2019 (5) TMI 1090 - AT - Central Excise

CENVAT credit - inputs or finished products - case of Revenue is that the goods in the question were finished products by themselves and cannot be used for manufacture of furniture and not inputs - HELD THAT - The goods in question are in many cases inputs used for manufacture of furniture although in some cases the goods appear to be finished goods themselves. These are either used by the assessee for manufacture of final products or were cleared as such on payment of central excise duty. The assessee is entitled to cenvat credit against the disputed Bills of Entry subject to verification by the lower authority that the goods in question have been cleared on payment of central excise duty as per Rule 3(5) of Cenvat Credit Rules, 2004 or were used for manufacture of final products. For the limited purpose of the verification, the matter is being remanded to the original authority for verification - Appeal allowed by way of remand.

Summary

Issues:
Cenvat credit denial on imported goods used for furniture manufacture.

Analysis:
The case involved a dispute regarding the denial of cenvat credit on imported goods used for manufacturing furniture. The appellant, a furniture manufacturer, imported raw materials and inputs for producing final products, clearing them after paying central excise duty. However, a show cause notice was issued seeking to deny cenvat credit on certain imported goods, alleging they were finished products unsuitable for furniture manufacturing. The original authority confirmed the demand, imposed penalties, and the First Appellate Authority upheld the decision, leading to the appeal.

The appellant argued that some imported materials like staple gun nails and buckles were indeed used for furniture manufacturing, supported by invoices showing clearance after paying central excise duty. Citing Rule 3(5) of the Cenvat Credit Rules 2004, the appellant contended that goods cleared after paying excise duty entitle them to cenvat credit, even if used as inputs or removed as such. Legal precedents Mahindra & Mahindra and Vishal Precision Steel Tubes & Stripes Pvt Ltd. were referenced to support this argument.

The Departmental Representative reiterated the findings of the impugned order, stating that the appellant failed to provide sufficient evidence of paying excise duty on the imported goods. While some invoices were submitted during the proceedings, verification by the lower authority was deemed necessary. The attention was drawn to the lack of evidence presented before the lower authorities, suggesting a need for verification if the appellant's claims were to be accepted.

After considering both sides, the Member (Technical) found that the disputed goods were indeed used as inputs for furniture manufacture in many instances, supported by sample invoices. Consequently, the appellant was deemed entitled to cenvat credit against the disputed Bills of Entry, subject to verification by the lower authority regarding the payment of central excise duty on the goods as per Rule 3(5) of the Cenvat Credit Rules, 2004 or their use in manufacturing final products. The matter was remanded to the original authority for verification purposes, allowing the appeal by way of remand for limited verification regarding the payment of central excise duty on the goods used for furniture manufacture.