The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the manufacturer was eligible to avail of the CENVAT credit of custom duty on inputs used for the manufacture and fabrication of capital goods under rule 3 of the CENVAT Credit rules,2004.
Dhampur Sugar Mills Ltd, the appellant assessee appealed against the order passed by the Commissioner, Customs and Central Excise for recovery of CENVAT credit availed and imposition pf penalty along with interest.
Aalok Arora, the counsel for the assessee contended that the assessee had maintained all the records of receipts and issue of items, and the issue slips which had been produced before the Commissioner show the names of the items, quality, and place of use, and even the Chief Engineer and the Chartered Engineer certified the use of each item.
Further submitted that since the items in issue were used by the assessee in the expansion of the factory, CENVAT credit would be admissible on the items.
Santosh Kumar, the counsel for the department contended that the assessee did not produce any documentary evidence to establish that the goods on which CENVAT credit had been availed were used in the fabrication of capital goods and so the Commissioner was justified in denying the CENVAT credit.
The Bench observed that the assessee was justified in asserting that there was no evidence on record to suggest that he was involved in the day-to-day affairs of the assessee and particularly concerning availing of CENVAT Credit.
The two-member bench comprising Dilip Gupta (President) and Anajani Kumar (Technical) quashed the penalty imposed and held that the assessee was eligible to avail of the CENVAT credit on inputs used for the manufacture and fabrication of capital goods.
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