2010 (7) TMI 333 - AT - Central Excise

Cenvat Credit - availed the credit on the strength of invoices issued in the name of their Daman unit and that they availed credit prior to obtaining registration - inputs are duty paid and the inputs have been received in the factory - Held that - they cannot be denied the benefit without verifying the genuineness or correctness of their claim and the Cenvat Credit cannot be denied only on this ground that they have availed credit prior to obtaining registration - appeal is allowed by way of remand

Summary

Issues involved:
1. Appeal against upholding demand and penalty under Central Excise Act, 1985.
2. Availing Cenvat Credit before obtaining Central Excise registration.
3. Disallowance of Cenvat Credit based on procedural aspect.
4. Appeal against penalties imposed by lower authorities.

Analysis:

Issue 1: Appeal against upholding demand and penalty under Central Excise Act, 1985
The appellant and the Revenue both filed appeals against Order-In-Appeal No. RKA/370-371/SRT-I/2009, dated 8-6-09. The assessee's appeal contested the confirmation of demand and various proposals in the show cause notice, while the Revenue's appeal was against the setting aside of the penalty imposed under Rule 15(2) read with Section 11AC. The Commissioner (Appeals) upheld the demand of duty and interest but set aside the penalties. The Tribunal heard both sides and decided to take the appeals together due to common issues involved.

Issue 2: Availing Cenvat Credit before obtaining Central Excise registration
The appellant contended that they shifted their unit to Daman due to a flood in Surat, causing delays in starting production and obtaining registration. They argued that they did not intend to evade legal dues and applied for registration after availing Cenvat Credit. The Revenue argued that registration is mandatory, and availing Cenvat Credit without it contravenes the rules. The Tribunal noted that the appellant applied for registration before taking credit, and substantive benefits should not be denied on technical grounds. The case was remanded to verify the genuineness of the inputs and receipt of goods in the factory.

Issue 3: Disallowance of Cenvat Credit based on procedural aspect
The department disallowed Cenvat Credit due to the delay in obtaining registration, despite the inputs being duty paid and received in the factory. The Tribunal emphasized that denial based solely on timing was unjustified, and the case needed verification of documents to determine the duty paid nature of inputs. The lower adjudicating authority was directed to examine the documents and decide on penalties accordingly.

Issue 4: Appeal against penalties imposed by lower authorities
The penalties imposed by the lower authorities were set aside by the Commissioner (Appeals), leading to appeals from both parties. The Tribunal's decision to remand the case for verification of documents also impacted the penalty aspect, as penalties would be decided based on the verification results. The appellants were instructed to provide relevant documents for examination, ensuring a fair opportunity for a hearing.

In conclusion, the assessee's appeal was allowed by remand, the Revenue's appeal was disposed of accordingly, and the Cross Objection was also disposed of for the record. The Tribunal's decision focused on the procedural and substantive aspects of availing Cenvat Credit, emphasizing the need for verification before denying benefits or imposing penalties.