2018 (9) TMI 2136 - AT - Central Excise

Court Overturns Denial of Cenvat Credit for Iron and Steel Manufacturer; Revenue's Allegations Lack Evidence.

Allied Recyling Limited Versus CCE & ST-Ludhiana

The HC set aside the impugned orders denying Cenvat credit to the appellant, a manufacturer of Iron, Steel Ingots, and Billets. The Revenue's contention ... CENVAT Credit - inputs - C.R. Sheets, Rounds, H.R. Coils - denial on the premise that the said inputs itself are finished goods for some other industry, therefore, the same cannot be input for the appellant - no investigation has been conducted by the Revenue to establish the fact that these inputs have not been received by the appellant - HELD THAT:- Revenue has made allegation only on the basis of the fact that the inputs which have been shown by the appellants that they have received inputs are finished goods for some other industry and it can be used as input, these are finished goods by other industry. Therefore, the same cannot be inputs for the appellant but no investigation was conducted whether the appellant has received these inputs in their factory or not, how these inputs have been diverted by the appellants or the supplier. The allegation made against the appellant is merely on the basis of assumption and presumption, therefore, the said allegation is not sustainable. CBEC Circular No. 690/6/2003-CX dated 20.01.2003 has explained the position holding that Since the “Steal former” is actually consumed and is contained in the ingots and billets manufactured in the units, it is in the nature of an “input”. The Cenvat credit cannot be denied to the appellant - the impugned orders are set-aside - Appeal allowed. Issues: Denial of Cenvat credit on certain inputs - Allegation of inputs being finished goods for another industry - Lack of evidence and investigation by Revenue - Applicability of CBEC CircularIn this case, the appellant, engaged in the manufacturing of Iron, Steel Ingots, and Billets, appealed against the denial of Cenvat credit on inputs such as C.R. Sheets, Rounds, H.R. Coils by the Revenue. The Revenue contended that these inputs were finished goods for another industry, thus not eligible as inputs for the appellant. The appellant argued that no evidence was presented by the Revenue to prove that the inputs were not received, and the denial was based on presumption. The appellant cited CBEC Circular No. 690/6/2003-CX to support their entitlement to Cenvat credit. The Revenue supported the impugned orders during the proceedings.After hearing both parties, the Hon'ble Member (Judicial) observed that the Revenue's allegation was solely based on the assumption that the inputs received by the appellant were finished goods for another industry, without conducting any investigation into the receipt of inputs by the appellant. The lack of evidence led to the allegation being deemed unsustainable. Referring to CBEC Circular No. 690/6/2003-CX, which clarified the nature of inputs like 'Steel former' as consumed in the manufacturing process, the Member concluded that the denial of Cenvat credit to the appellant was unjustified. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief.