2018 (1) TMI 98 - AT - Central Excise

CENVAT credit - credit taken on invoices on which proper address was not found - Held that - there is only clerical error in the invoice(s). Admitted facts are that the appellants had two units in the same industrial area only difference name Structure Division by the same management. Further admitted facts are that goods were found properly accounted in the proper records as required and no discrepancies were found with regard and used in manufacture of finished goods cleared by appellants on duty payment - credit allowed. Reversal of CENVAT credit under protest - CC Billets - Held that - the Commissioner (Appeals) erred in observing that reversal is without protest. As appellants have not accepted objection of Revenue and have also been contesting the matter in appeal. Thus the reversal of credit ipso facto is not admission - credit on Billets is fully allowed. Levy of duty - removal of scrap - Held that - cogent explanation was given by the appellants not found untrue. Thus demands have been confirmed only on presumptions - demand set aside. Inputs found short - MS Angles - Held that - admittedly there is no calculation sheet annexed to Panchnama neither any such calculation is referred in the show cause notice. Thus the demand is by way of presumption which is not tenable. Appeal allowed in part.

Summary

Issues:
1. Disallowance of Cenvat credit and duty demand on scrap removal.
2. Discrepancies in invoices leading to disallowance of Cenvat credit.
3. Disallowance of Cenvat credit on CC Billets.
4. Duty demand on shortage of input stock.

Analysis:
1. The appeal involved challenges against the disallowance of Cenvat credit and duty demand on scrap removal. The appellant, a manufacturing unit, faced discrepancies related to invoices and stock shortages. The duty demand was confirmed for the shortage in the stock of input materials. The appellant contested the disallowances, citing clerical errors and proper accounting of materials used in finished goods. The Tribunal found that the clerical error in invoices did not warrant disallowance of Cenvat credit, as the materials were genuine inputs used in manufacturing.

2. Regarding the disallowance of Cenvat credit on CC Billets, the appellant argued that the billets were essential inputs for manufacturing structures. The Tribunal noted that the reversal of credit was not an admission of wrongdoing, and the appellants contested the matter. Consequently, the disallowance of Cenvat credit on CC Billets was deemed unjustified, and the credit was allowed.

3. The duty demand on scrap removal was challenged by the appellant, who explained that the scrap was from worn-out sheds during repairs and renewal, not subject to duty or credit reversal. The Tribunal accepted the explanation, ruling that demands based on presumptions without concrete evidence were unfounded. Therefore, the duty demand on scrap removal was deleted.

4. Lastly, the duty demand on the shortage of input stock was contested based on discrepancies in the physical verification process. The appellant argued that the estimation method used was prone to variations and lacked supporting calculation sheets. The Tribunal found the demand based on presumption and lacking concrete evidence, leading to the setting aside of the duty demand on the shortage of input stock. The appeal was successful on all grounds, and consequential relief, including the reversal of Cenvat credit, was granted. Additionally, penalties imposed on the director were deleted.