2009 (2) TMI 629 - AT - Central Excise

Cenvat/Modvat - Duty paying documents - Returned goods - Since the goods were received in the factory, the appellants re-availed the Cenvat credit debited by them as per provisions of erstwhile Rule 57AC(5)(a)

Summary

Issues involved:
Admissibility of Cenvat Credit of Rs. 12,528, Rs. 5,562, and Rs. 15,464.

Analysis:
1. The first issue pertains to the admissibility of Cenvat Credit of Rs. 12,528. The denial of credit was based on the appellants taking credit on their own invoice, deemed invalid under Rule 7 of the Cenvat Credit Rules, 2002. However, it was found that the credit was availed upon receipt of goods back into the factory, accompanied by an excise duty paid invoice issued by the manufacturer, evidencing duty payment. The department did not dispute the receipt of goods or their duty paid status. Therefore, the denial of credit on technical grounds was deemed unjustified. Moreover, as the consignee was not a Central Excise assessee, the question of credit at the consignee's end did not arise, supported by the lack of evidence from the department. Consequently, the Cenvat credit of Rs. 12,528 was held admissible.

2. Moving on to the second issue concerning the credit of Rs. 5,562 based on the Receipt Cum Inspection Advice (RCIA), it was noted that rejected inputs were sent for rectification to a vendor, who returned the goods with the RCIA. Although the vendor did not provide an attested copy of the Rejection Goods Dispatch Note as required, the appellants reversed the credit initially, then re-availed it upon confirmation from the vendor regarding rectification and return of goods. The receipt of goods was duly recorded, justifying the appellants' availing of the Cenvat Credit. Hence, the denial of the credit of Rs. 5,562 was considered unjustified.

3. Lastly, the issue of the credit of Rs. 15,464 based on the RCIA was addressed. The appellants had sent some line rejections for rework to the vendor, who failed to return the goods initially, leading to the reversal of credit. However, upon the vendor's subsequent confirmation of resupply and the goods' receipt at the factory, the appellants re-availed the credit as per the rules. The records substantiated the receipt of the goods, justifying the re-availment of the Cenvat credit of Rs. 15,464. Consequently, the denial of this credit was deemed incorrect.

In conclusion, as all three credits totaling Rs. 33,554 were found admissible, no interest or penalty was imposed on the appellants. The impugned order by the Commissioner (Appeals) was set aside, and the appeal filed by the appellants was allowed with consequential relief as per the law.