TaxTMI 
TaxTMI 
2007 (8) TMI 254
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....xcise, it was observed that in the Cost Audit Report for the year 2002-2003, for the physical verification of inventory, there was shortage of raw material worth Rs. 33,42,161/-. The amount involved CENVAT (Central Value Added Tax) Credit of Rs. 5,34,746/-, which was claimed by the assessee, although raw materials were not used in or in relation to manufacture of the final product. Thus, Cenvat credit worth Rs. 5,34,746/- was claimed without justification or rather without being entitled to do so. Show cause notice dated 15-12-2004 was issued directing the assessee to show cause as to why demand of Rs. 5,34,746/- may not be confirmed, why interest under Section 11AB of the Central Excise Act, 1944 may not be recovered and why penalty und....
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...., in the matter at hands, the percentage was quite on the higher side (0.41%), as mentioned in the notice reply dated 9-2-2005. Taking into consideration Rule 7(4) of the Cenvat Credit Rules, 2002, the learned Joint Commissioner observed that the burden of proof regarding admissibility of Cenvat credit lies upon the manufacture and which burden was not discharged by the assessee. 3. The assessee approached the Commissioner of Central Excise & Customs (Appeals), Aurangabad by way of an appeal. The Commissioner (Appeals) disposed of the appeal by his judgment and order dated 25-11-2005 who confirmed the demand and interest, but reduced the penalty to Rs. 25,000/- by observing thus "However, I feel that this is not a case which warrants ....
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.... The language of the Rule is plain and unambiguous. If the assessee claims entitlement to Cenvat credit, it is the burden of proof upon the assessee to prove the admissibility of the Cenvat credit. In the matter at hands and in the facts and circumstances of the case, the only manner in which the assessee could have justified the Cenvat credit claim was by showing through the Books of Accounts or by any other piece of evidence that the inputs which were short as per Audit Report and were not utilized in the manufacture of final product. Having gone through the orders of all the authorities, there does not appear to be any such attempt on the part of the assessee. On the contrary, we are convinced that more reliance is upon claiming exemptio....
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.... Rule 7(4) in correct perspective. In view of failure on the part of the assessee to account for utilization of the inputs which were short and upon which Cenvat credit was claimed, but were not accounted in the Audit Report as utilized in the production, the two lower authorities have decided the matter against the assessee, and therefore, those authorities cannot be said to have read Rule 7(4) in an incorrect manner. 6. So far as the order of CESTAT is concerned, it has mainly relied upon the decision of the Tribunal, at Delhi hi the matter of Maruti Udyog Ltd. v. Commissioner of C. Ex., Delhi-III, reported in 2004 (173) E.L.T. 382. We must state here itself that the decision of the Tribunal is certainly not binding upon us and it is a....
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....exonerating the assessee from the liability to pay duty by reversing the Cenvat credit wrongly claimed. When there is no statutory foundation for such exemption, with due respect, we are unable to agree with the view taken by the Tribunal. It seems to be a sympathetic view by taking into consideration that it is a huge plant with huge turnover and in spite of huge and complex accounting system, there are bound to be some problems and some errors. With due respect, the Tribunal did not consider the other side of the coin. The Department does not function as a supervisor to ensure that every input is used or not used in the manufacture of final product is properly recorded in the accounts and the Department wholly relies upon the Books of Acc....