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CENVAT taken on goods which did not undergo any manufacturing activity – since goods have been cleared on payment of duty, credit is admissible in terms of rule 16 of CER: CESTAT, Ahmedabad

IN THE CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL

WEST ZONAL BENCH, AHMEDABAD

Appeal No. E/882/2009-DB

Arising out of OIA no. 91-2009-AHD-I-CE-ID-COMMR-A-AHD, Dated: 03.04.2009

Passed by Commissioner of Central Excise-AHMEDABAD-I

Date of Hearing: 18.01.2019

Date of Decision: 18.01.2019

NEEPA TRADING COMPANY

Vs

COMMISSIONER OF CENTRAL EXCISE

AHMEDABAD-I

Appellant Rep by: Shri S Bissa, Adv.

Respondent Rep by: Shri S K Shukla, Supdt. AR

CORAM: Ramesh Nair, Member (J)

Raju, Member (T)

CX – Three issues involved in the present case – As regard the credit in terms of notfn 40/2003-CE (NT) the only lapse on the part of assessee was that they have not given intimation as there is no change of stock as on 01/04/2003 – However, they had filed declaration for the stock as on 31/03/2003 – Since, in their reply they had stated that there is no change in the stock, the same may be considered as intimation, as there is no time period stipulated for such intimation – Hence, only for non filling of intimation which is of procedural nature, credit should not be denied – Accordingly, the credit with reference to notfn 40/2003-CE (NT) is admissible to assessee – As regard the issue that the assessee has availed the credit on goods which have not undergone the manufacturing activity, since the assessee have cleared the same goods on payment of duty, CENVAT credit is admissible in terms of Rule 16 of CER, 2002 and the demand on this ground is also set aside – As regard the demand confirmed denying benefit under notfn 38/03-CE, the Commissioner (A) has already considered and set aside the major demand on filing of 13 invoices by the assessee – However, for the remaining amount, assessee failed to produce any invoices – In absence of invoices, it cannot be ascertained that the goods cleared is covered by notfn 38/03-CE – Therefore, the demand of Rs.23,608/- is upheld – As regard penalty, since the major demand is set aside and the demand which was confirmed also relates to the applicability of the notification, no malafide found on the part of assessee, hence, the penalty imposed by lower authority is also set aside: CESTAT

Appeal partly allowed

FINAL ORDER NO. A/10178/2019

Per: Ramesh Nair:

Three issues involved in the present case are:

  1. The Cenvat Credit was denied on the stock lying on 31st March, 2003 on the ground that as per notification 40/2003-CE (N.T.) dated 30/04/2003 when there was no change in the stock on 01/04/2013, the assessee is required to give intimation which was given by the appellant.
  2. The credit was denied on the ground that the appellant have not carried out any manufacturing activity on man-made fabric. However, the duty was paid on clearance of such goods. The reason for denial of credit is that they have not carried out any manufacturing activity.
  3. The appellant was denied the exemption under notification 38/2003-CE dated 30/04/2003 on the ground that the goods cleared by the appellant is not covered by the notification and the relevant invoices were not produced to ascertain the nature of the goods.

2. Shri Sudhanshu Bissa, Ld. Counsel appearing on behalf of the appellant submits that as regard the first issue, since there was no change in the stock declared on 31/03/2003 as on 01/04/2003, they have not filed any declaration. He admits that the intimation required to be filed was not given to the department. In this regard, he submits that non filing of notification is only a procedural lapse. In the reply of the Show Cause Notice, the appellant have clearly stated that there was no change in the stock declared as on 31/03/2003. He also submits that there is no time limit to give the intimation. Therefore, the submission made in the reply could be taken as intimation.

2.1 As regard, the second issue, he submits that even though the goods on which CENVAT credit was taken, had not undergone manufacturing activity. Since it was cleared on payment of duty, credit is admissible.

2.2 As regard the third issue, he submits that the demand was raised of Rs. 74,000 approx. It was reduced by the Commissioner (A) to Rs. 23,608/- on the basis of 13 invoices submitted. The remaining invoices were not traceable. But the goods in the other invoices were same as goods supplied in the 13 invoices. Therefore, the benefit under notification 38/03- CE should be allowed.

3. Shri S.K. Shukla, Ld. Supdt. (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.

4. On careful consideration of the submission made by both the sides and perusal of the records, we find that as regard the credit in terms of notification 40/2003-CE (NT) the only lapse on the part of the appellant was that they have not given intimation as there is no change of stock as on 01/04/2003. However, they had filed declaration for the stock as on 31/03/2003. Since, in their reply they had stated that there is no change in the stock, the same may be considered as intimation, as there is no time period stipulated for such intimation. Hence, only for non filling of intimation which is of procedural nature, credit should not be denied. Accordingly, we hold that the credit with reference to notification 40/2003-CE (NT) is admissible to the appellant.

4.1 As regard the issue that the appellant has availed the credit on the goods which have not undergone the manufacturing activity, we are of the view that since, the appellants have cleared the same goods on payment of duty, CENVAT credit is admissible in terms of Rule 16 of Central Excise Rules, 2002 and the demand on this ground is also set aside.

4.2 As regard the demand of Rs. 23,608/- confirmed denying benefit under notification 38/03-CE, we find that the Ld. Commissioner (A) has already considered and set aside the major demand on filing of 13 invoices by the appellant. However, for the remaining amount, appellant failed to produce any invoices. In absence of invoices, it cannot be ascertained that the goods cleared is covered by notification 38/03-CE. Therefore, the demand of Rs.23,608/- is upheld.

4.3 As regard penalty since the major demand is set aside and the demand which was confirmed also relates to the applicability of the notification, we do not find any malafide on the part of the appellant, hence, the penalty imposed by the lower authority is also set aside.

5. The impugned order is modified to the above extent. The appeal is partly allowed in the above terms.

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