2010 (6) TMI 709 - AT - Central Excise

CENVAT credit - duty paying documents - denial on the ground that appellants had wrongly availed cenvat credit on the basis of non-cenvatable invoice issued by the contractor which was not valid document in terms of Rule 7 of the CCR 2002 and Rule 9 of the CCR 2004 - it was the case of the appellants that the goods were imported for the appellants factory and were routed through Mitsui only for convenience. The payment through Mitsui was reimbursement of the cost of the equipments and therefore credit was correctly availed - Held that - the credit is taken not because of endorsement but on the basis of bill of entry which also disclosed the name of the appellant apart from the fact that the goods accompanying the Bill of entry were subjected to the payment of duty and on clearance were directly transported to the appellant s factory premises and were utilized by the appellants for installation of their factory and no credit in respect of duty paid on those goods was taken by the contractor - also the effect of endorsement is only to amend the name of consignee and nothing more. And it is not the case of the department that on endorsement of the Bill of entry in favour of the appellant it was in any manner rendered to be invalid document or that the import under such document become unlawful. Credit allowed - decided in favor of assessee.

Issues Involved:
1. Validity of availing Cenvat credit on non-cenvatable invoices.
2. Compliance with Rule 7 of the Cenvat Credit Rules, 2002 and Rule 9 of the Cenvat Credit Rules, 2004.
3. Legitimacy of the Bill of Entry endorsement.
4. Utilization and receipt of goods in the appellants' factory.
5. Precedents and legal interpretations regarding Cenvat credit eligibility.

Issue-wise Detailed Analysis:

1. Validity of availing Cenvat credit on non-cenvatable invoices:
The appellants were denied Cenvat credit on the grounds that the invoices issued by the contractor were not valid documents as per Rule 7 of the Cenvat Credit Rules, 2002 and Rule 9 of the Cenvat Credit Rules, 2004. The adjudicating authority and the Commissioner (Appeals) held that the documents were not valid for claiming Cenvat credit as they were not issued in the appellant's name.

2. Compliance with Rule 7 of the Cenvat Credit Rules, 2002 and Rule 9 of the Cenvat Credit Rules, 2004:
The rules specify that Cenvat credit can be claimed on the basis of an invoice issued by an importer or a bill of entry. Rule 7(1) and Rule 9(1) provide the basis for taking Cenvat credit, while sub-rule (1A) of Rule 7 and sub-rule (2) of Rule 9 allow for credit even if the documents do not contain all required particulars, provided the duty payment and receipt of goods are verified. The Tribunal found that the documents in question, although issued in the contractor's name, contained all necessary details and the goods were received and used by the appellants.

3. Legitimacy of the Bill of Entry endorsement:
The Bill of Entry was endorsed to notify the appellants, and the goods were directly transported to their factory. The Tribunal noted that the endorsement did not invalidate the document or make the import unlawful. The endorsement merely amended the consignee's name, which did not affect the validity of the Bill of Entry for claiming Cenvat credit.

4. Utilization and receipt of goods in the appellants' factory:
It was undisputed that the goods were received in the appellants' factory, used for setting up their plant, and the contractor did not claim any credit for the duty paid. The Tribunal emphasized that the goods were received and utilized by the appellants, and the duty was paid, thus entitling them to claim Cenvat credit.

5. Precedents and legal interpretations regarding Cenvat credit eligibility:
The appellants relied on several judicial precedents, including the Bombay High Court's decision in Marmagoa Steel Ltd. v. Union of India and the Gujarat High Court's decision in Vimal Enterprise v. Union of India. These precedents established that Cenvat credit could be claimed if the duty-paid goods were received and used by the manufacturer, even if the documents were not in the manufacturer's name. The Tribunal found these precedents applicable and held that the authorities erred in denying the credit.

Conclusion:
The Tribunal concluded that the appellants were entitled to Cenvat credit as the goods were received and used in their factory, and the duty was paid. The endorsement on the Bill of Entry did not invalidate the document, and the precedents supported the appellants' claim. The appeal was allowed, and the impugned order was set aside with consequential relief.

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