products, but a Show Cause Notice was issued alleging incorrect availment of credit. The department claimed that the returned goods were not received by the Barauni unit of the Appellant, leading to the demand order and subsequent appellate affirmations.

The Appellant contended that the goods were correctly accounted for in the Barauni unit and were verified by the Range Superintendent based on the letter for Cenvat credit availment. A Chartered Accountant's Certificate was produced to support this claim. The Appellant cited judgments emphasizing that substantive benefit should not be denied due to procedural lapses. The Authorized Representative for the department supported the lower authorities' orders.

Upon hearing both sides, it was observed that the demand of Cenvat credit was confirmed solely based on the document's address to the Giridih unit, disregarding the verification of returned goods by the Superintendent at Barauni unit. The Appellant substantiated the receipt of goods at the selling unit, Barauni, through an intimation letter and Chartered Accountant's Certificate. As no contrary evidence was presented, the lower authorities' orders were set aside, and the appeal was allowed with consequential relief.

In conclusion, the Tribunal found in favor of the Appellant, highlighting the importance of proper verification and documentation in availing Cenvat credit and emphasizing the need for substantive benefit not to be denied due to procedural lapses.