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2023 (9) TMI 514 - AT - Central ExciseCENVAT Credit - input gone in manufacturing process destroyed due to electricity failure which has been cleared as scrap by the appellant on payment of duty - HELD THAT - The said issue has been dealt by the various decisions of this Tribunal and this Tribunal has held that when the input has been issued for manufacture and during the course of manufacture if input destroyed the cenvat credit cannot be denied. Reliance can be placed in COMMR. OF C. EX. CHANDIGARH VS. CHANDIGARH PETRO FOAM (P) LTD. 2009 (1) TMI 942 - PUNJAB AND HARYANA HIGH COURT where it was held that Modvat/Cenvat credit is not deniable on inputs destroyed in fire accident when the fact that inputs were actually issued and thereafter destroyed in fire accident has been admitted by the department. Thus the cenvat credit on input which has been destroyed due to power outage cannot be denied to the appellant - impugned order set aside - appeal allowed.
Issues:
The judgment involves the denial of cenvat credit to the appellant on inputs destroyed due to power outage during the manufacturing process. The main issue is whether the cenvat credit can be denied in such circumstances. Facts of the Case: The appellant, engaged in manufacturing aluminum and carbon electrodes, faced a power outage leading to the destruction of inputs in the manufacturing process. This outage caused significant production loss and additional costs for the appellant. An insurance claim was lodged, excluding the cenvat credit portion. Subsequently, a show-cause notice was issued for the recovery of cenvat credit availed on the destroyed inputs. The appellant contested the notice, arguing that cenvat credit cannot be denied for inputs destroyed due to electricity failure. Appellant's Submission: The appellant's counsel argued that cenvat credit for inputs used in manufacturing and destroyed during the process cannot be denied. They cited various decisions supporting their contention and highlighted that some inputs were procured after the power outage, hence credit on those inputs should not be denied. The appellant also challenged the applicability of the extended period of limitation. Revenue's Argument: The authorized representative for the Revenue reiterated the findings of the impugned order, maintaining the denial of cenvat credit to the appellant. Decision and Legal Precedents: The Tribunal considered the submissions and referred to previous decisions where it was held that when inputs issued for manufacture are destroyed during the process, cenvat credit cannot be denied. The Tribunal cited the case of Chandigarh Petro Foam Private Limited, where the High Court observed that credit cannot be denied for goods destroyed in a fire accident. Additionally, the Tribunal referred to the case of Indchem Electronics, where it was established that credit is not deniable on inputs destroyed in a fire accident. Based on these precedents, the Tribunal concluded that cenvat credit on inputs destroyed due to power outage cannot be denied to the appellant. Consequently, the impugned order was set aside, and the appeal was allowed. Operative Part of the Order: The Tribunal pronounced the operative part of the order in the open court, setting aside the impugned order and allowing the appeal.
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