Manufacturer's CENVAT credit claim for pig iron inputs in non-alloy ingot production upheld against Revenue challenge

CESTAT Kolkata upheld the respondent manufacturer's CENVAT credit claim for pig iron inputs used in non-alloy ingot production. The Revenue challenged the credit alleging goods were not received at the factory, relying only on invoices. The tribunal found no evidence supporting the allegation that inputs were diverted or not received at the respondent's factory. Anti-Evasion Superintendent's verification confirmed no evidence of diversion. The adjudicating authority's reasoned findings allowing the credit were upheld as the Department failed to provide contradictory evidence. Revenue's appeal was rejected.

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Issues involved: Allegation of improper availing of CENVAT Credit on pig iron without actual receipt of goods into the factory.

The appeal was filed by the Revenue against the Order-in-Original (De Novo) passed by the Ld. Commissioner of Central Excise and Service Tax, Bolpur Commissionerate. The respondent, a manufacturer of non-alloy ingots, availed CENVAT Credit on pig iron, a major input, procured from IISCO, Burnpur. The department alleged that the respondent had not received the goods in their factory and had availed credit based on invoices alone without actual receipt of goods. Four Show Cause Notices were issued proposing to disallow the CENVAT Credit on pig iron procured from IISCO, Burnpur.

In the initial proceedings, the Ld. Commissioner dropped the proceedings based on a report that lacked evidence of diversion of inputs. The Department appealed to CESTAT Kolkata, which set aside the order and directed a fresh investigation. In the subsequent proceedings, the Ld. Commissioner found no evidence to support the allegation of non-receipt of goods in the factory and dropped the proceedings. The Department appealed against this decision.

The Department contended that proper records were not maintained for receipt of inputs, and the burden of proof lay on the manufacturer to show admissibility of CENVAT Credit. However, the Ld. Commissioner found no evidence to substantiate the allegations and allowed the credit. The Department's appeal was rejected as they failed to provide evidence contradicting the findings of the Ld. Commissioner.

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