TMI Blog2018 (8) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... stinely removed. The amount of duty sought to be reversed is also calculated based on the average value of the inputs and average rates of duty - such demand based on mathematical calculation is not supported by law. Whether the assessee is entitled to the credit of CENVAT on invoices which show that the goods were received in vehicles which on verification were found to be not capable of transporting the goods? - Held that:- It is evident that it is impossible to carry inputs weighing in tonnes in these vehicles. If the assessee asserts that they had, in fact, received the goods in these vehicles, it is for them to show how. It is a well established principle that ‘he who asserts must prove’. This is especially true when one claims an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After conducting detailed investigation, they found that the data as revealed in the balance sheets for years 2004-05, 2006-07 and as derived from their firm registry for the period 2007-08 had shown excess process loss. Thus, it was felt that abnormal high process loss or invisible loss could be on three possible reasons or grounds. (1) That the material is not used in the manufacturing process. It is diverted and hence not accounted for in the manufacture and is adjusted through higher invisible loss. (2) Material was used but the TMT bars production was not accounted for and clandestinely removed. (3) The process of invisible loss is suddenly effected due to some special factors not foreseen. 3. The show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss occurred in the goods is higher. Therefore they have to deliver the goods as per the contract even if they received less production or incur more burning loss. The remaining material is compensated out of their production. Thus, he argued that 5% loss recorded in the SAIL agreement is not the correct benchmark. 5. The assessee was issued a show cause notice demanding reversal of CENVAT credit of ₹ 79,92,646/- under Rule 14 of CENVAT Credit Rules r/w provisions of Section 11A of the Central Excise Act, as per calculations in the annexure to the show cause notice. This annexure takes into account the loss recorded by the assessee and the maximum loss recorded based on their own past provision and the industry trends. After dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in the factory or the inputs were cleared as such clandestinely, has no basis. No irregularities were noticed during the panchnama. (2) Regarding the non-receipt of inputs from M/s Lakshmi Gayatri Iron and Steel Ltd, on the ground that those vehicles were not transport vehicles, no evidence is supplied to enable them to rebut such charges. There is no statement from the consignor or consignee or transporter to seek clarification and hence the allegation was without iota of evidence. (3) It is not possible to maintain arithmetic equation for input and output in a process. They vary on number of factors which may not be under control like continuous power supply, quality, and cost of inflation of raw material, etc., makes a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are (1) Whether a demand can be raised seeking reversal of CENVAT credit on the ground that the inputs could not have been used in manufacture of final products because the losses were much higher as per the standard industry norms. (2) Whether the assessee is entitled to the credit of CENVAT on invoices which show that the goods were received in vehicles which on verification were found to be not capable of transporting the goods. 9. On first question, we do not find anything in the Central Excise Act or Rules which will enable the department to seek reversal of CENVAT credit on the ground that the reported losses during processing are much higher than what is reasonable. Such an aberration is certainly a cause for enquiry a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicles, it is for them to show how. It is a well established principle that he who asserts must prove . This is especially true when one claims an evident impossibility to be a fact. As far as the department is concerned, they have discharged their responsibility by showing that the vehicles mentioned in the invoices have been referred to the Regional Transport Office who explained that these were autos and cars and not transport vehicles. Therefore the assessee could not have received inputs in them and is not entitled to the CENVAT credit on the invoices under which the goods were supposed to have been received from M/s Lakshmi Gayatri Iron and Steel Ltd. In view of the above, the demand of ₹ 79,92,646/- in the Order-in-Original ..... X X X X Extracts X X X X X X X X Extracts X X X X
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