2005 (4) TMI 464 - AT - Central Excise

Summary

Issues:
Discrepancy in receipt of iron ore pellets, disallowance of Cenvat credit, validity of supplementary invoices, applicability of case laws, invocation of extended period for limitation, justification of penalty.

Analysis:

1. Discrepancy in receipt of iron ore pellets:
The case involved a dispute regarding the quantity of iron ore pellets received by the appellant from the supplier. The appellant claimed to have received an excess quantity, while the Supdt. of Central Excise alleged a shortage based on invoice quantities. This discrepancy led to the imposition of differential duty on the total quantity, which was contested by the appellant.

2. Disallowance of Cenvat credit:
The Revenue disallowed Cenvat credit on the ground of short receipt of iron ore pellets. The appellant challenged this disallowance, arguing that the duty had been paid by the supplier and supplementary invoices were issued, making them eligible for Cenvat credit. The appellant relied on various case laws to support their claim for availing the credit.

3. Validity of supplementary invoices:
The appellant contended that the supplementary invoices issued by the supplier were valid duty paying documents, as directed by the Jurisdictional Authority at Visakhapatnam. They argued that if these documents were considered valid for duty payment, they should also be valid for availing Cenvat credit on inputs by the manufacturer of the final products.

4. Applicability of case laws:
The appellant cited several case laws, including the decision in the case of CCE v. Universal Cables Ltd., to support their arguments regarding the admissibility of Cenvat credit based on duty paid by the manufacturer. They also referred to the decision in TELCO v. CCE regarding the admissibility of credit even when duty on inputs was paid subsequent to clearance.

5. Invocation of extended period for limitation:
The appellant raised the issue of the Department invoking the larger period of limitation under proviso to Section 11A(1), contending that the demand for disallowance of credit during a specific period was barred by limitation. They argued that the Department had full knowledge of the transactions but delayed issuing the show cause notice.

6. Justification of penalty:
The appellant disputed the imposition of a penalty, arguing that it was not justified in the circumstances of the case. They presented their case against the penalty, emphasizing the lack of justification for such a punitive measure.

In conclusion, the Appellate Tribunal set aside the Order-in-Original, ruling in favor of the appellant and allowing the appeal with consequential relief. The Tribunal emphasized the importance of duty payment by the manufacturer and the validity of supplementary invoices for availing Cenvat credit, while also criticizing the Revenue's position on the matter. The judgment highlighted the relevance of case laws and the weakness of the Department's case in invoking the extended period for limitation.