Sampark Industries Ltd vs C.C.E., Noida

Arising out of the order in appeal No.31/CE/APPL/NOIDA/2012 dated 28.2.2013 passed by the Commissioner , Customs & Central Excise (Appeals), Noida.

For approval and signature:

Honble Mr. Justice G. Raghuram, President

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Sampark Industries Ltd. .. Appellants

Vs.

C.C.E., Noida . Respondent

Appearance:

Present Shri S.D. Gaur, Consultant for the appellants

Present Mrs. Ranjana Jha, A.R for respondent

Coram: Honble Mr. Justice G. Raghuram, President

Final Order No. 51587/2015

Per Justice G. Raghuram:

Heard the respective parties. The appeal is preferred against the order dated 28.2.2013 of the ld. Commissioner (Appeals), Customs and Central Excise, Noida. This order rejected the appeal preferred by the assessee/appellant herein and confirmed the adjudication order dated 31.10.2012 passed by the Additional Commissioner, Noida. The primary order dated 31.10.2012 passed by the Additional Commissioner disallowed the cenvat credit and directed its recovery on the ground that cenvat credit was wrongly availed to the extent of Rs.26,427/- and imposed penalty of Rs.1,07,289/-.

2. The relevant facts are that the appellant is a manufacturer of CPP films, metalized and embossed CPP films and blister CPP films falling under CETH No.3920.36 of CETA, 1985. The appellant was availing cenvat credit in relation to manufacture of their final products.

3. Show cause notice was issued on 28.9.2007 alleging that the appellant was availing cenvat credit in respect of duty paid on inputs and capital goods received in the factory for use in or in relation to manufacture of final products and had thus contravened provisions of Rule 3 of Cenvat Credit Rules, 2002 as amended and Rules 4,6, 8 and 11 of CEA, 2002. The contravention alleged was that the appellant availed cenvat credit of Rs.8,61,387/- during April 2002 to March 2004 but had utilized the same towards payment of duty on finished goods cleared from the appellants factory though the value of inputs received by them was subsequently adjusted/reduced by way of issuance of debit notes; that they had used these inputs in manufacturing the finished goods as well as manufacturing goods on job work basis but failed to reverse the credit involved on inputs used in the goods manufactured on job work basis. It also alleged that the appellant cleared three free samples without payment applicable duty. This aspect is no longer in issue in the present appeal.

4. Initially, by the order dated 20.7.2009 recovery of cenvat credit and penalty was ordered. Aggrieved, the appellant preferred an appeal before this Tribunal which was disposed on 19.7.2011 in Excise Appeal No.2924/2009. The Tribunal ruled that there was a categorical finding in the impugned proceedings that the appellant failed to produce supporting documents to show it had not availed input credit on the goods returned to them; that therefore the duty is demandable; that the appellant had contended that invoices and debit notes were produced by the appellant but were not considered by the adjudicating authority; that in the circumstances, the mater is being remanded for re-examination and the adjudicating authority is directed to verify documents produced by the appellants to support their claim and to consider the matter appropriately including on imposition of penalty.

5. After remittal by this Tribunal the adjudicating authority passed a fresh order dated 31.10.2012. The appeal there against was rejected by the impugned order.

6. On careful consideration of the matter it is noticed that there are two relevant aspects for consideration in the appeal. The first aspect is regarding the factum of availment of cenvat credit by the appellant on those inputs issued in manufacture of goods which were supplied to third parties and after such clearance some were returned and debit notes were recorded by the appellant. This aspect, i.e. whether the appellant availed cenvat credit on inputs which went into manufacture of final goods , some of which were the subject matter of debit notes is one aspect. The second aspect is whether there is a correlation between the value and quantities of the goods/materials recorded in the debit notes and the invoices in relation to which debit notes were recorded and the value and quantities of goods returned to the appellant specified in these debit notes.

7. Inasmuch as it is the Revenue which has alleged that appellant had availed cenvat credit on those input in respect of which debit notes were recorded, the burden of proof to establish the fact of the appellant having availed cenvat credit on those inputs is on Revenue. After such burden is discharged by Revenue, the onus shifts to the appellant/assessee to establish , if it could , that it had reversed the cenvat credit availed, on returned goods. As recorded by the debit notes the correlation between the debit notes and the invoices in respect of which the debit notes were recorded is the second aspect.

8. It has been the consistent plea of the appellant, in response to the show cause notice, in its assertion before the primary authority, its assertion before the appellate authority and before this Tribunal in the earlier proceedings as well, which was clearly recorded in para 3.1 of the impugned order that there was no proof or record of receipt by the appellant of goods on which cenvat credit was taken and therefore the cenvat credit availed by the appellant cannot be disallowed on the ground that some of the goods had been received back vide the debit note. The assertion in the show cause notice and the conclusion in the orders passed by the authorities below do not refer to any probative material or evidence to support Revenues assertion that the appellant availed cenvat credit on those inputs which resulted in the manufacture of final goods, some of which were returned to the appellant and are covered by the debit notes. Thus, Revenue failed to establish its assertion that the appellant had availed cenvat credit, an assertion which is clearly and categorically denied by the appellant and on which aspect no finding whatsoever stands recorded either by the primary authority or by the lower appellate authority. Thus the enquiry on the second aspect as to any correlation between the debit notes and invoices under which the goods were supplied to third parties by the appellant is an enquiry which is non sequitor.

9. On text authority, the burden of establishing availment of cenvat credit is on Revenue since it is Revenues assertion that appellant had availed cenvat credit of those inputs which were used in the manufacture of final goods some of which were returned and on which debit notes were issued. Since Revenue failed to establish availment of cenvat credit by bringing on record evidence support to claim, reference to RG-23 register or any other probative material, it must be held to have been failed to shift the onus to the appellant to prove that it had not availed cenvat credit.

10. Ld. A.R. for Revenue would contend that since the appellant, in response to the allegation in the show cause notice had contended that it did not avail cenvat credit, the burden of proving non-availment of cenvat credit is on the appellant. This is a contention that is stated to be rejected. The burden of establishing this allegation on the Revenue.

11. On the above analysis, the concurrent orders of the primary authority and the lower appellate authority below are unsustainable. These orders are accordingly quashed. The appeal is allowed. In the circumstances, there shall be no order as to costs.

(Justice G. Raghuram)

President

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