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2018 (2) TMI 16

Head Note:
CENVAT credit - Whether, in the facts and circumstances of the case, the demand raised by the Respondents is sustainable since even if credit is denied to the Appellants, it is simultaneously available to other factories who according to the Respondents have received the inputs under consideration? - extended period of limitation - proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 12 of the erstwhile Cenvat Credit Rules, 2002.

Held that: - Once the stock of raw materials has not gone out of the units of the Sanvijay Group or the Group as a whole, then, what ought to be apparent to all of them is that there was an irregularity and at best discrepancy, but not a wrongful availment of the cenvat credit. It is, therefore, clear that the Tribunal noted the arguments of the assessee's Advocate, and particularly that the shortage is not due to the clandestine removal of the goods, but it is only due to the accounting method and secondly, that the difference in the stock is less than 5% which is permissible by the BIS standards. Apart therefrom, the confirmation of demand of cenvat credit was on the basis of non receipt of inputs in the respective units.

The Tribunal holds that there is no dispute that the entire shortage found in the physical stock taken by the officers is less than 5%. It is in these circumstances and when in the assessee's own case it was held that shortage in the range of +/­ 5% should be ignored, then, the Tribunal followed its own order in the case of this very assessee and dropped the demand in respect of shortage found in the physical stock and consequent penalty commensurate to the duty on such shortage. Thus, the Group, the units and their activities were known to the Revenue. It is not as if the shortage was noticed for the first time. The shortage was not to such an extent as would make a demand for duty interest and penalty sustainable. It was in the permissible range.

Wrongful availment of CENVAT credit - Held that: - the goods have been consumed within the Group units and there is no cenvat credit which was wrongfully availed, but was adjusted as stated above. Thus, this was a case where the adjudicating authority so also the Commissioner (Appeals) and the Tribunal could not establish any loss of revenue. We are also not been shown any finding of such nature. Else, the penalty would not have been dropped. Once the explanation in regard to shortage of raw materials was found to be plausible and is accepted and the Appeal allowed in part, then, we do not see why for an alleged irregularity on penalty, the same view was not taken. It was imminently possible given the fact that no fraud has been established.

Once the assessees derive no benefit by not reversing cenvat credit on the inputs, when sister concerns are also eligible to take that credit, then, in the absence of any cogent and reliable evidence particularly on the diversion of inputs, the principle or doctrine of revenue neutrality, which was applied in that case by the Tribunal, was rightly upheld.

Appeal allowed - decided in favor of appellant.


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