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2011 (1) TMI 623 - AT - Central ExciseConfiscation - Invoice were issued at earlier date of dispatched of the goods - Investigations conducted by the department indicated that the goods had been received from Ludhiana depot of ESL and not from their factory at Hazira, while the invoices covering the goods had been issued by the factory of ESL at Hazira - Cenvat credit amounting to Rs. 7,32,490/- had been taken on the basis of original copies of the invoices issued by ESL - Held that the credit amounting to Rs. 7,32,490/- taken on the original copy of the invoice has been rightly denied and there is no infirmity in the impugned order of the Commissioner (Appeals) upholding the denial of credit and confirmation of its demand Regarding credit of Rs. 30,22,774 - If the appellant had received the goods directly from Hazira factory at Ludhiana under their invoices, there would have been no dispute about the cenvat credit on the basis of the invoices issued by the Hazira factory of ESL - Non-issue of invoices by the Ludhiana depot of Essar under Rule 57GG is only a minor technicality for which the Cenvat credit cannot be denied when neither authenticity of the invoices issued by the Hazira factory of the ESL to the appellants is disputed nor the receipt of the goods covered under those invoices by the appellants is disputed - Decided in favor of the assessee Regarding interest and penalty - appellants would be liable for interest under Rule 12 of the Cenvat Credit Rules read with Section 11AB of the Central Excise Act, 1944 on the demand of Cenvat credit of Rs. 7,32,490 - since this credit has been wrongly taken, the appellants would be liable for penalty and accordingly, the order-in-original imposing penalty on this count is restored - Decided against the assessee
Issues Involved:
1. Denial of Cenvat credit amounting to Rs. 30,22,774/-. 2. Denial of Cenvat credit amounting to Rs. 7,32,490/-. 3. Applicability of the extended period for issuing the show cause notice. 4. Imposition of penalty and interest. Detailed Analysis: 1. Denial of Cenvat Credit Amounting to Rs. 30,22,774/- Appellant's Argument: - The appellants argued that the denial of Cenvat credit was incorrect as they received H.R. Coils directly from ESL, Hazira, and also from ESL's Ludhiana depot. The invoices issued by ESL, Hazira were valid documents for availing Cenvat credit. - There was no dispute about the duty-paid nature of the H.R. Coils or their receipt and utilization in the manufacture of finished products. - The goods were received in the factory premises, and the invoices showed the payment of duty, making the credit taken in accordance with the law. - The substantive benefit should not be denied due to minor technicalities, as supported by the judgments of the Hon'ble Supreme Court and Punjab & Haryana High Court. Department's Argument: - The Department contended that since the goods were received from ESL's Ludhiana depot, the credit should have been taken on the basis of invoices issued by the depot under Rule 57GG. - The law mandates that duty-paid goods must travel under valid duty-paying documents, and credit is admissible only when inputs are received under corresponding invoices. Judgment: - The Tribunal found that the goods were dispatched by ESL, Hazira under their invoices to the appellant but were first unloaded at ESL's Ludhiana depot and then transported to the appellant's factory. - The Tribunal held that the non-issue of invoices by the Ludhiana depot under Rule 57GG was a minor technicality. Since the authenticity of the invoices issued by ESL, Hazira and the receipt of goods by the appellant were not disputed, the Cenvat credit could not be denied. - The impugned order upholding the Cenvat credit demand of Rs. 30,22,774/- was set aside. 2. Denial of Cenvat Credit Amounting to Rs. 7,32,490/- Appellant's Argument: - The appellants argued that the denial of credit on the basis of original copies of the invoices was incorrect as there was no dispute about the duty-paid nature of the goods or their receipt and use in manufacturing. - The appellants could execute an indemnity bond stating they would not take credit if a duplicate copy was found available. Department's Argument: - The Department argued that as per Rule 57G(6), credit could be taken on the basis of original copies only if the duplicate copy was lost and the loss was reported to the jurisdictional officer, which was not done in this case. - Reliance was placed on judgments that established credit could only be taken on specified documents prescribed by law. Judgment: - The Tribunal agreed with the Department, stating that the appellants had not followed the procedure prescribed under Rule 57G(6) for taking credit on the basis of original copies. - The credit amounting to Rs. 7,32,490/- taken on the original copy of the invoice was rightly denied, and the impugned order upholding the denial of credit was affirmed. 3. Applicability of the Extended Period for Issuing the Show Cause Notice Appellant's Argument: - The appellants argued that the extended period was not applicable as the Department was aware of the credit being taken on the basis of manufacturer's invoices and the invoices were submitted along with RT-12 returns. Judgment: - The Tribunal did not specifically address this issue in the detailed analysis, focusing instead on the substantive issues of credit denial and penalties. 4. Imposition of Penalty and Interest Appellant's Argument: - The appellants argued that no Cenvat credit was recoverable from them, and thus, there was no intention to evade duty, making the imposition of penalty unjustified. Department's Argument: - The Department argued that just because the entire disputed amount had been paid prior to the issue of the show cause notice, the penalty and interest could not be waived. Judgment: - The Tribunal found that the judgment relied upon by the Commissioner (Appeals) to set aside the penalty and interest was no longer good law. - The appellants were liable for interest under Rule 12 of the Cenvat Credit Rules read with Section 11AB of the Central Excise Act, 1944, on the demand of Cenvat credit of Rs. 7,32,490/-. - A penalty of Rs. 2 lakhs was imposed on the appellant, and the order-in-original imposing penalty was restored. Conclusion: - The appeal regarding the Cenvat credit of Rs. 30,22,774/- was allowed, setting aside the impugned order. - The denial of Cenvat credit of Rs. 7,32,490/- was upheld. - The order setting aside interest and penalty was reversed, and the original order was restored with a reduced penalty of Rs. 2 lakhs.
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