2016 (6) TMI 233 - AT - Central Excise

Reversal of CENVAT credit - denial on the ground that the said credit has been taken without receiving the goods from the parties who had issued the respective subsidiary gate passes - Held that - There is no clear cut attempt to correlate the purchase made by the appellant with the subsidiary gate passes received by them. The Commissioner (Appeals) has observed that there is no correlation in documents to link the goods received by the appellant with the sales made by the importer/manufacturer. In this regard, it is felt that the specific case to case correlation of each subsidiary gate passes is necessary to reach any conclusion. The lower authorities have failed to appreciate the earlier order of the Tribunal and have given vague findings. In view of the above, the matter is again remanded to the lower authority to examine the correlation between the purchases made by the appellant of the subsidiary gate passes on case to case basis. The appeal is allowed by way of remand.

Issues: Availing CENVAT Credit on the strength of subsidiary gate pass, denial of credit by the original adjudicating authority, dismissal of appeal by the Commissioner (Appeals), lack of correlation between purchases and subsidiary gate passes, issue of limitation, incomplete or unsatisfactory correlation in documents.

Availing CENVAT Credit: The appellant availed CENVAT Credit during a specific period based on subsidiary gate passes issued by the Supdt. of Central Excise. The department issued a show-cause notice seeking reversal of credit, alleging that the credit was taken without receiving the goods from the parties mentioned on the subsidiary gate passes. The Tribunal remanded the matter to the original adjudicating authority, emphasizing the need to verify the appellant's claim that they purchased the goods from other dealers who had initially acquired them from consignors listed on the gate passes.

Dismissal of Appeal by Commissioner (Appeals): The Commissioner (Appeals) dismissed the appeal on the grounds that the names on the subsidiary gate passes did not match the suppliers who sold raw materials to the appellant. Additionally, the parties issuing the gate passes denied any transaction with the appellant, and there was a failure to establish the movement of goods from the importer/manufacturer to the appellant. The Commissioner upheld the denial of credit but set aside the penalty imposed.

Lack of Correlation Between Purchases and Gate Passes: The appellant argued that they purchased goods from dealers who, in turn, acquired them from importers/manufacturers. They contended that the names on the gate passes did not need to match the suppliers as they obtained the passes from the manufacturer/importer. The appellant provided details linking their purchases to the importers/manufacturers, citing specific examples to support their claim. However, the AR argued that there was insufficient correlation between the goods purchased and the subsidiary gate passes, highlighting discrepancies in quantities and parties involved in transactions.

Issue of Limitation and Incomplete Correlation: The appellant raised the issue of limitation, as the notice was issued several years after the credits were taken. They argued that there was no suppression of facts as they had submitted necessary documents. The AR contended that the correlation provided by the appellant was incomplete or unsatisfactory, pointing out discrepancies in quantities and parties involved in the transactions. The Tribunal found a lack of clear correlation between the purchases and the subsidiary gate passes, emphasizing the need for a case-by-case examination to establish the link between the goods received and the sales made by importers/manufacturers.

In conclusion, the Tribunal allowed the appeal by way of remand, directing the lower authority to reexamine the correlation between the purchases made by the appellant and the subsidiary gate passes on a case-to-case basis. The decision highlighted the importance of establishing a clear link between the goods acquired and the transactions documented in the subsidiary gate passes to determine the eligibility for CENVAT Credit.

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