2025-VIL-2063-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Rule 4 of CENVAT Credit Rules, 2004 – Violation of provisions – Demand of credit – Appellant No.1 is engaged in manufacture of TMT bars and had been availing CENVAT credit on raw materials procured for manufacture of its final products – Appellant No.1 imported steel melting scrap for use in manufacture and transferred same to Appellant No.2 for trading purposes – Appellant No.2 subsequently transferred material to Appellant No.3, who transferred scrap back to Appellant No.1 – Department alleged that transactions between Appellant Nos.2 and 3 were only paper transactions without actual movement of goods, on basis of which, Appellant No.1 had availed CENVAT credit in violation of Rule 4 of the Rules – Department issued show cause notice to Appellant by proposing demand of credit – Adjudicating Authority confirmed demand proposed in show cause notice – Whether Appellant No.1 has violated provisions of Rule 4 of the Rules – HELD – It is an undisputed fact that imported scrap had not been physically transferred from one party to another party, which is a precondition for availing CENVAT credit facility. It is not clear as to how CENVAT credit had been availed or transferred without receipt of goods involved physically. Transactions availing credit and transferring same have been carried out without receipt or dispatch of goods. Appellant Nos.2 and 3 though registered as dealers have not procured goods either from manufacturer or from dealer under cover of valid invoices. There is no acceptable or corroborative evidence demonstrating receipt or procurement of goods, which is essential for purpose of availing credit. There is no evidence to establish that any physical movement of goods actually took place. Mere creation of paperwork or paper trial to indicate movement of goods or mere endorsement of Bills of Entry is not sufficient to establish eligibility for credit. Above discussions clearly indicate that there is violation of provisions of the Rules, making Appellant No.1 ineligible to avail credit. Orders under challenge are upheld – Appeals dismissed
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