2016 (4) TMI 724 - AT - Central Excise

Whether ingots and billets of thickness more than 3 inches can be used for manufacture of MS Bars of 6 mm - Held that - the report of the Chartered Engineer is very specific and has been given after examining the machines installed in that Mill. The same cannot be applied in any circumstances to respondent without giving actual comparison of the machines installed and without bringing the said expert to respondent. As regards the purchase register and the change in stand of respondent, these facts are irrelevant as none of these have been alleged in the show-cause notice. - Decided against the revenue

Issues:
1. Disallowance of CENVAT Credit for using ingots and billets of thickness more than 3 inches for manufacturing MS Bars of 6 mm.
2. Appeal against the demand for recovery of CENVAT Credit of ?26,64,744.
3. Criteria for admissibility of CENVAT Credit.
4. Evidence and arguments presented by M/s Salasar Steel Industries.
5. Reliance on the certificate of the Technical Expert.
6. Dismissal of Revenue's appeal and cross objection.

Analysis:

1. The case involved the disallowance of CENVAT Credit for using ingots and billets of thickness more than 3 inches in manufacturing MS Bars of 6 mm. The original authority confirmed the demand, but the first appellate authority set it aside. The Commissioner (Appeals) also set aside the demand citing the criteria for admissibility of CENVAT Credit, emphasizing that the department failed to provide proof or rule out the possibility of manufacturing activity in other premises.

2. The appeal was against the demand for recovery of CENVAT Credit amounting to ?26,64,744. The Commissioner (Appeals) held that the Department could not establish a case for disallowance of CENVAT Credit based on the evidence and arguments presented.

3. The Commissioner (Appeals) highlighted the three criteria for admissibility of CENVAT Credit: duty paid inputs, receipt of inputs in the factory, and non-usage of inputs for final product manufacture. The decision referenced previous rulings to support the conclusion that the Department lacked sufficient grounds for disallowance.

4. M/s Salasar Steel Industries did not appear during the proceedings. The Assistant Commissioner argued that the company changed its defense regarding the use of MS Ingots over 3 inches and that the Commissioner (Appeals) overlooked evidence like the purchase register.

5. The Revenue's appeal relied on a certificate from a Technical Expert stating that ingots with size more than 2.5 inches could not be used as raw material due to machine specifications. However, the Tribunal found this certificate to be specific to a different case and not applicable to M/s Salasar Steel Industries without proper comparison and expert examination.

6. Ultimately, the Tribunal dismissed the Revenue's appeal and disposed of the cross objection, emphasizing that the evidence presented by the Department was insufficient to justify the disallowance of CENVAT Credit. The judgment was pronounced on 22/3/16 by Member (T) Raju.

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