2008 (4) TMI 94 - AT - Central Excise

Denial of credit to Paints & varnish only on ground that evidence regarding quantity used not produced, is not justified Materials used in lining of furnace as refractory material are eligible for credit credit on items used in manufacture of parts of capital goods which are further used along with capital goods, is allowed invoices on which credit was taken were duly filed along with RT-12 return so credit not deniable on ground that valid documents were not produced

Summary

Issues involved:
Availability of credit for various items disallowed by the impugned order, validity of duty paying documents for credit, denial of credit for paints and varnishes, denial of credit for specific items like Mafrolite, High Alumina Refractory Cement, and Aluminium Ferrules, denial of credit based on lack of evidence of quantity used, denial of credit for invoices not in the name of the appellant, reconsideration of denied credit amounts, and imposition of penalty.

Issue 1: Availability of credit for various items:
The appellant appealed against the disallowance of credit for items like Forged Products, Blooms, Billets, Chequered Plates, GC Sheets, Flats & MS Plates, MS Rounds, Paints & Varnishes, Mafrolite, High Alumina Refractory Cement, and Aluminium Ferrules. The appellant argued that these items were used in the manufacture of parts of capital goods in the factory and further used in conjunction with capital goods. The revenue contended that as no duty was paid on the manufactured items, credit should be denied. However, the Tribunal referred to previous decisions where similar credits were allowed, emphasizing that the items were integral to the manufacturing process of capital goods.

Issue 2: Denial of credit for paints and varnishes:
Credit for Paints and Varnishes was denied due to a lack of produced accounts regarding their use in marking the final product. The appellant maintained that credit was taken only for the quantities used in or in relation to the final product. The Tribunal noted that paints are included in the definition of inputs, and since the revenue did not dispute the eligibility of credit but only the lack of evidence regarding quantity used, the denial of credit was set aside.

Issue 3: Denial of credit for specific items:
Credit for Mafrolite, High Alumina Refractory Cement, and Aluminium Ferrules was denied as they were used in the lining of the furnace as refractory material. However, the Tribunal cited previous decisions in favor of the assessee, stating that refractory material is entitled to credit. Therefore, the denial of credit for these specific items was deemed unsustainable and set aside.

Issue 4: Denial of credit based on lack of evidence:
In cases where credit was denied due to lack of evidence or valid invoices, the Tribunal remanded the matter back to the Adjudicating Authority for re-consideration. For instance, credit amounts of Rs. 19,02,408 and Rs. 52,770 were set aside for re-examination as valid invoices were filed along with RT-12 Returns. However, credit of Rs. 58,464 was rightly denied as the invoices were not in the name of the appellant.

Issue 5: Imposition of penalty:
As the Tribunal allowed a significant amount of credit in favor of the appellant, it was determined that there was no case for the imposition of a penalty. Therefore, the appeal was disposed of accordingly.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi covers the various issues involved and the Tribunal's decisions on each issue, providing a comprehensive overview of the legal implications and reasoning behind the judgment.