Custom, Excise & Service Tax Tribunal
M/S. Vinayak Steels Ltd vs Cc&Ce, Hyderabad-Iii on 4 October, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench SMB
Court I
Date of Hearing:04/10/2013
Date of decision:04/10/2013
Appeal No.E/165/2012
(Arising out of Order-in-Appeal No.76/2011(H-III)CE dt. 28/08/2011 passed by CC&CE(Appeals), Hyderabad-III)
M/s. Vinayak Steels Ltd.
..Appellant(s)
Vs.
CC&CE, Hyderabad-III
..Respondent(s)
Appearance Mr. Lalit Mohan Chandana, Advocate for the appellant.
Mr. N.Jagdish, Superintendent(AR) for the respondent.
Coram:
Honble Mr. B.S.V. Murthy, Member(Technical) FINAL ORDER No.26690/2013 [Order per: B.S.V. Murthy] Short point for consideration in this case is whether the appellants are eligible to take CENVAT credit on MS plates, channels, beams, angles etc. which are classifiable under Chapter 72 & 73 of CETA. It is not in dispute that the said items were not the items enumerated in the definition of capital goods even though credit was taken initially treating the same as capital goods. When the proceedings were initiated by the Revenue proposing to deny the CENVAT credit on the ground that these items are not covered by the definition, appellants made an alternative submission that the same may be treated as inputs and credit may be allowed. This also was denied. Hence the appeal.
2. The total amount involved in this case is Rs.2,84,036/- and the credit was availed during the period 01/08/2009 to 19/05/2010. Show-cause notice has been issued within one year and there is no limitation issued involved in this case.
3. Heard both sides.
4. The credit has been denied on the ground that the appellant has not been able to show any evidence whatsoever that the said items were used for manufacture/fabrication of capital goods as claimed by them. The Chartered Engineers certificate produced by the appellants has been rejected on the ground that the Chartered Engineers certificate was not supported by any documentary evidence. It has also been held that the Chartered Engineers certificate was produced after more than one year.
5. I find that in this case the show-cause notice was issued on 24/08/2010. I find that Annexure I to the show-cause notice gives the details of name of supplier, the impugned goods on which credit has been taken, amounts of CENVAT credit taken, remarks and usage. Under the remarks column except for one item viz. C.I. bottom plate in the month of October 2009, all the remaining items are shown as inputs. The show-cause notice also clearly observes in paragraph 7 that all these items on which credit has been taken as input credit cannot be considered as inputs for manufacture of above said goods. The show-cause notice proposed to deny the credit on the ground that if capital goods were manufactured by utilizing these inputs as claimed by the appellants, the same should have been reflected in the ER1 returns and in the absence of such reflection, the credit cannot be allowed.
6. During the course of hearing, it was submitted by the appellant that the size of the appellant is such that no detailed records as to the utilization of inputs in the form of bill of materials issued to workshop or for fabrication and further issue of the finished item for production etc. have been maintained. It is his submission that the statement given by them which was enclosed as Annexure I to the show-cause notice clearly indicates the quantity purchased by them and utilized by them and for what purpose the same has been utilized. I find that this to be so. In the Annexure I itself, it is clearly indicated that quantum of item used and for what purpose. There is also a clear observation by the Commissioner(Appeals) as well as the Chartered Engineer that items like tundish, buffels, former sheets, gasification plant are actually utilized in the manufacturing process by the appellant and there is no specific rejection of the claim of the appellant that these are parts/components of the finished goods or in the absence of such, they get utilized in the manufacture of their finished goods and therefore considered as inputs. Contrary to the findings recorded by the lower authorities, it is seen from the Chartered Engineers certificate that it gives the size of the former sheets/tundish, number of such items required, the quantity of steel required for manufacture which on verification could have revealed whether the appellants have taken the credits correctly or not. No doubt there is a procedural omission in view of the fact that the appellant should have indicated these items to have been manufactured and shown in their returns and claimed CENVAT credit. To that extent, the appellant can be found fault with. However, in the absence of any evidence of diversion of items on which credit has been taken and in the absence of any contrary finding to find that Chartered Engineers certificate to be invalid, prima facie, benefit of CENVAT credit cannot be denied to the appellant. Appellant has, in my opinion, produced effectful evidence to show that they utilized the raw materials and they have utilized them in their factory and they have utilized them as inputs. In the absence of any contrary finding to the submissions other than stating that evidence is not sufficient, in my opinion, the appellants should be held as eligible for the benefit of CENVAT credit. However, I find that in view of the fact that the appellant did not maintain proper records and did not follow the proper procedure viz. submission of details in the ER1 returns etc., the penalty has to be imposed.
7. Accordingly, in view of the above observations, I take a view that appellant is eligible for the CENVAT credit. For the lapses, in my opinion, a penalty of Rs.30,000/- (Rupees thirty thousand only) would meet the ends of justice. Accordingly, the impugned order is set aside and appeal is allowed as far as CENVAT credit is concerned and penalty is reduced to Rs.30,000/- (Rupees thirty thousand only) as observed above.
(Pronounced and dictated in open court) (B.S.V. MURTHY) MEMBER (TECHNICAL) Nr 3