2016 (3) TMI 1136 - AT - Central Excise

Denial of CENVAT credit - credit taken on the basis of photocopy of the invoice - Held that - It is an admitted fact that the cenvat credit has been taken by the appellant based on the photocopy of invoice issued by the supplier of goods and that photocopy of invoice is not prescribed as a valid document under Rule 11 of the Central Excise Rules 2002. However, upon verification of the books of accounts maintained by the appellant, since the original authority has held that the goods covered under the disputed invoice has suffered duty and the goods have been received in the factory for use in or in relation to manufacture of the final product, the requirement of Rule 9 of the Cenvat Credit Rules 2004, in my opinion, has been complied with for the purpose of cenvat benefit. Since the duty paid character is not under dispute, it cannot be said that taking of cenvat credit on the basis of photocopy of the invoice is attributable to fraud, collusion, suppression of facts with intent to evade payment of duty. Thus, SCN in this case should be confined to a period of one year from the relevant date. Since, cenvat credit in the present case has been taken in the month of April 2006 and the SCN was issued on 19.02.2009, I am of the view that the same is barred by limitation of time. Since the SCN has been issued beyond the period of one year, I am of the opinion that proceedings initiated for recovery of cenvat demand and for imposition of penalty is not proper, and accordingly, I hold that the impugned order is not sustainable - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Denial of cenvat benefit and confirmation of penalty amount.
2. Validity of taking cenvat credit based on a photocopy of the invoice.
3. Barred by limitation of time - SCN issued beyond one year.

Analysis:

Issue 1: Denial of cenvat benefit and confirmation of penalty amount
The Tribunal observed that the matter was remanded back to the Original Authority for fresh fact-finding in the previous round of litigation. The Original Authority dropped the Show Cause Proceedings, stating that the duty paid character of the goods and their utilization in the factory were not in dispute. However, the Revenue appealed, leading to the denial of cenvat benefit and confirmation of the penalty amount by the Ld. Commissioner (Appeals). This denial of benefit and penalty confirmation formed the subject matter of the current dispute before the Tribunal.

Issue 2: Validity of taking cenvat credit based on a photocopy of the invoice
The Appellant argued that since duty had been paid on the disputed invoice and the goods were received in the factory for the intended purpose, allegations of suppression or misstatement could not be made beyond the one-year limitation period for issuing Show Cause Notice (SCN). The Appellant relied on previous Tribunal decisions to support this argument. On the other hand, the Respondent contended that taking cenvat credit based on a photocopy of the invoice was not permissible under Rule 9 of the Cenvat Credit Rules, 2004. The Respondent cited a Tribunal decision to support this stance.

Issue 3: Barred by limitation of time - SCN issued beyond one year
The Tribunal examined the compliance with Rule 9 of the Cenvat Credit Rules, 2004, and found that the duty paid character was not in dispute, and there was no evidence of fraud or suppression. As the SCN was issued more than one year after the cenvat credit was taken, the Tribunal held it to be barred by limitation of time. Distinguishing the Respondent's cited case, the Tribunal concluded that the proceedings for recovery of cenvat demand and penalty imposition were not proper due to the time limitation, ultimately ruling in favor of the Appellant and deeming the impugned order unsustainable.