2013 (11) TMI 237 - AT - Central Excise

Tribunal Upholds Denial of CENVAT Credit & Penalty, Directs Deposit for Appeal

The Tribunal condoned the 7-day delay in filing the appeal due to the Managing Director's unavailability. However, the denial of CENVAT credit and ... Determination of assessable value – Waiver of pre deposit of duty and Penalty u/s 11AC of CE Act – Held that:- The applicant has determined the assessable value on stock transferred goods under Rule 8 of Central Excise Valuation Rules by adopting 110% of the cost of the product - the applicant has adopted the CAS-4 method - the value was determined by the CERA Audit whereby, the assessable value for the respective years had been revised. The difference in the assessable value was around 57.39 Lakhs and 36.71 Lakhs respectively in comparison to the value arrived at by the applicant, whereas for the years 2006-2007, 2008-2009 and 2009-2010, the applicant has paid duty on the excess value of Rs.3.13 crores, 2.3 crores and 3.03 crores respectively - Prima facie, there was no reason why the excess duty paid during 2006-07, 2008-09 & 2009-10 should not be adjusted for the period where duty has been short paid - the applicant could able to make out a prima facie case for total waiver of dues and all dues waived and its recovery stayed during the pendency of the appeal – Stay granted. Issues:1. Condonation of delay in filing the appeal.2. Denial of CENVAT credit and imposition of penalty.3. Transfer of inputs between units and utilization in final products.4. Invocation of Rule 9(2) of CENVAT Credit Rules.5. Requirement of proper documentation for claiming input credit.Analysis:1. The appellant sought condonation of a 7-day delay in filing the appeal due to the non-availability of the Managing Director to sign the appeal papers. The Tribunal considered the reason satisfactory and condoned the delay.2. The appellant had two units, and inputs were received in one unit but utilized in the other for manufacturing final products. However, proceedings were initiated as the invoices were addressed to the wrong unit, leading to the denial of CENVAT credit and imposition of a penalty equal to the credit amount.3. The appellant argued that inputs were actually used in the manufacture of final products in the unit where credit was claimed, despite lacking evidence of transfer between units. The appellant also highlighted specific inputs, like ABS plastic, which could only be used in the unit where the final products were manufactured.4. The Tribunal noted that Rule 9(2) of CENVAT Credit Rules could not be invoked due to the actual non-receipt of inputs in the unit claiming credit. Lack of proper documentation for the transfer of inputs further weakened the appellant's claim for CENVAT credit.5. Considering the submissions, the Tribunal directed the appellant to deposit a specified amount within a given timeframe. Failure to comply would result in the denial of the appellant's claim for credit. However, upon the deposit, there would be a waiver of pre-deposit for the remaining dues and a stay against recovery during the appeal's pendency.This detailed analysis of the judgment from the Appellate Tribunal CESTAT Bangalore covers the issues of delay condonation, denial of CENVAT credit, transfer of inputs between units, invocation of specific rules, and the requirement of proper documentation for claiming input credit.