2011 (3) TMI 759 - AT - Central Excise

Demand - Cenvat credit - Board s Circular dated 29-2-1996 - The only change is that the inputs have been procured at their factory instead of their Head office. Moreover, we have also observed that in the show-cause notice the same Bills of Entry are mentioned in Annexure A for denying credit as the same has not been availed immediately - it is clear that the intent of the legislature is that the manufacturer should not be denied the credit of the inputs procured by them within the provisions of law - if the appellant has not taken the credit immediately on receipt of the goods, the appellant cannot be deprived from taking the credit later-on - Held that the appellants are entitled for CENVAT credit and they cannot be denied the CENVAT credit merely on the ground that they have not taken the credit immediately - Appeal is allowed

Summary

Issues:
Appeal against demand of duty and penalty based on credit availed of additional duty and CENVAT credit on Bills of Entry; Denial of credit on grounds of immediate credit availing.

Analysis:

Issue 1: Appeal against demand of duty and penalty based on credit availed of additional duty and CENVAT credit on Bills of Entry
The appellants challenged the demand of duty and penalty confirmed in the impugned order, asserting that the confirmation was unjust as the Bills of Entry were not endorsed in their name. The learned Advocate cited the case law precedent of Marmagoa Steel Ltd. v. CCE and subsequent higher court decisions to support their argument. The Revenue contended that the credit could not be availed if not done immediately upon procurement, referencing Board Circulars and legislative intent. The Tribunal examined the Bills of Entry and noted that the inputs were received at the appellant's factory, thus holding that denial of credit based on Bills of Entry not in the appellant's name was unsustainable.

Issue 2: Denial of credit on grounds of immediate credit availing
The Tribunal analyzed the contention regarding immediate credit availing and referred to Board Circulars and the case of Philips India Ltd. to determine the legislative intent. It was established that the manufacturer should not be denied credit for inputs procured within the provisions of law. The Tribunal disagreed with the Revenue's argument to refer the matter to a Larger Bench and held that denial of credit based on not taking it immediately was not valid. The decision emphasized that failure to take immediate credit affects the appellant, not the Revenue, and that denying credit later on would be unjust. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, if any.

This comprehensive analysis of the legal judgment addresses the issues involved, the arguments presented by both parties, and the Tribunal's reasoning leading to the final decision.