Case Law Details
Savita Oil Technologies Ltd Vs Commissioner of Central Excise (CESTAT Mumbai)
The issue revolves around the alleged non-receipt of ‘inputs’ in excess of the tolerance margin of 0.4% at the facility of the appellant as evidenced by their own ‘goods receipt note (GRN)’ for the disputed period and the impugned order held that
‘8. The Adjudicating Authority at para 18 of the impugned order, observes that the appellant has been raising debit notes on the supplier / transporter wherever the difference in weight is more than 0.4%. They have been raising the said debit notes as a deterrent measure but there is nothing on record to prove that they had paid the duty liability contained in such debit notes amounts along with interest. I find that the tolerance limit of 0.4% is acceptable norm in the case of lubricating oils being received in tankers. Hence, duty is recoverable in respect of the loss more than 0.4% and recovered through debit notes.’
Availment of CENVAT credit of duties paid on inputs is enabled by rule 3 of CENVAT Credit Rules, 2004. The credit taken by the appellant is the duty of central excise paid by the supplier as recorded in the invoices and any difference in quantity, manifested in ‘goods receipt note (GRN)’ on actual weighment at place of receipt, does not alter the tax thus borne on the goods except when credit accrues to the supplier through appropriate debit notes raised by recipient. No such document is placed on record. There is no evidence of any of inputs having been returned to supplier or rerouted elsewhere. The lower authorities are, themselves, not certain that duties, to the extent of quantity not received, have been re-credited by the manufacturer as is evident from the finding referred to supra. It is only by adverse presumption that the liability under rule 14 of CENVAT Credit Rules, 2004 has been ordered for recovery.
Furthermore, rule 3 of CENVAT Credit Rules, 2004 does not offer any adjustment towards tolerance or allowance and, yet, the lower authorities have deigned to provide for some arbitrary margin; implicit in the sheer arbitrariness is the principle of spreading the entire invoice value, and corresponding duty discharged, over the quantity of the goods as actually delivered. Tolerance limits are prescribed according to the nature of the goods and for the purpose of computation wherever such quantity is critical. Insofar as CENVAT credit is concerned, the underlying foundation is discharge of identical amount of duty on ‘inputs’ procured for manufacture or for rendering of service on the part of supplier.
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