2010 (1) TMI 521

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..... and not sustainable. Cenvat/Modvat – burden of proof regarding admissibility of Cevat Credit is not on assessee when they consistently denied taking credit and department had not produced Cenvat account.
Shri P.G. Chacko, Member (J) S/Shri Prakash Shah with Jitu Motwani, Advocates, for the Appellant. Shri Manish Mohan, SDR, for the Respondent. [Order]. - In this appeal filed by the assessee, the short question arising for consideration is whether the decision of the lower authorities to demand duty on a certain quantity of inputs for the period 2005-06 and to impose equal amount of penalty on the assessee is sustainable on the facts of this case. A senior auditor of the department on 8-12-2006 made on an audit report, wherein the foll .....

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..... uditor's report and entered the finding that the assessee had availed inadmissible Cenvat Credit to the extent of Rs. 3,22,525/-. On this basis, the proposed demand was confirmed against the party and equal amount of penalty was imposed on them. The order of adjudication was upheld by the Commissioner (Appeals). Hence the present appeal of the assessee. 2. After hearing the learned Counsel for the assessee and the learned SDR for the Revenue, I find that the demand raised on the assessee is not sustainable on facts or in law and, consequently, the penalty imposed on them is also liable to be set aside. There are more than one reasons. 3. Firstly, the show-cause notice was issued purely on the basis of audit objections without the necessar .....

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..... lunderous inasmuch as it repeats the auditor's blunder. Both the auditor and the author of the show-cause notice chose to add the figure 2312 kg to the closing balance (-) 11,412 kg of aluminium ingots to arrive at the total figure of 13,724 kg as the alleged excess quantity of input issued to the floor of the factory during 05-06. 5. Thirdly, the lower authorities also chose to repeat the mistake of the auditor in application of Rule 9(5) of the Cenvat Credit Rules, 2004. Apparently, it was presumed that the burden of proof regarding the admissibility of Cenvat Credit to the extent of Rs. 3,22,525/- lay on the assessee. The indisputable fact is that, in this case, the assessee consistently denied having taken any such credit. The departme .....

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