TaxTMI 
TaxTMI 
2017 (5) TMI 384
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....ppellant for period of three years. The department case is that whatever shortage is found in respect of input supplied by the principle to the appellant, credit to that extent is not admissible to the appellant accordingly credit was denied. The appellant took stand that after entire analysis, they found that shortage is only to the tune of Rs. 44 lakhs at which they have admittedly reversed the Cenvat credit of Rs. 7,04,361/-. The adjudicating authority denied the credit on the entire value of shortage shown by M/s. Mahindra & Mahindra Ltd to Rs. 36,36,848/-. Being aggrieved by the Order-in-Original appellant filed appeal before the Commissioner(Appeals) which came to be rejected therefore appellant is before me. 2. Shri. Rajesh Ostwal....
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....y both sides and perused records. 5. I find that Cenvat credit was denied by the lower authority only on the basis of some shortage recorded by M/s. Mahindra and Mahindra in their books of account, there is nothing as such recorded in the books of appellant. As per the appellant's book there is only shortage of Rs. 44 Lakhs towards input received from M/s. Mahindra and Mahindra. The department has not conducted physical stock. It is also on record that M/s. Mahindra and Mahindra clarified the entire position of their recording of shortage in their books of account which is scanned below: From the above clarification given by M/s. Mahindra and Mahindra Ltd, it has been observed that shortage recorded by M/s. Mahindra and Mahindra Ltd w....
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....to PSSL, Nasik for manufacture of Motor Vehicle components (Body) panels). As a process. PSSL would take the Modvat credit of the duly paid on the steel sheets. They would be discharging the duty liability on the components manufactured and supplied to M&M. M&M would pay them to the extent of the Job work charges + the excise duty paul by PSSL less the Modvat credit availed by PSSL. M&M would permit diem certain production losses (scrap) and any amount beyond such allowances would also be debited to PSSL. (We have started debiting from F02 onwards, priar period we have not dehited them) Material Accounting at M&M The material accounting of M&M was as under: a) As and whch In respect of the Steel ....
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.... due to the following reasons: a) Not Updating BOM timely Value engineering issues: The consumption of the steel sheets is recorded by a system of back flushing the assigned weight of the component. If PSSL has received 1000 kgs of steel sheet and they return 7 components whose assigned wi. Is 100 kgs per piece, whose wt Is 700 Due to value engineering, the quantity of sice! used for a particular part may be reduced. However, the incorporation of the same in the Bill of Material would take time. Since back flushing is regulated by the BOM, it would continue to show higher consumption and would result in shortage.(not shortage, but physical excess at M&M) b) Variations in Steel sheets. The qty supplied by M&M to PSSL ....