2016 (12) TMI 656 - AT - Central Excise

CENVAT credit - denial on the ground that respondents are showing more consumption of cenvat credit availed inputs than actually consumed and apparently the cenvat credit has been wrongly availed on these input chemicals - Held that - No study has been made regarding the composition of various other raw materials and their impact and the usage of caustic soda and sodium sulphite. Apparently, the whole calculation is rudimentary and no scientific analysis or expert guidance has been taken in this regard. Above all as pointed out in the impugned order, there is no evidence of non receipt of these raw materials or unaccounted diversion of these materials from the premises of the respondent. No discussion to that effect has been recorded in the original order. As such, we find no justification to interfere with the impugned order. Similarly, we note that when the respondent paid back the amount of credit to be reversed on their option to avail the exemption under N/N. 4/2006-CE, no penal action follows. We are in agreement with the impugned order on this ground also. Accordingly, appeal filed by the Revenue is dismissed - decided in favor of respondent-assessee.

Summary

Issues:
1. Availing of cenvat credit on inputs
2. Reversal of cenvat credit under Notification No. 4/2006-CE

Analysis:
1. The case involved a dispute regarding the availing of cenvat credit on inputs by the respondent, who were engaged in the manufacture of writing and printing paper. A show cause notice was issued alleging that the respondent had availed more cenvat credit than actually consumed on certain input chemicals. The notice sought to deny credit amounting to ?21,57,061. Additionally, it was contended that the respondent did not reverse the cenvat credit of ?10,90,220 as required under Rule 11(2) of the Cenvat Credit Rules, 2004 when they opted for exemption under Notification No. 4/2006-CE. The original authority confirmed the demands and imposed penalties. On appeal, the Commissioner set aside the original order but confirmed the liability of ?10,90,220 with interest, which had already been paid by the respondent. The Revenue appealed against this order.

2. During the hearing, the Revenue argued that the consumption of certain chemicals remained high even when the main input, straw, was reduced, and the respondent failed to provide a satisfactory explanation for this. The Revenue also contested the non-imposition of penalties on both issues. However, the Tribunal noted that the respondent had submitted detailed documentation, including cenvat credit accounts, invoices, and raw material issue slips, along with ledgers of waste paper suppliers. The Revenue's calculations were found to be rudimentary, lacking scientific analysis or consideration of the composition of other raw materials used. The Tribunal observed that there was no evidence of non-receipt or diversion of raw materials by the respondent. As a result, the Tribunal upheld the Commissioner's order, dismissing the Revenue's appeal. The Tribunal also noted that no penal action was warranted when the respondent voluntarily paid back the credit amount upon opting for the exemption, concurring with the impugned order on this issue as well. The appeal filed by the Revenue was thus dismissed, and the cross-appeal was disposed of.