2017 (10) TMI 648 - AT - Central Excise

CENVAT credit - parts manufactured by appellant and supplied to their own office and parts purchased by them - Held that - It is seen that the total cenvat credit claimed by the appellants is higher than the total duty demanded from the appellants. This situation clearly points to the fact that the figure of cenvat credit claimed by the appellants is inflated. In normal circumstances, the value of input is only a fraction of the price of the final product as there is an element of value addition. Moreover in industry, there is always a factor of non-excisable goods which are used in the final product. As a result the amount of cenvat credit is usually much lower than the amount of duty payable on the finished goods - the claim made by the appellants is inflated and onus is on the appellants to substantiate the claim. The appellants have not given any evidence of actual receipt of goods in respect of which cenvat credit has been claimed. In absence of the same the cenvat credit cannot be allowed. It is the responsibility of the appellants to produce the evidence that the items in respect of which cenvat credit have been used in the manufacture of final products. As a matter of abundant precaution and in the interest of justice, the appellants are given an opportunity to produce evidence of receipt of these inputs before the original adjudicating authority - appeal allowed by way of remand.

Summary

Issues: Denial of cenvat credit on certain items.

Analysis:
The appeal was filed against the denial of cenvat credit on specific items by the revenue. The appellant argued that they cleared goods to their own offices, which included parts manufactured by them and parts purchased. The revenue initially denied the cenvat credit, leading to a series of proceedings and remands. After the final remand, part of the credit was allowed, but a significant amount of credit was still denied, totaling to ?30,10,138. The denial included credit on air conditioners received from the factory and sold, original invoices for buyers, and photocopies of invoices. The appellant contended that the denial of credit on certain items amounted to double jeopardy as the duty was already demanded and upheld separately by the Hon'ble Apex Court. They also argued that the denial based on the unavailability of duplicate invoices was merely a procedural lapse and should not result in credit denial.

The revenue argued that there was no evidence of receipt of goods submitted by the appellant. They highlighted discrepancies in the figures, pointing out that the total cenvat credit claimed was higher than the total duty demanded, indicating an inflated claim by the appellant. The Presiding Member examined the submissions and noted that the cenvat credit claimed exceeded the duty demanded, suggesting an inflated claim. Typically, the value of input is lower than the price of the final product due to value addition and non-excisable goods used in production. The lack of evidence of actual receipt of goods led to the conclusion that the credit could not be allowed. The onus was placed on the appellant to substantiate their claim with evidence of receipt and use of goods in the manufacturing process.

In the absence of evidence, the Presiding Member granted the appellants an opportunity to produce proof of receipt of inputs before the original adjudicating authority. If they could demonstrate that the goods were received, used in manufacturing, and duty was paid, the credit would be allowed. The appeal was allowed by way of remand, emphasizing the importance of substantiating claims with evidence in such cases.