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2016 (3) TMI 479 - CESTAT ALLAHABAD

2016 (3) TMI 479 - CESTAT ALLAHABAD - TMI - Denial of Cenvat credit on capital goods - Held that:- Following the ruling of Honourable Gujarat High Court and Bombay High Court in the cases of M/s Nish Fibres & M/s Maharashtra Electrosmelt Ltd. (2009 (12) TMI 415 - Gujarat HIGH COURT ) as the appellant have withdrawn the claim of the depreciation, which is an admitted fact, set aside the denial of Cenvat credit along with the penalty imposed under Rule 15 read with Section 11 AC of the Act.
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t the allegation of shortage of raw materials, does not stand. Thus, set aside the demand in respect to shortage of raw material along with penalty under Rule 15 read with section 11 AC on the appellant company as well as the penalty on the authorized signatory, Mr. Vipin Bajaj under Rule 26 of the Central Excise Rules. - Decided in favour of assessee - Ex Appeal Nos. 1447 And 1459/2010 - Dated:- 30-11-2015 - Anil Choudhary, Member (J) For the Appellant : Shri Vipin Garg, Adv For the Respondent .....

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s of Central Excise. They are in appeal against common order in appeal dated 16/3/10 by which the denial of Cenvat credit on capital goods have been confirmed, as well as demand by way of reversal of Cenvat credit on the stock of raw materials found short, have also been confirmed, whereas penalty for shortage have been set aside confirming the penalty on the Cenvat credit disallowed on capital goods along with further penalty of ₹ 50,000/- under rule 26 of Cenvat Credit Rules, 2002 on Mr. .....

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lation of the provisions of rule 4 (4) of Cenvat Credit Rules,2004. A SCN dated 20.07.2008 was issued alleging that the cenvat credit of ₹ 10,64,406/- be held in-admissible and demanded under Rule 14 of Cenvat Credit Rules, 2004 with interest. Further, an amount of ₹ 1,08,484/- should not be demanded on shortage of cenvatable inputs found short by 7050 kgs along with interest and further a penalty was proposed on the Company as well as on the Authorized Signatory, Mr. Vipin Bajaj. 4. .....

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on the very next day in writing from the date of stock taking, before the Commissioner of Central Excise. In view of the statement recorded on the date of inspection of authorised signatory, who has admitted the shortage stating that the shortage may have occurred due to error by the employees of the Company. However, he agreed to deposit the duty amount of ₹ 1,08,484/. Rejecting the contentions of the appellant as an afterthought, the proposed demands were confirmed along with interest an .....

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ortage of input is concerned, he held that the same does not attract any penalty in absence of any evidence of clandestine removal, except the statement of Mr.Vipin Bajaj. Accordingly, he set aside the penalty on the shortage amounting to ₹ 1,08,484/- but have confirmed the denial of Cenvat credit on the stock found short. Being aggrieved the appellants are before this Tribunal. 6. The appellant had contested the show cause notice stating therein that prior to the issue of show cause notic .....

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laim of depreciation on the capital goods in question. In this view of the matter, it is urged that the ld. Commissioner (Appeals) has erred in confirming the duty or denial of Cenvat credit on capital goods. He further relies on the ruling's of Honourable Gujarat High Court in the case of CCE versus Nish Fibres wherein the question before the Honourable High Court was whether the Tribunal have committed substantial error of law in allowing the benefit of modvat credit when the same was not .....

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on the ruling of Bombay High Court in the case of CCE versus Maharashtra Electro Smelt Ltd. 2008 (224) ELT 391 (Bom) wherein under similar circumstances, that the depreciation was claimed on capital goods and the same was withdrawn by filing the revised returns, it was held by the Honourable High Court that only when assessee had actually claimed depreciation on capital goods, the assessee is not entitled to modvat credit. So far as the confirmation of demand in respect to shortage of raw mater .....

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eproduced below for ready reference: "9. Coming to the next issue of shortage of inputs, I notice that the appellant No.1 had pleaded that actually there was no shortage and the officers visiting the appellant's premises forcefully recorded the statement of the appellant No.2 and made him to write the facts as per their convenience. The appellant No.1 had also pleaded that on the first available opportunity, the statement was retracted by the appellant No.2 and facts regarding retractio .....

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r, wherein it has been claimed that there was no shortage in the raw material and also that the method of stock taking was faulty as the same was conducted on eye estimation basis. In this regard after examining the statement, the panchnama and the physical stock verification report, I notice that the appellant No.2 had admitted the fact of shortage not only in presence of the officers but, also in presence of two independent panchas, who have signed- the panchnama and the stock verification rep .....

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pheld as the order in that respect is legal and proper and the appellant are required to pay the same with the interest in case of delayed payment. 10. So far as penalty under Rule 15 (1) & (2) of the Cenvat Credit Rules, 2004 read with Section 11AC for the alleged shortage is concerned, I notice that there is no evidence except the statement of the appellant No.2 to substantiate that the shortages were on account of clandestine removal. It is a settled law that mere admittal in the statemen .....

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he theory of clandestine removal shall fail. In this case also, the department had tried to allege the clandestine removal only on the basis of statement whereas other evidences are absent. I observe that the adjudicating authority has not mentioned any reason as to how he arrived at such conclusion of clandestine removal of finished goods and the contravention of provisions of Act & Rules although it is a settled law that clandestine removal is a serious charge, which is required to be disc .....

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unds etc. to prove the allegations." 8. He further urges that in view of the categorical finding that there is no clandestine removal on the part of the appellant for the shortage in the stock which is also not properly substantiated, no demand should be confirmed and the same is fit to be set aside along with penalty on the appellants. 9. The ld. AR for the Revenue relies on the impugned order. He further states that so far Cenvat credit on capital goods is concerned, the appellant had ava .....

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