2011 (3) TMI 262 - AT - Central Excise

Rule 9 of the Cenvat Credit -The appellants appeal against the denial of credit availed by on the basis of endorsed by their head office to their factory - The invoices have been issued at head office of the appellant - The head office has diverted the goods in packed condition to their factory through endorsement of address on the invoices Thus, it is not the case of the endorsement of the party in the invoices - The appellants have received these goods against duty paid invoices in their factory and the same have been used in the manufacture of final products on which duty has been discharged - Hence the appeal is allowed in favour of appellants.

Summary

Issues: Denial of credit availed by appellants based on endorsement of head office address on invoices for goods received at factory.

Analysis:
1. Facts of the Case: The appellants were denied credit by the Central Excise department for procuring inputs against duty paid invoices with the head office address, which were then endorsed to the factory address. The denial was based on Rule 9 of the Cenvat Credit Rules, 2004, leading to the issuance of a show cause notice, subsequent denial of credit, and imposition of interest and penalty. The appellants appealed to the Tribunal.

2. Appellant's Argument: The appellants contended that despite the invoices being endorsed from the head office to the factory address, the goods were received against duty paid invoices and used in manufacturing final products on which duty was discharged. They argued that the denial of credit solely based on the address endorsement was a technical error and should not result in credit denial. The appellant cited various Tribunal decisions supporting their position.

3. Respondent's Argument: The respondent argued that under the new rule, no endorsement was allowed, and the appellants failed to disclose this fact to the department. They claimed that endorsed invoices were not proper documents for availing Cenvat credit under Rule 9. The respondent relied on Tribunal decisions to support their stance.

4. Judgment: The Tribunal examined both arguments and found that the invoices were indeed issued at the appellants' head office, which then redirected the goods to the factory through address endorsement. It was noted that the endorsement was not made by a third party but by the appellants themselves. The Tribunal disagreed with the respondent's reliance on certain case laws, stating they were not applicable to the current situation. The Tribunal found the case laws cited by the appellant more relevant, as they established that credit availed on factory address despite invoices being addressed to the head office was not a valid ground for credit denial. Consequently, the Tribunal set aside the denial of credit, allowing the appeal in favor of the appellants.