CENVAT credit cannot be denied based solely on shortages; it requires clear evidence of clandestine removal and credible links to capital goods definitions under applicable laws.

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL ALLAHABAD E-Hearing REGIONAL BENCH - COURT NO.I Excise Appeal No.70653 of 2019 (Arising out of Order-in-Original No.03/PR. COMMR./MRT/2019 dated 18.06.2019 passed by Principal Commissioner of Central Goods & Services Tax, Meerut)

M/s Rana Sugar Ltd., …..Appellant (Belwara, Post Office- Manpur, Tehsil and District Moradabad-244925)

VERSUS Principal Commissioner of Central Goods &

Services Tax, Meerut ….Respondent (Opposite Shaheed Park, (Near Ashok Ki Lat)

Delhi Road, Meerut)

APPEARANCE Shri Vikrant Kackria, Advocate for the Appellant Shri Santosh Kumar, Authorized Representative for the Respondent CORAM: HON’BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)

HON’BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)

INTERIM ORDER NO.-25/2024 Date : 17.12.2024 FINAL ORDER NO.- 70001/2026 DATE OF HEARING : 10.10.2024 DATE OF DECISION : 06.01.2026 P. K. CHOUDHARY:

The present appeal has been filed by the Appellant assailing the Order-in-Original No.03/PR. COMMR./MRT/2019 dated 18.06.2019 passed by the Principal Commissioner of Central Goods & Services Tax, Meerut.

2. The issue involved in the present appeal relates to disallowance of credit on various accounts and the demand of Central Excise Duty on sugar found short during inspection by the Departmental Officers. The Departmental Officers had visited the factory of the Appellant on 24.10.2008 and physically verified the stock, which resulted in shortage of 50500 quintals of sugar as compared to Book Balance as detected by the visiting Officers. Statement of various persons of the Appellant‟s Sugar Mills were recorded, wherein they only stated that there is shortage of goods, but none of the persons had stated that there was any clandestine removal of the goods by the Appellant. The Cenvat Credit was proposed to be disallowed amounting to Rs.1,50,45,349/- on various grounds. Further, Service Tax of Rs.4,74,760/- was proposed to be demanded under the category of Transportation of Goods by Road Service on the ground that since the freight was borne by the Appellant, thus they were liable to pay the Service Tax on the freight amount under reverse charge mechanism. This is the second round of litigation before the Tribunal. In the first round, the matter was remanded back to the Adjudicating Authority vide Final Order No.71214/2018 dated 21/06/2018, wherein it was mentioned that as regards the clandestine removal of goods, the Authority should look into the corroborating and other evidence to prove that the goods have been removed in a clandestine manner in view of the Hon‟ble Allahabad High Court‟s judgement in the case of Commissioner of Central Excise, Kanpur Vs. Minakshi Castings reported as 2011 (274) E.L.T. 180 (All.). Further as regards, the Cenvat Credit on various items, it was categorically mentioned that the matter be decided in view of the Hon‟ble Gujarat High Court‟s decision in the Case of Mundra Ports & Special Economic Zone Ltd. Vs. Commissioner of Central Excise reported as 2015 (39) S.T.R. 726 (Guj). The Adjudicating Authority has again confirmed the demand of Central Excise Duty on the ground that since there was shortage of goods, thus it proves that the same have been removed in a clandestine manner and the Credit has also been denied to the Appellant. The demand of Service Tax has also been confirmed on the ground that the Appellant was liable for payment of Service Tax. In addition to the confirmation of demand of Central Excise Duty, a penalty of Rs.49,41,425/- has been imposed under Section 11AC of the Central Excise Act . The Cenvat Credit has been disallowed by pl