CESTAT Upholds Rejection of Recovery of Availed CENVAT Credit of Excise Duty on Waste and Scrap of Iron and steel on ground of Absence of Corroborative Evidence [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the rejection of recovery of availed CENVAT credit of excise duty on the waste and scrap of iron and steel on the ground of absence of corroborative evidence. 

Arsh Alloys, the respondent assessee was engaged in the manufacture of excisable goods namely “M.S. ingots” in their Induction furnace unit, and for the purposes of manufacture of the said goods, the assessee mainly purchased duty-paid inputs such as “waste and a scrap of iron and steel” and availed CENVAT credit of duty paid on the inputs received and used in their factory of production. 

The revenue appealed against the order passed by the Commissioner (Appeals) for dropping the recovery of CENVAT credit amounting to Rs. 2,30,50,926 which was availed by the assessee and 16 persons who acted as brokers, 10 re-rolling/furnace units who were the alleged actual buyers of scrap of iron and steel and 66 ship breaking units. 

R K Agarwal, the counsel for the department contended that no inquiry was conducted by the department to ascertain the actual nature of waste and scrap found lying at the factory premises of the assessee during the search and that the panchas did not expertly have any knowledge of the nature of goods given their education qualification was not proper. 

Also submitted that the adjudicating authority had also failed to consider the fact that 10 owners/authorized representatives of the re-rolling mills/furnace mills whose names were disclosed by the brokers, had admitted in their statements that they had received consignments diverted by the assessee without any invoice and paid the proceeds in cash. 

Paresh M. Dave, the counsel for the assessee contended that after considering the evidence adjudicating authority had held that goods were supplied by the input suppliers to the assessee and the assessee was eligible to claim the CENVAT credit of duty paid on the said inputs. 

The Bench observed that in the case of Commissioner Versus Motabhai Iron Steel Industries, the court held that where there is tangible documentary evidence in favor of the assessee and even if there are overall statements of a third party contradicting the documentary evidence, such tangible documentary evidence must be given primacy over the overall statements. 

The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) upheld the decision of the Commissioner (Appeals) while dismissing the appeal filed by the revenue. 

To Read the full text of the Order CLICK HERE

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