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TMI Blog2017 (3) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... ification by the officers before proceeding to deny the credit. Further, the presumption that defective concast bloom is a MS item and can be used for rerolling purpose has been contested as incorrect by the appellant. It is the submission of the appellant that even during the visit by the audit officers, the appellants sought to demonstrate the usage of the duty paid inputs in their furnace. Regarding the yield being on the lower side, we note that a verification has been conducted by the Income Tax Department to find out the burning loss in another similarly situated unit. It was recorded that the yield varies from 82.87% to 85.21% - various inferences made in the impugned order, at best can lead to a suspicion regarding possible improprietary on the part of the appellant. However, the same is not sufficient to deny the credit of inputs received, without any corroborative evidence of non-receipt or diversion of received inputs. We find in the present case no such evidence has been brought forward by the Revenue. The inferences based on possible loss on sale, lesser usage of electricity or gas etc. are not sufficient enough to deny credit on inputs which are otherwise legitimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inputs on which credit has been availed. Further, the name of these inputs were not declared in ER-6 returns during the material time and the appellant did not maintain separate records in terms of Rule 9 of Cenvat Credit Rules, 2004. 2. The learned Counsel appearing on behalf of the appellant submitted that the denial of credit was mainly based on assumption and presumption without any corroborative evidence adduced by the Revenue. They have requested the jurisdictional officers to verify the process undertaken by them in their furnace. The statement given by Shri K.K. Agarwal, Director of the appellant company, explained all the queries raised by the officers. While the statement was shown as relied upon document in the show cause notice, there is no discussion at all about the clarifications offered by the Director in his statement. There is no evidence of non-receipt of the raw material or diversions of credit availed raw material. No verification of the process undertaken by the appellant and the method adopted by them to cut these raw materials into pieces and use them in the process have been conducted by the officers. No verification with supplier of raw material or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07, 84.07% in 2007-08, and 84.32% in 2008-09, as is evident from the figures submitted in Reply to Show Cause Notice. There is absolutely no evidence produced in this regard in the impugned order. The finding is based on assumption and presumption. 2. The appellant has failed to follow proper procedure for maintaining accounts for raw material receipts, disposal, consumption and inventory of inputs capital goods. Non-maintenance of separate inventory of inputs was merely a procedural lapse for which substantive benefit cannot be denied. 3. The appellant has incurred loss on sale of every M. Ton of the product. No prudent manufacturer would continue to suffer losses. In 2005-06 2006-07, raw material rates were very high in comparison to finished products and being an induction furnace, the Appellant had to bear losses in 2005-06 to the tune of ₹ 1,22,02,523/- in 2006-07, profit of ₹ 30,42,123/- was recorded, as per Balance Sheet. This loss was accrued due to market trend and not for using the inputs in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been regularly filing the prescribed monthly return in the form of ER-6, in respect of information regarding receipt and consumption of each principal inputs with reference to the quantity if final cobbles, defective rails and wire rod cables in any of the ER-6 returns filed by them pertaining to the period in dispute. The demand has been raised subsequent to audit of books and accounts and thus it is an established case of suppression. There was no suppression as the Appellant had regularly submitted ER-1 returns along with enclosures, i.e. Annexure under Rule 7, Details of sale invoices, Challan and PLA, etc. Thus extended period is not invocable and penalty is not imposable. 8. Finding regarding conversion into MS Scrap from sister concerns on job work basis The allegation/finding is beyond the SCN as there is no such allegation in the SCN. Further, finding is entirely based on presumptions. 9. Finding regarding nonsubmission of consignment notes. It is submitted that the Learned Commissioner failed to appreciate that Appellant paid servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from 82.87% to 85.21%. We also find that the impugned order made observation regarding impossibility of selling MS Ingots on loss, if the disputed raw materials were actually used in the manufacture. In this connection, we observed that, in 2005-2006 the appellant incurred a loss of about 1.22 crores and in 2006-2007 they got a profit of ₹ 30 lakhs. Further, it is not for the Revenue to determine on what price the final product should have been sold by the appellant. In the absence of any manipulation with ulterior motive, the sale price is generally determined by market forces. Based on the sale price no presumptive conclusion can be made about possible non-usage of duty paid inputs in the manufacture of final product. We find various inferences made in the impugned order, at best can lead to a suspicion regarding possible improprietary on the part of the appellant. However, the same is not sufficient to deny the credit of inputs received, without any corroborative evidence of non-receipt or diversion of received inputs. We find in the present case no such evidence has been brought forward by the Revenue. The inferences based on possible loss on sale, lesser usage of elect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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