2016 (12) TMI 1211 - AT - Central Excise

CENVAT credit - closure of factory - cenvat credit and finished goods transferred to Dharuhara unit - removal of scrap and discard of capital goods - manufacture of Industrial Gases namely, Nitrogen and Oxygen - Held that - I find that the additional documents, with regard to scrap and discard of capital goods, produced before the Tribunal was not produced before the authorities below. Since the documents have to be verified at the original stage, I am of the view that the matter can be remanded to the Original Authority for verification of the documents/ records - If the original authority is satisfied that records/documents are proper, then he should allow the cenvat benefit and drop the duty demand. The submissions of the appellant that cylinder valves were procured during the period 2007-2008 on which cenvat credit has not been taken, is not appreciated at this juncture for the reason that no documents were produced to show that the valves cleared during the disputed period were procured prior to 2007-2008 and no Modvat/ Cenvat credit has been taken by the appellant. Since interest is compensatory in character, and in view of the fact that there is no loss of Revenue, I am of the opinion that confirmation of interest of ₹ 2,26,704/- and penalty of ₹ 500/- is not proper and justified. Thus, appeal filed against such demand is allowed and the impugned order is set aside. As regards the issue of passing the cenvat credit to the customers under cenvatable invoices issued by the dealer, I find that the appellant is registered under Central Excise Department both as a manufacturer as well as a first stage dealer. Since, the invoices were issued by the first stage dealer to the buyesr of the goods, and the said goods are not co-relatable with the goods manufactured by the appellant as a manufacturer, in my opinion, credit cannot be disallowed on the cenvatable invoices issued under the dealer registration certification. Appeal disposed off - matter on remand.

Issues:
1. Non-reversal of Cenvat credit on cylinder valves
2. Non-reversal of cenvat credit on scrap and discarded capital goods
3. Delayed reversal of cenvat credit
4. Passing of cenvat credit to customers under dealer invoices

Analysis:

1. Non-reversal of Cenvat credit on cylinder valves:
The appellant argued that no cenvat credit was taken on the cylinder valves procured in 2007-2008, hence no reversal was required. However, as no evidence was presented to prove this claim, the Tribunal upheld the cenvat demand of ?1,37,378 along with interest and penalty.

2. Non-reversal of cenvat credit on scrap and discarded capital goods:
The appellant contended that no cenvat credit was availed on the capital goods procured in 1993-94, thus no reversal was necessary when removed as scrap. The Tribunal found merit in this argument and remanded the matter to the Original Authority for verification of documents. If verified, the duty demand will be dropped.

3. Delayed reversal of cenvat credit:
The appellant demonstrated that they had sufficient balance to cover the confirmed cenvat amount, indicating no loss to the Government. As interest is compensatory and no revenue loss occurred, the Tribunal set aside the interest amount of ?2,26,704 and penalty of ?500.

4. Passing of cenvat credit to customers under dealer invoices:
The appellant, registered as both a manufacturer and first stage dealer, issued invoices under the dealer registration. The Tribunal ruled that since the goods sold were not related to the manufactured goods, disallowing the cenvat credit on dealer invoices was unjustified. The demand of ?50,207 and penalty were deemed unsustainable.

In conclusion, the Tribunal upheld the cenvat demand related to cylinder valves, remanded the issue of scrap and discarded goods for verification, set aside the interest amount and penalty for delayed reversal, and allowed the appeal on passing cenvat credit under dealer invoices.

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