2017 (3) TMI 1080 - AT - Central Excise

CENVAT credit - duty paying documents - Whether the appellant is entitled to Cenvat credit of ₹ 89,854/- availed on receipt of inputs in the factory, wherein on the invoices address of Head Office is mentioned? - Held that - the appellants have produced the evidences, which shows that the goods were received in the factory at Ghaziabad as is evident from the goods received note, and the weighment slips at Ghaziabad. Further, it is the admitted case of the Revenue that the appellants have got only one manufacturing unit and head office at Meerut - credit allowed. Scrap - Whether the Central Excise duty is excisable on sale of scrap generated in course of processing used and worn out tyres? - Held that - the issue is no longer res-integra and the said Explanations have been considered by the Hon ble Supreme Court in the case of DSCL Vs. Union of India, wherein it has been held that waste and scrap generated in course of manufacture, although the same may be cleared for value or consideration, but the same are not exigible to Central Excise duty - demand set aside. CENVAT credit - capital goods - disallowance of Cenvat credit being 50% of the eligible credit, which was required to be taken in the subsequent year, but was taken in the 1st year itself - Held that - the appellant has stated that the reason for taking of credit before it was due, was due to over sight and no mala-fide was on the part of the appellant. The credit was anyway available after few months in the next financial year, Accordingly, only the liability for interest survives, no penalty is excisable on the appellant - penalty set aside - interest upheld. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Entitlement to Cenvat credit on improper invoices
2. Excisability of Central Excise duty on sale of scrap generated in processing
3. Disallowance of Cenvat credit taken in advance

Analysis:

Issue 1: Entitlement to Cenvat credit on improper invoices
The appellant claimed Cenvat credit of ?89,854 on invoices with the Head Office address, which raised a question of entitlement. The Tribunal found that the goods were received at the factory in Ghaziabad, supported by evidence like goods received notes and weighment slips. As the Revenue acknowledged the single manufacturing unit at Meerut, the Tribunal held that the appellant was entitled to the Cenvat credit of ?89,854.

Issue 2: Excisability of Central Excise duty on sale of scrap
The dispute revolved around the excisability of Central Excise duty on iron and brass scrap generated during the manufacturing process of reclaim rubber. The Revenue demanded duty based on an amendment in 2008, considering the scrap marketable. However, referring to a Supreme Court case, it was established that waste and scrap generated in manufacturing, even if cleared for consideration, are not liable for Central Excise duty. Consequently, the demand of ?6,97,120 was set aside.

Issue 3: Disallowance of Cenvat credit taken in advance
Regarding the disallowed Cenvat credit of ?85,667 taken in advance, the appellant had reversed a substantial amount and cited oversight as the reason for early credit utilization. The Tribunal noted the absence of malafide intent and the subsequent availability of credit in the next financial year. While confirming the liability for interest, the demand of ?85,667 was set aside. The penalty imposed under the Cenvat Credit Rules, 2004, was reduced from ?85,667 to ?10,000. The appeal was partially allowed based on these findings.