Appeal Dismissed: Cenvat Credit Denied for Steel Items in Fabrication of Molasses Tanks

The Tribunal dismissed the appeal filed by M/s. Avon Organics Ltd. regarding the denial of cenvat credit on steel items used for fabrication of molasses tanks and invoices in the name of the head office. The denial was upheld due to the lack of evidence supporting the claimant's arguments, including the absence of proof of non-availment of credit at the other unit and the authenticity of the invoices. The appellant failed to meet the onus of proving the admissibility of credit, leading to the dismissal of the appeal on 29.12.2017.

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Issues: Denial of cenvat credit, demand of interest, imposition of penalty

Denial of Cenvat Credit on Steel Items for Fabrication of Molasses Tanks:
The appellant, M/s. Avon Organics Ltd., filed an appeal against the denial of cenvat credit amounting to Rs. 7,03,726 on steel items used for fabrication of molasses tanks in their factory. The appellant argued that the material in question was used in a different unit than the one mentioned in the Bills of Entry and provided a Chartered Accountant's certificate to support their claim. They contended that the denial of credit based on the absence of a certificate from the Range Superintendent of the other unit was unjustified and that the credit should have been allowed based on the CA certificate. However, the Tribunal found that while tanks are covered under the definition of capital goods, the inputs used for their construction are not. Consequently, the credit on steel items used for tanks was disallowed.

Denial of Cenvat Credit on Invoices in the Name of Head Office:
Another issue raised in the appeal was the denial of cenvat credit amounting to Rs. 31,06,539 due to invoices being in the name of the head office. The appellant failed to produce a certificate from the Range Superintendent of the other unit confirming the non-availment of credit there. Moreover, the invoices submitted were deemed not original. The Tribunal upheld the denial of credit on these grounds, emphasizing the lack of evidence regarding non-availment of credit at the other unit and the authenticity of the invoices.

Onus of Establishing Receipt and Utilization of Material:
The Tribunal highlighted Rule 9(5) of the Cenvat Credit Rules, which places the onus on the claimant to prove the receipt and utilization of material and satisfy the authorities regarding credit admissibility. In this case, the documents supporting the credit availed were found to be distinct, requiring the appellant to demonstrate the receipt and utilization of the material. Despite providing a CA certificate, the appellant failed to furnish evidence of non-availment of credit at their other unit or the receipt and utilization of the material before the lower authorities or the Tribunal. As a result, the Tribunal concluded that the appellant did not meet the onus placed on them, leading to the dismissal of the appeal.

In conclusion, the Tribunal dismissed the appeal filed by M/s. Avon Organics Ltd. on the basis of the lack of merit, emphasizing the failure to establish the admissibility of credit on steel items used for tanks and the absence of sufficient evidence regarding the non-availment of credit at the other unit as well as the receipt and utilization of the material. The judgment was pronounced on 29.12.2017.

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