2011 (1) TMI 780 - AT - Central Excise

Cenvat credit - whether the respondent is eligible to avail Cenvat Credit of the SAD which was not indicated on the invoice when the entire material was transferred to Unit No.2 - Revenue has contested that the credit availed by the Unit No.2 / the respondent herein was not in accordance with Rule 9 of the Cenvat Credit Rules, 2004 - It is on record that subsequent to audit query being raised, the appellant had issued invoice No.262 dt. 10/10/2009 for the entire amount of duty which was taken as credit by Unit No.2 on 28/11/2007 - It can be seen that the Revenue has not disputed the fact that the respondent Unit No.2 is eligible to avail the credit of the SAD which should have been indicated in the invoice, which has not been done so - Held that - the input invoice was not available at the time of taking credit by the assessee - Decided against the revenue.

Issues:
- Eligibility to avail Cenvat Credit under Cenvat Credit Rules, 2004
- Proper documentation for availing credit under Rule 9 of CCR
- Denial of credit on procedural lapses
- Transfer of imported inputs between units without proper invoice
- Applicability of case laws in determining procedural lapses

Analysis:

Eligibility to avail Cenvat Credit under Cenvat Credit Rules, 2004:
The case revolves around the eligibility of the respondent to avail Cenvat Credit under the Cenvat Credit Rules, 2004. The respondents, as manufacturers of bulk drugs, were availing the facility of Cenvat credit for excise duty and service tax paid on inputs and input services received. The issue arose when the respondents took credit of inputs without proper documents, leading to a show cause notice for recovery of the credit, interest, and penalty. The lower authority denied the credit under Rule 9 of CCR, prompting an appeal by the respondents before the Commissioner(Appeals).

Proper documentation for availing credit under Rule 9 of CCR:
The crux of the matter was the requirement of proper documentation for availing credit under Rule 9 of CCR. The Revenue contended that credit taken based on a mere note from Unit-I to Unit-II did not qualify as credit taken on a valid document. The Tribunal's decision in a similar case was cited to support this argument. However, the Commissioner(Appeals) set aside the order-in-original, emphasizing that the denial of credit based on procedural lapses was not tenable, especially when the goods had been received, duty paid, and used in manufacturing.

Denial of credit on procedural lapses:
The Tribunal analyzed whether the denial of credit based on procedural lapses was justified. The Commissioner(Appeals) found that the non-raising of an invoice at the time of reversing Additional Duty of Customs was a procedural lapse, but substantive benefit of Cenvat credit could not be denied for such lapses. The Tribunal highlighted that when goods were received, duty paid, and used in manufacturing, the denial of credit for procedural lapses was not warranted.

Transfer of imported inputs between units without proper invoice:
The case involved the transfer of imported inputs between units without indicating the Additional Duty of Customs (SAD) on the invoice. While the Unit No.1 failed to indicate the SAD amount on the invoice, it was later rectified by issuing a belated invoice. The Tribunal considered this procedural lapse but ultimately concluded that the substantive benefit of Cenvat credit could not be denied solely on procedural grounds.

Applicability of case laws in determining procedural lapses:
The Tribunal assessed the applicability of case laws in determining procedural lapses. The Revenue contested the Commissioner(Appeals)' decision, arguing that non-raising of an invoice was not a condonable procedural lapse. However, the Tribunal upheld the Commissioner(Appeals)' decision, emphasizing that the factual matrix and circumstances of the case warranted a different interpretation, making the denial of credit on procedural grounds unwarranted.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue, affirming the correctness and legality of the order passed by the Commissioner(Appeals) and highlighting that the factual matrix supported the decision to allow the Cenvat credit to the respondent.

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