2019 (2) TMI 1423 - AT - Central Excise

Tribunal grants Cenvat credit, upholds exemption denial due to insufficient documentation

The tribunal partially allowed the appeal, ruling in favor of the appellant on the denial of Cenvat credit based on stock declaration and the denial of ... CENVAT Credit - credit denied on the stock lying on 31st March, 2003 on the ground that as per N/N. 40/2003-CE (N.T.) dated 30/04/2003 when there was no change in the stock on 01/04/2013 the assessee is required to give intimation which was not given by the appellant - Held that:- Appellant had filed declaration for the stock as on 31/03/2003. Since, in their reply they had stated that there is no change in the stock, the same may be considered as intimation, as there is no time period stipulated for such intimation - Hence, only for non filling of intimation which is of procedural nature, credit should not be denied - credit allowed. CENVAT Credit - credit denied on the ground that the appellant have not carried out any manufacturing activity on man-made fabric - Held that:- Since, the appellants have cleared the same goods on payment of duty, CENVAT credit is admissible in terms of Rule 16 of Central Excise Rules, 2002 - Demand on this ground set aside. Exemption under N/N. 38/2003-CE dated 30/04/2003 - exemption denied on the ground that the goods cleared by the appellant is not covered by the notification and the relevant invoices were not produced to ascertain the nature of the goods - Held that:- The Ld. Commissioner (A) has already considered and set aside the major demand on filing of 13 invoices by the appellant. However, for the remaining amount, appellant failed to produce any invoices. In absence of invoices, it cannot be ascertained that the goods cleared is covered by notification 38/03-CE. Therefore, the demand of ₹ 23,608/- is upheld. Penalty - Held that:- Since the major demand is set aside and the demand which was confirmed also relates to the applicability of the notification, there is no malafide on the part of the appellant, hence, the penalty imposed by the lower authority is also set aside. Appeal allowed in part. Issues involved:1) Denial of Cenvat Credit based on stock declaration.2) Denial of credit due to lack of manufacturing activity.3) Denial of exemption under a specific notification.Analysis:Issue 1: Denial of Cenvat Credit based on stock declarationThe appellant argued that no change in stock from 31/03/2003 to 01/04/2003 was declared, and thus, no separate intimation was filed. They contended that the non-filing of notification was a procedural lapse and that their reply to the Show Cause Notice should be considered as intimation, as there was no specified time limit for such notification. The tribunal agreed, holding that the failure to provide intimation was a procedural issue and did not warrant denial of credit. Therefore, the credit under notification 40/2003-CE (NT) was deemed admissible to the appellant.Issue 2: Denial of credit due to lack of manufacturing activityThe appellant asserted that even though the goods did not undergo manufacturing activity, they were cleared after duty payment, making them eligible for CENVAT credit under Rule 16 of Central Excise Rules, 2002. The tribunal concurred, stating that since the goods were cleared on payment of duty, the credit was permissible, and the demand on this ground was set aside.Issue 3: Denial of exemption under a specific notificationRegarding the denial of exemption under notification 38/03-CE, the Commissioner (A) had reduced the demand based on 13 submitted invoices, but the remaining invoices were not produced. The tribunal found that without these invoices, it could not be verified if the goods cleared were covered by the notification. Therefore, the demand of &8377; 23,608/- was upheld, as the necessary documentation was lacking. However, the penalty was set aside due to the absence of malafide intent on the appellant's part.In conclusion, the tribunal partially allowed the appeal, holding that the appellant was entitled to the Cenvat credit under notification 40/2003-CE (NT) and the CENVAT credit for goods cleared after duty payment. However, the denial of exemption under notification 38/03-CE was upheld due to insufficient documentation, with the penalty being set aside.