2013 (10) TMI 618 - AT - Central Excise

CENVAT Credit Penalty on dealer who issued excise invoice was not registered under central excise - Revenue was of the view that M/s. Chemical Sales is not a registered dealer, the invoices issued by them were not valid documents for availing Cenvat Credit - Held that - M/s. Chemical Sales were a genuine dealer and goods supplied by them under their invoices had been received by M/s. Hindustan Unilever Ltd - Just because M/s. Chemical Sales issued invoices to M/s. Hindustan Unilever Ltd. without being a registered dealer, on the basis of which the M/s. Hindustan Unilever Ltd. availed the Cenvat Credit, Penalty cannot be imposed on M/s. Chemical Sales, as it was for M/s. Hindustan Unilever Ltd. not to take Cenvat Credit on the basis of the invoices issued by an un-registered dealer - For some contravention of Rules by M/s. Hindustan Unilever Ltd., penalty cannot be imposed on M/s. Chemical Sales and as such imposition of penalty on them does not appear to be sustainable. Reversal of CENVAT Credit Waiver of Pre-deposit - M/s. Hindustan Unilever Ltd. have reversed Cenvat Credit - But in respect of spare parts of capital goods they would be eligible for Cenvat Credit - However, as regards the Cenvat Credit on the basis of the invoices issued by M/s. Chemical Sales, M/s. Chemical Sales were neither a manufacturer nor a registered dealer, the invoices issued by them was not valid documents for Cenvat Credit - Thus, in respect of alleged wrong credit this is not a case for total waiver M/s. Hindustan Unilever Ltd. are directed to deposit an amount - On deposit of this amount within the stipulated period, the requirement of pre-deposit of balance amount of Cenvat Credit demand, interest and penalty imposed on the appellant would stand waived Partial stay granted.

Summary

Issues:
1. Admissibility of Cenvat Credit for caustic soda purchased from an unregistered dealer.
2. Treatment of spare parts of capital goods as inputs for Cenvat Credit.
3. Imposition of penalties on the appellant and the dealer for Cenvat Credit issues.

Analysis:
1. The appellant, a detergent manufacturer, availed Cenvat Credit for caustic soda purchased from an unregistered dealer, leading to a dispute with the Department. The Department contended that since the dealer was unregistered, the credit was inadmissible. The Assistant Commissioner confirmed a total Cenvat Credit demand, including penalties. On appeal, the Commissioner upheld the decision, prompting the appellant to file further appeals and stay applications.

2. During the hearing, the appellant argued that the caustic soda was purchased from a registered dealer who directly supplied the goods to them, justifying the Cenvat Credit claim. Additionally, the appellant defended the treatment of spare parts of capital goods as eligible for Cenvat Credit, citing compliance with the definition of capital goods. The Department opposed the appeals, emphasizing the inadmissibility of credit from unregistered dealers and the partial availability of credit for spare parts of capital goods.

3. The Tribunal analyzed the submissions and records, acknowledging that the dealer was genuine and the goods were received by the appellant. It noted that penalizing the dealer for the appellant's contravention was unjust, as the appellant should have exercised caution in availing credit from unregistered dealers. Regarding the spare parts issue, the Tribunal recognized the eligibility of Cenvat Credit but found the credit from the unregistered dealer invalid. Consequently, the Tribunal directed the appellant to deposit a specified amount within a deadline to proceed with the appeal, while waiving the remaining balance. The penalty requirement for the dealer was also waived pending appeal resolution.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision, providing a comprehensive overview of the legal proceedings and outcomes.