2015 (10) TMI 2209 - AT - Central Excise

Denial of CENVAT Credit - appellant never manufactured/cleared any MTC - variation of description of goods and their value stated in the Bill of Entry and the invoices - Held that - It is seen from records that appellants have explained in their reply to the show cause notice that the inputs imported were stock transferred under proper invoices to their sister concern at Palwal Unit. Department has no case that appellant s Palwal Unit is not manufacturing/clearing MTC. So, also there is no case that these inputs were diverted or alienated in any manner. I find that authorities below ought to have accepted the explanation offered by appellant which was supported by documents of stock transfer. In the invoices, being stock transfer, the sale value included all taxes and 10% margin of profit. That therefore, the assessable value in the Bill of Entry is less than the sale value shown in the invoice. A comparable table showing the value in Bill of Entry and value in sale invoice is given. - allegation that value of inputs in invoices did not match with that in Bill of Entry, is baseless. The other allegation is that the inputs stated in these documents did not match description-wise. In the Bill of Entry, the description is given as gear box . In the sale invoice it is described as a slew gear box, Hoist gear box. Again in Bill of Entry, the description is slewing Ring whereas in the invoice, the description is slew Ring, S-Ring CBE-1200. I cannot agree with the contention of the Respondents that these are major discrepancies on which the benefit of credit can be denied. I do not find any markable variation in the description of inputs in these documents. - No wilful mis-statement or suppression with intention to evade duty is established against the appellants. In such circumstances the extended period is not invokable. The demand is therefore time barred. - Decided in favour of assessee.

Summary

Issues: Disallowance of CENVAT Credit on inputs; Allegation of not manufacturing or clearing goods; Discrepancies in description and value of goods in Bill of Entry and invoices; Issue of limitation in the show cause notice.

Analysis:
1. The appellants, engaged in manufacturing Hydraulic Mobile Crane and Tower Crane, availed CENVAT Credit but faced disallowance of credit on parts of Mobile Tower Crane (MTC) due to not manufacturing or clearing those goods. The show cause notice alleged discrepancies in descriptions and values of imported inputs. The order disallowed the credit, leading to the appeal.

2. The appellant's counsel argued that the MTC parts were stock transferred to a sister concern for manufacturing MTC, following CENVAT Credit Rules. They explained the differences in descriptions and values between the Bill of Entry and invoices, attributing it to duties and taxes. Regarding limitation, it was contended that no suppression or misstatement was alleged in the notice for the period in question.

3. The Department argued that inputs should be used in or in relation to the manufacture of the final product, which was not the case for MTC. They highlighted discrepancies in descriptions and values, asserting the appellants were not entitled to credit.

4. The judge observed that the appellant's explanation of stock transfer to the sister concern was supported by documents, indicating proper use of inputs. Absence of evidence showing diversion or alienation of inputs supported the appellant's case for credit.

5. Addressing the discrepancies in descriptions and values, the judge found the appellant's explanations valid, with detailed comparisons provided. The judge dismissed the Department's argument of major discrepancies, concluding that the differences were not substantial enough to deny credit.

6. Regarding the issue of limitation, the judge ruled in favor of the appellant, noting the absence of wilful misstatement or suppression to invoke the extended period. The demand was deemed time-barred, supporting the appellant's position.

7. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed with any consequential reliefs.