TMI Blog2007 (8) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The Department has approached this court for the purpose of challenging judgment and order dated 13-11-2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai ("CESTAT", for short) in Appeal No. E/647/2006. 2. It is the case of the Department that during the course of Audit of Records of the respondent by Internal Audit Officers of Central Excise, it was observed that in the Cost Audit Report for the year 2002-2003, for the physical verification of inventory, there was shortage of raw material worth Rs. 33,42,161/-. The amount involved CENVAT (Central Value Added Tax) Credit of Rs. 5,34,746/-, which was claimed by the assessee, although raw materials were not used in or in relation to manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature while huge amount of credit Rs. 5.34 lakh was involved in this matter." Regarding reliance placed upon the decision of the Tribunal at Delhi in the matter of Maruti Udyog Ltd. v. Commissioner of C. Ex., Delhi-III, reported in 2004 (173) E.L.T. 382 (Tri.- Del.), it is observed that in the reported judgment, shortage was very small (0.24%) fraction of the inputs received. However, in the matter at hands, the percentage was quite on the higher side (0.41%), as mentioned in the notice reply dated 9-2-2005. Taking into consideration Rule 7(4) of the Cenvat Credit Rules, 2002, the learned Joint Commissioner observed that the burden of proof regarding admissibility of Cenvat credit lies upon the manufacture and which burden was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts shall maintain proper records for the receipt, disposal, consumption and inventory of the inputs and capital goods in which the relevant information regarding the value, duty paid, the person from whom the inputs or capital goods have been produced is recorded and the burden of proof regarding the admissibility of the Cenvat credit shall lie upon the manufacturer taking such credit." The language of the Rule is plain and unambiguous. If the assessee claims entitlement to Cenvat credit, it is the burden of proof upon the assessee to prove the admissibility of the Cenvat credit. In the matter at hands and in the facts and circumstances of the case, the only manner in which the assessee could have justified the Cenvat credit claim wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found short. We do not think that except reproduction of Rule 7(4) of the Cenvat Credit Rules, 2002, any other material is required to record a finding in favour of the Department that it is the burden of proof of the assessee to "justify the Cenvat credit availed. It is necessary to refer the orders of the Joint Commissioner as also the Commissioner (Appeals) because they have applied Rule 7(4) in correct perspective. In view of failure on the part of the assessee to account for utilization of the inputs which were short and upon which Cenvat credit was claimed, but were not accounted in the Audit Report as utilized in the production, the two lower authorities have decided the matter against the assessee, and therefore, those authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Joshi was produced, which was practically in the same terms as the letter of Auditor namely Price Water House in the reported judgement and paragraphs No. 5.3 to 5.6 of which are reproduced in paragraph No. 2 of the reported judgment. From the observations of the Tribunal, it is evident that the Tribunal has not placed reliance upon any legal provision, either from the Act or from the Rule, while exonerating the assessee from the liability to pay duty by reversing the Cenvat credit wrongly claimed . When there is no statutory foundation for such exemption, with due respect, we are unable to agree with the view taken by the Tribunal. It seems to be a sympathetic view by taking into consideration that it is a huge plant with huge turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find it difficult to approve the view taken by the Tribunal at Delhi in Maruti Udyog case, mainly because such a view which can be described as only sympathetic view does not have any basis of any statutory provision. 7. The appeal is, therefore, partly allowed. The impugned judgment and order of CESTAT is quashed and set aside. We restore the order of the Joint Commissioner, Central Excise Customs, Aurangabad, to the extent of confirmation of demand notice and interest under Section 11AB of the Central Excise Act, 1944. We hereby clarify that having arrived at a conclusion that there was no suppression or any misstatement on the part of the assessee, we are not inclined to maintain any penalty under Section 11AC of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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