2017 (10) TMI 796 - AT - Central Excise

Confiscation - clandestine removal - goods lying in the factory premises unaccounted on the inputs and the finished goods - Held that - The absence of any specific finding, in recording of the goods in the RG I register, but were found within the factory premises and there was no attempt to remove the said goods clandestinely, nor any precedent of the same - the confiscation for the said goods seems to be incorrect, is set-aside. CENVAT credit - no entries made in the RG 23A Part-I register as to receipt of the raw material - Held that - It is undisputed that the appellant had not maintained any clandestine records during the period in question. At the same time, the appellant had availed Cenvat credit of the amount and recorded the same in RG 23A Part-I register and the said credit has been utilized by them for paying central excise duty on the finished goods cleared by debiting the same in RG 23A Part-II register - demand set aside. CENVAT credit - returned goods - Rule 16 of CER, 2004 - Held that - the said demand needs to be upheld as the appellant has not been able to justify the same before the Tribunal that the goods which were received back were in fact received under some documents which indicate that the goods were originally cleared on payment of duty - in the absence of any co-relation, demand needs to be upheld. Appeal allowed in part.

Summary

Issues:
1. Confiscation of unaccounted goods in factory premises.
2. Eligibility to avail Cenvat credit of ?45,31,371.
3. Demand of duty on ineligible Cenvat credit of ?2,87,958.

Confiscation of unaccounted goods in factory premises:
The appeal addressed the confiscation of goods found in the factory premises without proper entry in the RG-I register. The appellant contested the allegations, arguing that there was no evidence of clandestine removal of goods and the absence of regular personnel led to the unaccounted goods. The Tribunal noted that while the goods were unrecorded, there was no indication of attempted clandestine removal. Consequently, the confiscation of the goods was set aside due to lack of evidence supporting clandestine activities.

Eligibility to avail Cenvat credit of ?45,31,371:
The issue revolved around denying the appellant the Cenvat credit on grounds of inadequate record-keeping in the RG 23A Part-I register. The appellant maintained that the credit was used for paying central excise duty on finished goods, even though the show cause notice did not demand duty on these goods. The Tribunal, citing precedents, concluded that even if the appellant was ineligible for the credit, the utilization for duty payment effectively reversed the credit. As a result, the demand of ?45,31,370 was set aside, along with associated interest and penalties.

Demand of duty on ineligible Cenvat credit of ?2,87,958:
The Tribunal upheld the demand for duty on ineligible Cenvat credit of ?2,87,958. The appellant failed to provide sufficient justification for the credit, unable to demonstrate that the received goods were originally cleared with duty payment. Due to the lack of evidence correlating the received goods to duty payments, the demand, along with interest and penalties, was upheld. The appeal was disposed of accordingly.

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