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2018 (12) TMI 237 - CESTAT ALLAHABADClandestine removal - excess use of inputs - entire case of the Revenue as regards the excess use of inputs and the consequent availment of Cenvat credit is based upon the comparison of input consumption figures for the two financial year 2006-07, 2007-08 - Held that:- It is well settled law that the quantum of final product manufactured by an assessee cannot be arrived at on the basis of the input output ratio. The appellants have explained that 2006-07 was the first year of their manufacture and as such having started the commercial production in that year only, there was huge loss of inputs during the course of manufacture. Further it stands contended by them that they are in the manufacture of high precision products to be used for luxury cars, which require 100% sophistication and no manufacturing defects are accepted by the customers - In such a scenario to arrive at a conclusion that the appellant has used more inputs and has availed excess credit, which requires to be reversed by them cannot be upheld. In the absence of any evidence to the contrary that the appellant cleared their inputs “as such” after availing the Cenvat credit of duty and in fact in the absence of any allegation to that effect, there are no justifiable reasons to deny the credit to the appellant merely on the basis of the input output ratio - demand alongwith penalty set aside. CENVAT Credit - rejected products - Rule 16(1) of Cenvat Credit Rules - penalty - Held that:- The appellant during the course of adjudication before the Commissioner admitted to pay the said duty and did not contest the same inasmuch as the rejected goods were not processed by them. Inasmuch as the same were accepted by the appellant as payable, the same is confirmed - inasmuch as there is no mala fide on their part and everything was being reflected in the records, the invocation of penal provision against them on the said demand would not be justified. Demand set aside with penalty - appeal disposed off.
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