2017 (3) TMI 930 - AT - Central Excise

CENVAT credit - penalty - demand on the ground that appellant had imported 408.917 MT of laminated scrap during the year 2000-01 and they have suppressed the production of their final product under the guise of sub standard imported material by claiming more wastage - Held that - there is virtually no evidence on record to establish the manufacture of final product and clearance of the same without payment of duty. There is no evidence of manufacture, their clearance and identification of the buyers and transporters - demand not justifiable - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Availment of Cenvat Credit on inputs not used in final product manufacturing.
2. Allegation of clandestine removal and demand raised against the respondent.
3. Appeal by Revenue against the order passed by Commissioner (A).
4. Lack of evidence to establish manufacture and clearance of final product without duty payment.

Analysis:

Issue 1: Availment of Cenvat Credit
The respondent had availed Cenvat Credit on inputs like Solder wire, which was not utilized in the manufacturing of their final product. Proceedings were initiated for denial of Cenvat Credit along with imposition of penalty. The Commissioner (A) upheld the denial of credit, and the respondent was aggrieved with this decision.

Issue 2: Allegation of Clandestine Removal
The Revenue alleged that the respondent had imported laminated scrap and underreported the production of their final product, leading to a demand of duty. The Adjudicating Authority initially dropped the demand due to lack of concrete evidence supporting the allegation of excess production. The Revenue appealed to Commissioner (A), who rejected the appeal citing insufficiency of evidence and reliance on the statement regarding the quality and nature of the imported scrap.

Issue 3: Appeal by Revenue
The Revenue filed an appeal against the orders of the lower authorities, arguing that there was no evidence to prove the imported scrap was sub-standard and that the goods must have been manufactured from it. However, the Member (Judicial) found a lack of evidence to establish the manufacture and clearance of the final product without duty payment, leading to the rejection of the Revenue's appeal.

Issue 4: Lack of Evidence
The Member (Judicial) noted the absence of evidence regarding the manufacture, clearance, and identification of buyers and transporters of the final product without duty payment. Both lower authorities had correctly concluded in favor of the respondent, and there was no basis to interfere with their decisions. Consequently, the Revenue's appeal was dismissed.

In conclusion, the judgment addressed the issues of improper Cenvat Credit availment, allegations of clandestine removal, lack of evidence supporting duty demands, and the dismissal of Revenue's appeal due to insufficient proof of duty evasion.