Credit eligibility on fresh inputs received in lieu of defective inputs cleared without payment of duty.

PJ/CASE LAW/2014-15/2424

Case:-M/s CORAL COSMETICS LTD Vs COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III

Citation:-2014-TIOL-2181-CESTAT-MUM

Brief facts:-The appellant is in appeal against the impugned order wherein input credit on aluminium collapsible tubes was denied to the appellant. The brief facts of the case are that the appellant is a manufacturer of toothpaste. They were receiving aluminium collapsible tubes from M/s. Jyoti Record manufacturing Co. Ltd. During the course of manufacturing they found certain tubes were defective. These tubes were returned to the supplier for repair but instead of repair of the said tubes, the supplier supplied fresh tubes without payment of duty. Therefore, the credit was denied. The Adjudicating Authority confirmed the demand but the matter went to the Commissioner (Appeals) who remanded the matter back for fresh consideration to the Adjudicating authority. In remand proceedings, the Adjudicating Authority dropped the show-cause notice which was appealed against by the revenue before the Commissioner (Appeals), who set aside the order of adjudication. Therefore, appellant is in appeal before Tribunal.

Appellant’s contention:-The ld. counsel submits that in this case, a case has made out merely on the basis of statement and no corroborative evidence has been produced by the revenue in support of their allegation. It is also submitted that the defect in the tubes were rectifiable, therefore, without examining the records, it cannot be said that fresh tubes have been supplied. Therefore, impugned order required to be set aside.

Respondent’s contention:-On the other hand, ld. AR supported the impugned order.

Reasoning of judgment:-The Hon’ble Tribunal find that Shri P.M. Narvekar, the Quality Control officer of the appellant have made a statement under Section 14 of the Central Excise Act, 1994 on 11.09.1993 confirming that they are receiving fresh manufactured “aluminium collapsible tubes” as replacement for the rejected tubes from M/s. Jyoti Record Manufacturing Co. Ltd. The statement of the Quality Control officer is relevant to decide the issue before the Tribunal. The said statement confirmed the allegation alleged against the appellant as the said statement has not been retracted. Therefore, as per the decision of CC vs. D. Bhoormull 1983 (13) ELT 1546 (SC) = 2002-TIOL-253-SC-CUSwherein it is held that what is admitted need not be proved; the statement of the Quality Control Officer is conclusive.

Therefore, they do not find any infirmity in the impugned order; the same is upheld. The appeal filed by the appellant is dismissed.

Decision:-Appeal disposed of.

Comment:- The crux of the case is that credit cannot be availed on the tubes that were returned to the supplier for repair but instead of repair of the said tubes, the supplier supplied fresh tubes without payment of duty. The reason for the same being that when clearance of fresh tubes was made without payment of duty, credit cannot be availed on the same. The Quality Control officer of the appellant also made a statement under Section 14 of the Central Excise Act, 1994 on 11.09.1993 confirming that they have received fresh manufactured “aluminium collapsible tubes” as replacement for the rejected tubes. Therefore, the fact being established of receipt of fresh tubes without payment of duty, the credit was disallowed and the appeal was dismissed.

Prepared by:- Monika Tak

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PJ/CASE LAW/2014-15/2424

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