2008 (12) TMI 563 - AT - Central Excise

Cenvat/Modvat - Inputs received on stock transfer basis - Held that - it cannot be concluded that the inputs or capital goods have to be acquired by a manufacture only by purchase, for taking the Cenvat credit. There is no such condition in Rule 57AB of Central Excise Rules, 1944 and corresponding provisions of Cenvat Credit Rules 2001/2002 - appeal dismissed - decided against Revenue.

Summary

Issues:
- Denial of Cenvat credit on the ground of inputs not being purchased
- Interpretation of Rule 57AE of Central Excise Rules, 1944 and Rule 7(4) of Cenvat Credit Rules 2001/2002

Analysis:
The case involved a dispute where the Respondent, engaged in the manufacture of excisable goods, received soda ash from their manufacturing unit in Hyderabad and claimed Cenvat credit amounting to Rs. 7,32,354. The Revenue contested this credit under Rule 57AE of the Central Excise Rules, 1944, and Rule 7(4) of the Cenvat Credit Rules 2001/2002, arguing that the soda ash received was not purchased. An Additional Commissioner confirmed the Cenvat credit demand and imposed a penalty. The Respondent appealed to the Commissioner (Appeal), who set aside the Additional Commissioner's order. The Revenue then appealed to the Tribunal.

Upon hearing the Departmental Representative, it was argued that Cenvat credit is only available for duty-paid inputs acquired through purchase, not on stock transfer basis. The Tribunal analyzed the relevant provisions, noting that Rule 57AB of the Central Excise Rules, 1944, and the corresponding provision in Cenvat Credit Rules, 2001/2002 allowed credit for duty paid on inputs received in the factory, without specifying they must be purchased. The Tribunal emphasized Rule 57AE(3) required maintaining records of inputs and capital goods, including purchase information, but did not mandate acquisition only through purchase for Cenvat credit eligibility. The Tribunal found no requirement in the rules that inputs must be purchased to claim credit, upholding the Commissioner (Appeal)'s decision and dismissing the Revenue's appeal.

In conclusion, the Tribunal's judgment clarified that the rules did not restrict Cenvat credit eligibility to purchased inputs, emphasizing the importance of maintaining proper records for credit claims. The decision highlighted the absence of a purchase-only condition for Cenvat credit under the relevant rules, ultimately supporting the Respondent's entitlement to the credit in question.