2024 (6) TMI 756 - AT - Central Excise

Liability of Central Excise Duty on notional basis instead of the actual figures - denial of Cenvat credit on photocopies of invoices - disallowance of cenvat credit on inputs used in the manufacture of goods lying in stock - CENVAT credit on sugar cess. Whether the central excise duty liability has been incorrectly demanded on notional basis instead of the actual figures? - HELD THAT - It is submitted that the actual figures of production and clearances for the relevant period was available with the adjudicating authority as the appellant had submitted the said data during the said adjudication proceedings. It has also been submitted that the CA Certificate to certify the actual production figures had also been submitted to the adjudicating authority - it is found that in the impugned order that the clearances for the period August 07 to March 2008 has indeed been calculated as a proportion of the total production figures - this methodology adopted by the adjudicating authority to calculate the clearances during this period when the actual data of clearances was available with the Commissioner cannot be appreciated - CA Certificate also examined wherein the monthly production clearances figures for the period 01.08.2007 to 30.06.2008 has been certified by the Chartered Accountant. The department had not led any evidence to hold that this CA Certificate was incorrect or fraudulent - the Commissioner has erred in determining the duty resulting of excess duty liability - the total duty determined is liable to be reduced by this amount. Whether the adjudicating authority was correct in denying Cenvat credit on photocopies of invoices? - HELD THAT - Rule 9 of Cenvat Credit Rules 2004 specifies the documents and records for the purpose of availment of credit. In some cases it is noted that the appellant only had photocopies of the purchase invoices on which credit was denied. However the receipt and utilization of inputs for the specified purpose has not been disputed nor has the department led any evidence to establish that the input was not received or was not duty paid - In view of the same the Commissioner had erred in disallowing this part of the cenvat credit. Whether the adjudicating authority was correct in disallowing cenvat credit on inputs used in the manufacture of goods lying in stock? - HELD THAT - The reasoning given by the adjudicating authority cannot be accepted. It is on record that the appellant had opening stock of 8389 quintals of sugar as on 01.08.2007. Subsequently 8389 quintals of sugar was used in the manufacture of the final products - The department has denied the credit by not giving any sound reasoning for the denial. There is nothing on record to establish that the CA certificate produced by the appellant is fraudulent or incorrect - the adjudicating authority has erred in ignoring the cogent evidences led before it - the Tribunal in several decisions has held that once the appellant has submitted sufficient evidence along with the CA certificate to substantiate their claim the onus shifts to the Revenue to disprove the same - credit wrongly denied. Whether the credit on sugar cess has been correctly allowed? - HELD THAT - The coordinate bench of the Tribunal in similar facts and circumstances has allowed the Cenvat credit on sugar cess in the case of M/S. DIAMOND BEVERAGES PVT. LTD. VERSUS COMMISSIONER OF CGST CENTRAL EXCISE KOLKATA SOUTH 2019 (8) TMI 1517 - CESTAT KOLKATA relying upon the decision in M/S. BENGAL BEVERAGES PRIVATE LIMITED VERSUS COMMISSIONER OF CGST CX HOWRAH COMMISSIONERATE (VICE-VERSA) 2022 (2) TMI 1118 - CESTAT KOLKATA - the Commissioner was correct in allowing the Cenvat credit of Sugar Cess to the appellant. Appeal of assessee allowed.

Summary

Issues Involved:

1. Incorrect demand of central excise duty on a notional basis.
2. Denial of Cenvat credit on photocopies of invoices.
3. Disallowance of Cenvat credit on inputs used in the manufacture of goods lying in stock.
4. Eligibility of credit on sugar cess.

Detailed Analysis:

1. Incorrect Demand of Central Excise Duty on a Notional Basis:

The appellant contended that the methodology adopted for calculating the production figures was incorrect and not supported by any legal provisions. The actual production for the period August 2007 to March 2008 was 51,032 quintals, which was less by 3,660 quintals than the notional figure of 54,692 quintals used by the adjudicating authority, resulting in an excess duty liability of Rs. 2,67,656/-. The Tribunal found that the actual figures of production and clearances were available with the adjudicating authority, and the CA Certificate certifying the actual production figures was not disputed by the department. Therefore, the Commissioner erred in determining the duty, and the total duty determined is liable to be reduced by Rs. 2,67,656/-.

2. Denial of Cenvat Credit on Photocopies of Invoices:

The appellant submitted that the originals of the relevant purchase invoices had been submitted before the jurisdictional Assistant Commissioner, but some original copies were misplaced. The adjudicating authority disallowed the Cenvat credit on the ground that Rule 9 of Cenvat Credit Rules, 2004 specifies the documents and records for the purpose of availment of credit, and photocopies of invoices are not proper documents. However, the Tribunal noted that the receipt and utilization of inputs were not disputed, and the department did not provide any evidence to establish that the input was not received or was not duty paid. Therefore, the Commissioner erred in disallowing this part of the Cenvat credit.

3. Disallowance of Cenvat Credit on Inputs Used in the Manufacture of Goods Lying in Stock:

The appellant had an opening stock of 8,389 quintals of sugar as on 01.08.2007, which was used in the manufacture of final products cleared during the period 01.08.2007 to 30.06.2008. The adjudicating authority rejected the claim stating that the appellant did not obtain Central Excise Registration nor maintained the RG 1 Register. The Tribunal found this reasoning unacceptable and noted that the appellant had provided sufficient evidence, including a CA certificate, to substantiate their claim. The Commissioner erred in ignoring the cogent evidence led before it. Therefore, the Cenvat credit on inputs used in the manufacture of goods lying in stock should be allowed.

4. Eligibility of Credit on Sugar Cess:

The adjudicating authority allowed Cenvat credit on sugar cess based on the Karnataka High Court decision in Commissioner v. Shree Renuka Sugars Ltd. The Revenue contended that the decision was challenged before the Supreme Court and was pending. The Tribunal noted that the Karnataka High Court decision, which allowed Cenvat credit on sugar cess, was not stayed by the Supreme Court. The Tribunal also relied on similar decisions by other benches, which allowed Cenvat credit on sugar cess. Therefore, the Commissioner was correct in allowing the Cenvat credit of Sugar Cess to the appellant.

Conclusion:

The Tribunal modified the impugned order to reduce the total duty determined by Rs. 2,67,656/- and allowed the Cenvat credit on photocopies of invoices and inputs used in the manufacture of goods lying in stock. The Tribunal also upheld the eligibility of credit on sugar cess and dismissed the appeal filed by the Revenue.