2023 (6) TMI 1151 - AT - Central Excise

CENVAT credit on the customs duty paid through TR-6 challan on Greaves 1.51 Diesel Engine 77 KW which initially imported from China under the Scheme ATA Carnet - rejection of credit on the grounds that not a capital good and that TR- 6 Challan is not the valid document as contemplated by Rule 9 of Cenvat Credit Rules, 2009 for establishing the payment of duty. HELD THAT - The engine in issue is undisputedly falls under Chapter 84 therefore one limb of Rule 2(a) ibid has been fulfilled, the another limb is that it must be used in the factory of the manufacturer of the final product. According to the learned Commissioner, the appellant has failed to submit any corroborative evidence to establish the use of the said engine for any research purpose in their factory whereas learned counsel submits that all relevant evidences were produced by them before this learned Commissioner - if the appellant wishes to avail credit then they have to fulfill the conditions laid down in the relevant provision. Learned counsel produced test data sheet in respect of LEAP 3 Cyl diesel engine variant indicating the use of imported engine in their factory. The test data sheet as produced herein may be a relevant document for their purpose but the authority below will be the appropriate authority to appreciate the same. Without going into the other aspect viz. suppression by appellant, imposition of penalty etc., one more opportunity granted to the appellant to produce evidences including the test data sheet to establish the use of the said engine for any research purpose in their factory and for that purpose the matter is remanded back to the learned Commissioner (Appeal) for deciding the same afresh - The issue regarding TR-6 challan has already attained finality. The appellant is directed to produce all relevant documents/ evidences they wish to rely upon in support of their submission before the learned Commissioner (Appeals). Appeal allowed by way of remand.

Summary

Issues involved:
The appeal involves the rejection of Cenvat Credit by the lower authority on the grounds that the imported engine was not used for Research & Development (R&D) as claimed by the appellant, and that the TR-6 Challan presented by the appellant was not a valid document under Rule 9 of Cenvat Credit Rules, 2009.

Details of the judgment:

Issue 1: Availment of Cenvat Credit
The appellant, engaged in manufacturing excisable goods, imported an engine under the 'ATA Carnet' scheme for exhibition purposes but later decided to retain it for R&D. The lower authority rejected the Cenvat credit on the grounds of the engine not being used for R&D and the TR-6 Challan not being a valid document. The 1st appellate authority accepted the validity of the TR-6 Challan but still denied the credit due to lack of evidence of R&D use. The Tribunal acknowledged the validity of the TR-6 Challan and directed the appellant to provide further evidence to establish the engine's use for R&D in their factory. The matter was remanded back to the Commissioner (Appeals) for a fresh decision based on the additional evidence to be submitted by the appellant.

Issue 2: Validity of TR-6 Challan
The validity of the TR-6 Challan as a document for establishing payment of duty was not contested by the Revenue and was deemed final by the Tribunal. The focus of the appeal was primarily on the substantiation of R&D use rather than the validity of the TR-6 Challan. The Tribunal emphasized the importance of fulfilling the conditions for availing credit as per relevant provisions and granted the appellant another opportunity to present supporting evidence, excluding the TR-6 Challan issue which had already been settled.

Conclusion:
The impugned order was set aside, and the appeal was allowed for remand to the 1st Appellate Authority for a fresh decision based on the additional evidence to be provided by the appellant. The Tribunal emphasized the need for the appellant to produce all relevant documents and evidence to support their claim of using the imported engine for R&D purposes in their factory.