2013 (10) TMI 943

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....ad filed ER-3 quarterly return for quarter ending 06/2011 on 9.7.2011 for the goods manufactured and cleared during April 2011 to June 2011. During the scrutiny of the said quarterly ER-3 return filed by them, it was observed that an amount of Rs.2,76,068/- was shown to have been taken as CENVAT credit in CENVAT abstract during the said quarters. However, on scrutiny of the document on whose strength the credit was taken, it was found that the duty paid on M.S. scrap was taken as credit. Since the scrap is not an input for manufacture of dish ends and not eligible for CENVAT credit a detailed study of the issue was taken up and the same revealed that the said invoice is issued by M/s. Bharat Heavy Electricals Ltd. (BHEL) in the name of the ....

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....cture of dish ends has to be accepted and accordingly, he dropped the proceedings. On an appeal filed by the Revenue, Commissioner (A) in the impugned order held that the original adjudicating authority erred in coming to this conclusion. He observed that he should have investigated as to whether MS plates which were purchased by the assessee which according to them was left over and according to BHEL was waste was correct or not and whether it was in reality could have been used in the manufacture of dish ends. Further, he also observed according to Notification No.214/86-CE dated 23.5.1986 under which the materials were sent by BHEL, the material should have been returned to BEHL and therefore there is a violation of the condition of the ....

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....dish ends, which is their final product and this contention was accepted by the original adjudicating authority, who did not feel the need for any investigation. However, when the department filed an appeal, the Commissioner (A) came to the conclusion that the verification / investigation which was not felt as a necessity at the time of issue of show-cause notice or at the time of adjudication by the original adjudicating authority was required. This conclusion was reached only because he did not believe the assessee. The whole system of collection of indirect taxes is based on the trust placed on the assessee and the assessee has to do the self-assessment and considering whether a particular item is input or not, whether credit is admissib....