Appeal allowed due to unjust denial of Cenvat credit on capital goods. No diversion or non-availability issues found.

The appeal was allowed as the Member (Technical) found that the denial of Cenvat credit on capital goods was unjustified. Despite some original documents being unavailable, there were no allegations of diversion of goods or non-availability of items for which credit was taken. The Member noted that the first 50% credit had been availed without objection, and there was no merit in denying the second 50% credit based on the reasons provided in the impugned order. Consequently, the impugned order was set aside, and the appeal was allowed.

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Issues:
- Denial of Cenvat credit on capital goods due to lack of proper records maintenance.
- Dispute over availing the second 50% credit on capital goods.
- Allegation of non-availability of original documents for some invoices.

Analysis:

Issue 1: Denial of Cenvat credit on capital goods
The appellants, engaged in manufacturing excisable goods, availed Cenvat credit on capital goods. The Revenue initiated proceedings against them, denying credit due to alleged failure in maintaining proper records as per Cenvat Credit Rules. The Original Authority observed that original documents for certain credits were not produced, leading to the denial of credit.

Issue 2: Dispute over availing the second 50% credit
The appellant contended that the first 50% credit on capital goods had been availed without objection over the years. However, the Revenue questioned the availing of the second 50% credit in August 2011, citing non-availability of records for past periods and absence of some original invoices. The appellant argued that the credit availability had never been challenged on merit, and there were no allegations of diversion of items for which credit was taken.

Issue 3: Allegation of non-availability of original documents
The lower Authorities, supported by the Authorized Representative, maintained their findings regarding the denial of credit based on the lack of original documents for certain invoices. However, during the hearing, it was revealed that out of 242 invoices, 210 original documents were produced, while photocopies were provided for the remainder. The officers of Central Excise Intelligence had taken over the original documents and records in connection with investigations in 2009.

The Member (Technical) examined the appeal records and found that the availability of credit on capital goods was not disputed on merit. The first 50% credit had been availed and utilized without any objection from the Revenue. Despite the non-availability of some original documents, the Member noted that there were no allegations of diversion of goods or non-availability of items for which credit was taken. The Member concluded that there was no justification for denying the second half of the credit based on the reasons stated in the impugned order. Consequently, the impugned order was set aside, and the appeal was allowed.

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