2017 (9) TMI 986 - AT - Central Excise

CENVAT credit - MS Plate, iron and steel plates, MS Low carbon diff. sheet / coils, galvanized T L - denied on the basis of invoice which does not bear the vehicle number and on the premises that inputs in question are not inputs for manufacturing of final products by the appellant - Inputs received from the registered dealers are not inputs for the appellant for manufacturing goods - demand of duty for Shortage of inputs as well as finished goods - Held that - No investigation was conducted at the end of the supplier of the said goods. Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit - appellant is entitled to avail Cenvat Credit on the invoice issued by M/s. Ganpati Enterprises. Input received from registered dealer - Held that - no investigation was conducted with the registered dealer whether they have supplied goods or not. Merely on the ground that these inputs cannot be the inputs for manufacturing of final goods and the process is very costly for manufacturing final product cannot be the grounds to deny Cenvat Credit - credit allowed. Shortage of inputs as well as finished goods - Held that - no panchnama was drawn for verification of the finished goods and it is not coming out from the impugned order whether stock verification was done physically or on sample basis - also, the shortage is negligible in quantity - duty cannot be demanded on the mere shortage of the inputs as well as of finished goods. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against demand of duty, interest, and penalty
- Shortages of finished goods and raw material
- Invoice without vehicle number
- Denial of Cenvat Credit
- Inputs not considered for manufacturing
- Shortage of inputs and finished goods

Analysis:
The appellant appealed against an order confirming duty demand, interest, and penalty. The case involved shortages of finished goods and raw material during investigations at the appellant's premises. Allegations included an invoice without a vehicle number and inputs not considered for manufacturing final products. The duty demand was based on shortages and denial of Cenvat Credit. The Tribunal analyzed the case on three grounds: a) invoice without vehicle number, b) inputs not suitable for manufacturing, and c) shortages of inputs and finished goods.

Invoice without Vehicle Number:
The Tribunal cited a previous case where the denial of Cenvat Credit based solely on the absence of vehicle numbers on invoices was challenged. It was established that the goods were physically received by the appellant, and the absence of vehicle numbers did not warrant penalty or denial of credit. Consequently, the Tribunal held that the appellant was entitled to avail Cenvat Credit despite the missing vehicle number on the invoice.

Denial of Cenvat Credit for Inputs:
Regarding the inputs from registered dealers, the Tribunal noted that no investigation was conducted to verify the supply of goods. Merely deeming the inputs unsuitable for manufacturing without concrete evidence or supplier investigation was deemed insufficient grounds to deny Cenvat Credit. Therefore, the Tribunal ruled in favor of the appellant, stating that Cenvat Credit could not be denied based solely on the nature of the inputs without proper verification.

Shortage of Inputs and Finished Goods:
Concerning the shortages of inputs and finished goods, the Tribunal highlighted the lack of detailed verification procedures in the impugned order. It was unclear whether physical stock verification was conducted, and the shortage was deemed negligible in quantity. Consequently, the Tribunal held that duty could not be demanded solely based on minor shortages of inputs and finished goods.

In conclusion, the impugned order was set aside, and the appeal was allowed in favor of the appellant, granting consequential relief. The Tribunal's decision emphasized the importance of thorough investigations and concrete evidence before denying Cenvat Credit or imposing duty based on shortages or input suitability for manufacturing.