2009 (6) TMI 920 - AT - Central Excise

CENVAT credit - duty paying invoices - credit on capital goods denied on the ground that it was taken on the strength of an endorsed Bill of Entry and sales invoice of the importer who was not registered with excise authorities - Held that - there is no requirement in Rule 9 of the CENVAT Credit Rules 2004 that the importer per se is required to be registered with the excise authorities and it is only an importer issuing an invoice from his depot or from the premises of the consignment agent of the said importer who is required to be registered in terms of Rule 9(1)(iii) - the assessees are entitled to credit as the invoices issued by the importer read with the Bill of Entry under which the goods were imported are eligible documents for taking credit - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of CENVAT credit on capital goods due to importer not being registered with excise authorities.

Analysis:
The judgment revolves around the denial of CENVAT credit amounting to Rs. 1,68,206 representing 50% credit on capital goods, specifically a match making machine, due to the importer not being registered with excise authorities. The appellant, M/s. Arunshankar Match Industries, imported a used match making machine Model KL/401, which was transferred to Meenakshi Match Industries. The dispute arose as the sales invoice did not explicitly state that the machine had discharged the customs duty liability. The appellant argued that the endorsed Bill of Entry along with the sales invoice indicated the transfer of goods and discharge of customs duty liability, hence justifying the credit claim.

The judge highlighted that Rule 9 of the CENVAT Credit Rules 2004 does not mandate the importer to be registered with excise authorities for credit eligibility. It was noted that the discrepancy between the description of goods in the Bill of Entry and the sales invoice, regarding the machine being used or not, did not hold ground as the authorities had acknowledged the sale of a used match making machine to the appellant. Consequently, the judge ruled in favor of the appellant, emphasizing that the invoices issued by the importer, in conjunction with the Bill of Entry, constituted valid documents for claiming credit. The impugned order denying credit was set aside, and the appeal was allowed, affirming the appellant's entitlement to the credit.

In conclusion, the judgment clarifies the eligibility criteria for CENVAT credit on capital goods, emphasizing the significance of valid documentation such as endorsed Bill of Entry and sales invoices in establishing the transfer of goods and discharge of customs duty liability, irrespective of the importer's registration status with excise authorities.