2011 (5) TMI 73 - AT - Central Excise

Tribunal affirms decision to drop proceedings over disputed Cenvat credit, emphasizing burden of proof.

The Tribunal upheld the decision of the lower authorities to drop proceedings against the respondent for availing Cenvat credit on capital goods. The ... Proof - Reversal Cenvat credit - Capital goods - Under Rule 7 of the then Cenvat Rules - The revenue was of the opinion that the respondent has availed Cenvat credit on the capital goods used in the manufacturing of finished goods and subsequently sold the same - Show cause notice was issued demanding the reversal of such Cenvat credit - The appellant was able to demonstrate, that they have not availed the Cenvat credit of the duty paid on capital goods - It is seen that the department is seeking the respondent to prove the negative, which is incorrect proposition of law - The revenue has not been able to produce any evidence regarding the availment of Cenvat credit by the respondent on the said capital goods - Hence, the appeal filed by the revenue devoid and is rejected. Issues involved:Revenue's appeal against dropping of proceedings regarding availing Cenvat credit on capital goods used in manufacturing and subsequent sale.Analysis:The appeal before the Appellate Tribunal CESTAT, New Delhi involved the issue of the Revenue contesting the dropping of proceedings initiated against the respondent for availing Cenvat credit on capital goods used in manufacturing and subsequently sold. The Revenue alleged that the respondent had availed Cenvat credit on capital goods, leading to a demand for reversal of such credit. The Adjudicating Authority dropped the proceedings based on evidence provided by the respondent, indicating non-availment of Cenvat credit on the duty paid for the capital goods procured and cleared later. The Commissioner (Appeals) upheld the Adjudicating Authority's decision, prompting the Revenue to appeal before the Tribunal.The Revenue raised several grounds of appeal, emphasizing the necessity of proper documentation, such as duplicate copies of invoices and RG23A Pt. I/Pt. II, to determine the availment of Cenvat credit on capital goods. They argued that the Chartered Accountant's certificate was insufficient proof and highlighted discrepancies in the Commissioner (Appeals)'s observations regarding subsequent year credits and balance sheet entries. The Revenue contended that the respondent failed to provide adequate documentation to prove non-availment of Cenvat credit on the capital goods in question.In the Tribunal's analysis, it was noted that the Revenue failed to produce any evidence demonstrating that the respondent had indeed availed Cenvat credit on the duty paid for the capital goods. The Tribunal highlighted the incorrect proposition of law by the Revenue in seeking the respondent to prove a negative, i.e., non-availment of credit. The Tribunal concluded that the lower authorities were correct in dropping the proceedings as the Revenue could not substantiate their claims with evidence of Cenvat credit availed by the respondent on the capital goods.Ultimately, the Tribunal upheld the decision of the lower authorities, deeming the dropping of proceedings justified based on the lack of evidence supporting the Revenue's claims. The Tribunal found the appeal filed by the Revenue to be without merit and rejected it, affirming the correctness of the impugned order.