2023 (4) TMI 212 - AT - Central Excise

Recovery of irregular CENVAT Credit and Education Cess Secondary Higher Education Cess - non-production of required evidence in support of their job work claim - N/N. 214/86-CE. - HELD THAT - In terms of sub rule (I) of Rule (3) of the CENVAT Credit Rules, 2004 a manufacturer of finished goods is allowed the benefit of availment of CENVAT Credit on any inputs used in the manufacture of intermediate goods processed by way of job work availing the benefit of exemption as contained in MF DR Notification No. 214/86-CE dated 25.03.1986 and received by them for use in or in relation to the manufacture of final product - For failure to demonstrate adherence to legal prescriptions the authorities below did not find sufficient merit in the appellants claim. They held the entire issue to be violative of the provisions of law thereby denying the appellants the benefits sought upholding the Show Cause Notice. The prescription entitling for availment of the exemption is in effect a mandatory requirement in the absence of which consequential benefits do not flow the onus to establish their entitlement to availment utilization of the said credit calls for adherence to the norms specified. These are as stated mandatory requirements and non-adherence thereto is liable to denial disallowing of the said credit. The conditions stipulated can certainly not be considered merely procedural but is a sine qua non to the availment of the exemption contained in the notification ibid. The non-repudiation of the claims of the department doubting the authenticity and manipulation of the evidence tendered by the appellant as concocted fabricated and after thought pointed out inter-alia by way of specific examples the invocation of the willful misstatement/ suppression clause in the show cause notice in terms of the proviso to Section 11A is upheld. Besides it is an admitted position that the appellant could produce no document whatsoever in support of their contention for credit availment for the year 2006-07. There are no merit in the appeal filed by the assessee - appeal dismissed.

Summary

Issues Involved:
1. Adherence to CENVAT Credit Rules and Job Work Notification.
2. Evidentiary support for job work claim.
3. Limitation period for demand notice.
4. Registration under BIFR and its impact.
5. Procedural compliance and its effect on exemption entitlement.

Summary:

1. Adherence to CENVAT Credit Rules and Job Work Notification:
The appellant, a manufacturer of various trucks and stackers, availed CENVAT Credit on Pig Iron, which was sent to a job worker for casting. The department found irregularities during an audit, leading to a Show Cause Notice alleging contravention of Rules 3 & 4 of the CENVAT Credit Rules, 2004, and seeking recovery of Rs. 6,85,620/- in CENVAT Credit and associated cesses.

2. Evidentiary Support for Job Work Claim:
The department contended that the appellant failed to produce necessary evidence to support their job work claim, such as the requisite intimation/undertaking to the jurisdictional Assistant/Deputy Commissioner as per Notification No. 214/86-CE. The appellant also failed to produce job work challans and other records. The adjudicating authority found inconsistencies and manipulations in the submitted challans, leading to the conclusion that the job work claim was concocted and fabricated.

3. Limitation Period for Demand Notice:
The appellant argued that the demand was barred by limitation. However, the adjudicating authority found that the period for which the impugned credit was availed spanned from August 2006 to January 2009, and the notice was issued on July 26, 2011. This falls within the extended timeframe of five years as per Section 11A of the Central Excise Act, 1944, and hence, the demand was not barred by limitation.

4. Registration under BIFR and its Impact:
The appellant's plea of being registered under BIFR was noted, but the lack of current status information rendered it inconsequential to the case's disposal. The submission of a summary record declaring the appellant as a sick company did not impact the judgment.

5. Procedural Compliance and its Effect on Exemption Entitlement:
The adjudicating authority emphasized that adherence to procedural requirements is essential for claiming CENVAT Credit. The failure to demonstrate compliance with Notification No. 214/86-CE and the submission of manipulated and deficient documents led to the denial of the claimed benefits. The Hon'ble Supreme Court's precedents were cited to support the view that non-compliance with procedural requirements, even if considered procedural, is fatal to the entitlement of exemptions.

Conclusion:
The appeal was dismissed due to the appellant's failure to adhere to mandatory procedural requirements and the submission of manipulated evidence, resulting in the denial of CENVAT Credit and associated benefits. The operative part of the order was pronounced in open court on April 3, 2023.