Balaji Pressure Vessels Ltd Vs Commissioner of Central Tax (CESTAT Hyderabad)
The CESTAT Hyderabad examined an appeal challenging an order confirming demand and imposing penalty under Section 11AC of the Central Excise Act, 1944 on allegations of wrongful availment of Cenvat credit. The department alleged that the appellant had availed credit on inputs without actually receiving the goods in its factory, in violation of Rule 3 of the Cenvat Credit Rules, 2004.
The appellant, engaged in manufacturing empty gas cylinders, had procured HR coils from suppliers and, except for a small quantity, cleared these inputs “as such” to other companies. It was contended that the goods were first received in the appellant’s factory and thereafter cleared, with corresponding reversal of Cenvat credit under Rule 3(5). The appellant argued that reversal of credit effectively neutralized any alleged irregularity and resulted in no revenue loss.
The adjudicating authority concluded that the goods were not received at the appellant’s factory but were directly delivered to the customers. This conclusion was based on factors such as timing differences between invoice and delivery, transport charges, and interpretation of certain statements. On this basis, it confirmed the demand and imposed penalty.
The Tribunal identified two key issues: whether the goods were actually received in the appellant’s factory, and whether the credit was properly reversed upon clearance. It examined documentary and factual evidence presented by the appellant, including invoices bearing the factory address, gate register entries, store records, and audit records, which showed no discrepancies. It also noted that mandatory testing of materials was conducted in the appellant’s in-house laboratory, indicating receipt of goods.
