2012 (6) TMI 97 - AT - Central Excise

Appeals Commissioner overturns Cenvat credit demand, emphasizes burden of proof on department.

The Commissioner (Appeals) set aside the Cenvat credit demand on the sale of used capital goods as scrap without duty payment, stating the burden of proof ... Duty on capital goods cleared as scrap - capital goods in respect of which Cenvat Credit had been availed - respondents in course of proceedings before the Asst. Commissioner had claimed that the capital goods were not cenvat credit availed goods but the Asstt. Commissioner did not accept this plea and held that the goods were cenvat credit availed. finding is without any reference to the records. Since whether or not the capital goods, in question, were cenvat credit availed is verifiable fact, the impugned order is set aside and the matter is remanded back to the original adjudicating authority for de novo adjudication. revenue's appeal is allowed by way of remand. Issues:1. Whether the provisions of Rule 3(5A) of the Cenvat Credit Rules, 2004 apply to the sale of used capital goods as scrap without payment of duty.2. Burden of proof regarding the availment of Cenvat credit on capital goods sold as scrap.3. Applicability of judgments in similar cases to the present appeal.Issue 1:The case involved the sale of used capital goods as scrap without payment of duty during a specific period. The department contended that Rule 3(5A) of the Cenvat Credit Rules, 2004 applied in such cases, requiring payment of duty equal to the duty on the sale price of the goods. The original adjudicating authority confirmed a Cenvat credit demand along with interest and imposed a penalty. On appeal, the Commissioner (Appeals) set aside the order, stating that the burden of proving the capital goods were Cenvat credit availed goods rested with the department. The Commissioner relied on previous tribunal judgments. The present appeal was filed against this decision.Issue 2:During the hearing, the departmental representative argued that the burden of proof regarding the availment of Cenvat credit on the capital goods sold as scrap lay with the respondent. Since the respondent failed to produce evidence supporting their claim that the goods were not Cenvat credit availed, the department could presume that Cenvat credit had been availed. The representative cited tribunal judgments and a High Court judgment supporting this view. The absence of the respondent during the hearing led to a decision made ex parte in accordance with Rule 21 of CESTAT (Procedure) Rules.Issue 3:Upon careful consideration, the judge found that the duty on capital goods cleared as scrap would be payable only if Cenvat credit had been availed on those goods. The Asstt. Commissioner's finding that the goods were Cenvat credit availed lacked reference to supporting records. The judge noted that the availability of records regarding Cenvat credit availed goods is a verifiable fact. As the original order did not refer to such records, the judge set aside the decision and remanded the matter back to the original adjudicating authority for a fresh adjudication after verifying whether Cenvat credit had been availed on the capital goods in question. The revenue's appeal was allowed by way of remand.