CENVAT credit of inputs lying in store "as such" and "in-process goods" - loss by fire - CENVAT credit on in-process goods not to be reversed

Rako Mercantile Traders vs. Commissioner of Central Excise, Lucknow [2015] 55 taxmann.com 72 (New Delhi - CES- TAT)

 

FACTS:

Appellants, manufacturers of excisable goods availed CENVAT credit of duty on inputs. Fire occurred in factory and finished goods, stock in process and raw material got destroyed. Department denied CENVAT credit on inputs which were in stock and in process since these goods were not used in the manufacture of dutiable final products and that fire occurred due to negligence on part of assessee.

HELD:

The Revenue's explanation that fire has occurred on account of negligence on the part of assessee was not appreciated by the Tribunal inasmuch as nobody invites fire. Inputs which were issued from inputs store section to be used in manufacture of final products are eligible for CENVAT credit and no reversal is required. As regards to the inputs lying in store, relying upon Panacea Biotech Ltd. vs. ELT 2013 (297) ELT 587 (Tri-De/), the Tribunal held that mere receipt of the inputs will not entitle the assessee to avail the credit, when such inputs are destroyed "as such" in the store section itself. Thus, credit in respect of inputs in process was allowed whereas those stock in stores was not allowed.