2014 (1) TMI 466 - AT - Central Excise

Recall of Final Order Granted, Burden of Proof on Revenue for Cenvat Credit

M/s Punjab Alkalies & Chemicals Ltd. Versus CCE, Chandigarh

The court allowed the application for recalling the final order due to non-prosecution, noting that the appeal should not have been dismissed solely for ... Recall of Final order - Waste and scrap of capital goods cleared – No reversal of Cenvat credit or payment of duty made – Held that:- The entire dispute in the present appeal relates to the verification of the factual aspect - Once an assessee takes a stand that the capital goods out of which waste and scrap has arisen were not cenvatable, the onus to prove the contrary is upon the Revenue – Following Union of India vs. Hindustan Zinc Ltd. [2007 (3) TMI 198 - HIGH COURT RAJASTHAN ] - Revenue has not advanced any evidence to reflect upon the fact that the assessee had availed the Cenvat credit on the capital goods – order set aside and the Central Excise authorities directed to verify the assessees records to give to a conclusive finding as regards the stand taken by the appellant – Decided in favour of Assessee. Issues:1. Recall of final order due to non-prosecution2. Dismissal of appeal for non-prosecution3. Confirmation of demand of duty, interest, and penalty4. Applicability of Cenvat Credit Rules5. Onus of proof on the Revenue regarding Cenvat creditIssue 1: Recall of final order due to non-prosecutionThe judgment addresses the application for recalling the final order where the stay petition and appeal were dismissed for non-prosecution. It was noted that the appellant did not appear due to non-receipt of notice, and the notice was solely for the disposal of stay. The court agreed that the appeal itself should not have been dismissed for non-prosecution, leading to the allowance of the application for recalling the order.Issue 2: Dismissal of appeal for non-prosecutionThe court found that the lower authorities had confirmed a demand of duty, interest, and penalty on the appellant for clearing waste and scrap of capital goods without reversing Cenvat credit or paying duty. Despite the appellant's claim of purchasing the capital goods before 1994 without availing Modvat credit, the Additional Commissioner referred to Cenvat Credit Rules and held that the appellant must reverse the credit or pay duty. The court emphasized that the rules apply to waste and scrap from capital goods with Cenvat credit, placing the onus on the Revenue to prove otherwise.Issue 3: Confirmation of demand of duty, interest, and penaltyThe dispute centered on the factual verification of whether the capital goods in question were cenvatable, with the court highlighting the legal position and factual aspect. Citing precedents, the court stated that if an assessee claims the capital goods were not cenvatable, the Revenue must prove otherwise. As the Revenue failed to provide evidence of Cenvat credit availed by the appellant, the court set aside the impugned orders and directed the Central Excise authorities to verify the records for a conclusive finding.Issue 4: Applicability of Cenvat Credit RulesThe judgment clarified that the Cenvat Credit Rules apply to waste and scrap from capital goods with Cenvat credit, emphasizing the need for factual verification in disputes related to the utilization of such credit.Issue 5: Onus of proof on the Revenue regarding Cenvat creditThe court reiterated that the burden of proof lies with the Revenue to demonstrate that the assessee availed Cenvat credit on the capital goods in question. In the absence of such evidence, the court directed the authorities to verify the records for a conclusive determination.In conclusion, the judgment addressed various issues related to the recall of the final order, dismissal of the appeal, confirmation of duty demand, applicability of Cenvat Credit Rules, and the onus of proof on the Revenue regarding Cenvat credit, providing a detailed analysis and directing further verification by the authorities.