2011 (5) TMI 296 - AT - Central Excise

Pre-deposit of duty - Denial of credit - Loss of original copies of invoices - The appellants cleared their final products on payment of duty, which were subsequently rejected by their customers and received back by them - The appellants took credit of duty of in respect of the above rejected and received back goods, on the basis of photocopies of the invoices issued by them at the time of clearance of the said goods - Held that the loss of original copies cannot be made the sole basis for denial of credit in case of returned of the goods but appellants should have brought on record some other collateral evidences to establish that the goods are the very same goods which were originally cleared and their buyers have not availed the modvat credit of duty paid on the same - Thus, set-aside the impugned order and remand the matter to the original adjudicating authority.

Summary

Issues:
Availment of credit on photocopies of invoices without producing original invoices.

Analysis:
The case involves the appellant availing credit on photocopies of invoices for goods rejected by customers and returned to them. The Revenue objected to this practice, leading to disallowance of credit and imposition of penalties. The appellant argued that the original invoices were lost, and they had reversed the credit upon re-despatch of the goods. They contended that Rule 16 of Cenvat Credit Rules 2002 allowed credit without the original invoices. The lower authorities disagreed, insisting on availing credit with original invoices as per Rule 9 of Cenvat Credit Rules 2004. The appellant claimed to have reversed the credit upon reprocessing the goods, but the Revenue raised concerns about misuse of photocopies and lack of verification by buyers.

The Commissioner (Appeals) highlighted the need for evidence that buyers did not avail credit based on original invoices and questioned the identity of the goods. The Revenue expressed suspicions of foul play due to the nature of the goods involved. The appellate tribunal acknowledged the Commissioner's observations and emphasized the appellant's responsibility to provide evidence that buyers did not misuse the original invoices for credit. While loss of original invoices alone should not be the reason for credit denial, the appellant needed collateral evidence to prove the goods' identity and buyers' lack of credit availing. The tribunal remanded the matter to the adjudicating authority for further examination, allowing the appellant to substantiate their claims and present a defense.

In conclusion, the tribunal set aside the previous order, emphasizing the appellant's obligation to provide evidence supporting their claim and defending against the Revenue's concerns. The case highlights the importance of proper documentation and verification in credit availment processes to prevent misuse and ensure compliance with Cenvat Credit Rules.