2014 (3) TMI 275 - AT - Central Excise

Availment of CENVAT Credit - Nexus of goods with manufacturing activity - Proceedings have culminated in confirmation of the demand for the Cenvat credit with interest and penalty equal to the credit availed - Held that - In this case a detailed stay order was passed wherein the Tribunal had given detailed observations for requiring the appellant to make pre-deposit. Even at the final hearing stage, no new facts to support the case of the appellant have been brought out. The appellant had failed to maintain proper records for the utilization of the inputs and admittedly there are no records reflecting the issue of goods and their utilization in their factory - appellant has failed to show that the items in dispute have been used for the purpose for which they were received - Decided against assessee.

Summary

Issues:
1. Availment of Cenvat credit on certain items without evidence of use in manufacturing.
2. Invocation of extended period for denial of Cenvat credit.
3. Acceptance of Chartered Engineer's certificate as evidence of use of inputs.
4. Failure to maintain proper records for utilization of inputs.

Analysis:
1. The appellant availed Cenvat credit on items without evidence of their use in manufacturing, leading to proceedings to deny credit amounting to Rs. 3,21,565/- during June to November, 2006. The lack of evidence showing utilization in the manufacture of components/machinery/equipments raised doubts on the qualification of these items as inputs, resulting in the confirmation of demand for the Cenvat credit along with interest and penalty.

2. The appellant argued that the Chartered Engineer's certificate demonstrated the utilization of inputs within the factory for fabrication purposes, contesting the invocation of the extended period. It was highlighted that until a relevant case decision by the Larger Bench in 2010, conflicting judgments existed, leading to a genuine belief in eligibility for the credit. The appellant's reliance on the certificate and the timing of regulatory changes formed a crucial aspect of the defense.

3. The Respondent contended that the appellant failed to maintain records for the issue and utilization of materials, shifting the burden to prove the use of inputs for claiming Cenvat credit onto the assessee. Moreover, the Chartered Engineer's certificate was challenged on grounds of lacking crucial details such as dates, visit confirmation to the factory, and the nature of estimates provided. The certificate's reliability was further questioned based on the Engineer's acknowledgment of inputs being used for structural supports instead of intended purposes.

4. The judgment emphasized the appellant's inability to produce substantial evidence even after a detailed stay order, highlighting the absence of new facts supporting their case during the final hearing. The failure to maintain proper records for input utilization, coupled with the lack of documentation reflecting the issue and utilization of goods in the factory, weakened the appellant's position. Ultimately, the rejection of the appeal was based on the appellant's failure to demonstrate the actual use of disputed items for their intended purpose, reinforcing the decision to uphold the impugned order.