2015 (11) TMI 357

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..... The fact of the case is that the appellant is engaged in the manufacture of excisable goods falling under Chapter 84 of the Central Excise Tariff Act, 1984. They are also availing Cenvat credit as per the terms of Cenvat Credit Rules, 2004. During the course of EA 2000 audit, it was noticed that they had availed Cenvat credit on the goods covered under following invoices, which were initially cleared by the appellant and returned by their customers: Sr. NO. Invoice No. & Date Cenvat Credit Entry No. & Date Amount of credit availed (Rs.) 1. 22/10.09.2003 16/68 dtd 03.07.04 93,600/- 2. 08/05.06.2004 18/68 dtd 06.07.04 38,400/- 3. 11/06.07.2004 26/69 dtd 04.08.04 3,360/- 4. 30/04.12.2003 ....

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.... amounting to Rs. 1,21,701/- was not admissible. The show cause notice dated 6/12/2006 was issued wherein Cenvat credit of Rs. 1,44,754/- and Rs. 1,21,701/- was proposed to be denied and payment of Rs. 31,200/- already debited was proposed to be appropriated against demand. Interest under Section 11AB was also proposed and amount of Rs. 7,436/- paid by the appellant on account of interest was proposed to be appropriated. Penalty under Section 11AC was also proposed. Show cause notice was adjudicated vide order in original dated 21/8/2007 wherein the adjudicating authority confirmed the proposal made in the show cause notice. Aggrieved by the aforesaid order, the appellant preferred an appeal before the Commissioner (Appeals), who upheld the....

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....e entire show cause notice, it was alleged that credit is not admissible for the reason that the appellant has booked amount as shown obsolete in their balance sheet which is apparently wrong for the reason that the appellant booked in their balance sheet under head of loss merely due to design fault. Therefore, no goods was become obsolete. He also submits that there is no evidence adduced by the department after taking credit of returned goods; the same have been cleared from the factory without payment of duty. He submits that whatever returned goods received in the factory was admittedly used in the production. Only there is some deterioration of the goods on account of which the loss was booked in the balance sheet. He also submits tha....

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....were received under the five invoices on which already demand was confirmed. I am of the view that demand in respect of the loss booked under the balance sheet has to be sustained for the reason that if explicitly assessee booked loss is nothing but value which was written off. Therefore on written off value, Cenvat credit is not admissible. Therefore demand of Rs. 1,21,701/- in respect of loss credit is not admissible. As regard Cenvat credit in respect of five invoices which were admittedly towards returned goods in my view credit correctly admissible in terms of Rule 16. As regard the disposal of the goods the appellant submitted that the goods returned from their customers were dismantled and used in the fresh production which is strict....