2011 (7) TMI 974 - AT - Central Excise

Cenvat Credit on the basis of Bill of Entry in the name of International Operation Division of the assessee - Penalty - Circular No. 179/13/96-CX. dated 29-2-1996 - Plain reading of the order of the Commissioner clearly indicates that the bill of entry was in the name of the appellant only - It is pertinent to note that the appellant s factory in Bhopal comes directly under the jurisdiction of Commissioner Bhopal and therefore the finding that in the absence of endorsement in the bill of entry by the International Operations Division it was not possible to ascertain as to whether the goods covered by the said bill of entry were received and used in the assessee factory cannot be appreciated. - Cenvat Credit allowed. . As regards the material procured from Hindustan Copper Limited - The fact that the job worker has processed the material and sent the intermediate goods manufactured using the inputs following Notification No. 214/86 has not been refuted. In the given facts and circumstances of the case the transport of material directly to the job worker s premises to avoid payment of extra period and same time cannot lead to denial of credit - Cenvat Credit allowed.

Summary

Issues:
1. Denial of credit for imported goods due to lack of endorsement on bill of entry.
2. Denial of credit for inputs procured from Hindustan Copper Limited not physically received in the factory but used in intermediate products.

Analysis:

Issue 1: Denial of credit for imported goods
The appellant imported goods with the bill of entry filed under its International Operation Division, but the goods were received at the appellant's factory in Bhopal. The department denied credit due to lack of endorsement on the bill of entry as per Circular No. 179/13/96-CX. The appellant argued that non-endorsement by the International Operation Division was a technical violation and should not affect credit since the materials were received and used as intended. The Commissioner's reasoning focused on the absence of endorsement, leading to uncertainty about the goods' usage. However, the Tribunal found that the bill of entry was in the appellant's name, and the material receipt was confirmed by store receipt vouchers. The Tribunal concluded that procedural lapses should not hinder credit entitlement when the materials were received and utilized correctly.

Issue 2: Denial of credit for inputs from Hindustan Copper Limited
The second issue involved credit denial for inputs procured from Hindustan Copper Limited, sent directly to a job worker, and received as intermediate products by the appellant. The department argued that the appellant failed to follow prescribed procedures and did not physically receive the inputs in the factory. The appellant explained that the materials were sent to the job worker to avoid transportation costs, and the job worker processed them under Notification No. 214/86. The Commissioner highlighted the failure to follow prescribed procedures and lack of evidence regarding the movement of inputs. However, the Tribunal accepted the appellant's explanation, noting that the job worker processed the materials as per the notification. The Tribunal concluded that the direct transport to the job worker's premises did not justify credit denial, as the appellant complied substantially with credit conditions despite minor procedural lapses.

In conclusion, the Tribunal set aside the disallowance of credit amounting to Rs. 980899 and the imposed penalty of Rs. 3 lakhs. The decision emphasized that procedural deviations should not obstruct credit entitlement when the materials were received and utilized as required.