2013 (12) TMI 1339 - AT - Central Excise

Denial of cenvat credit goods not received on the dates when credit taken Held that - The goods had subsequently been received, as the goods covered by the invoice No. 62, dated 31-10-2005 on the basis of which the credit was taken on 31-10-2005, had been received on 3-11-2005 and the goods covered by the invoice Nos. 91 and 92 each dated 31-12-2005 on the basis of which Cenvat credit had been taken on 31-12-2005, had been received on 3-1-2006 - When the goods were received in the factory, the Cenvat credit cannot be denied thus, the department can charge only the interest as irregularly taken credit Decided against Revenue.

Summary

Issues:
1. Denial of Cenvat credit for input received after the credit was taken.
2. Validity of penalty imposed for irregular Cenvat credit availed.
3. Appeal against the order of Commissioner (Appeals) by the Revenue.

Analysis:
1. The case involved the denial of Cenvat credit by the department to the respondent, who are manufacturers of rough steel forgings, for inputs (furnace oil) received after the credit was taken. The department issued a show cause notice for denial of Cenvat credit, recovery of the amount with interest, and imposition of penalty. The Assistant Commissioner confirmed the demand, interest, and penalty, stating that the credit was irregularly availed. On appeal, the Commissioner (Appeals) modified the order, setting aside the demand but upholding interest and reducing the penalty. The Revenue appealed against this decision.

2. During the hearing, the learned DR argued that the respondent were not eligible for Cenvat credit as the inputs were not received on the dates the credit was taken. However, it was noted that the goods were subsequently received on different dates. The Judge observed that since the goods were eventually received by the factory, the Cenvat credit could not be denied solely based on the timing of credit availed. As a result, the Judge upheld the Commissioner (Appeals) order, stating that only interest could be charged for irregularly taken credit, dismissing the Revenue's appeal.

3. The Judge's decision focused on the fact that the goods covered by the invoices for which the Cenvat credit was taken were indeed received by the factory, thereby justifying the availment of the credit. The judgment emphasized that the department could only charge interest for the irregularity in the timing of credit availed, as the goods were eventually received. Consequently, the appeal by the Revenue was dismissed, affirming the decision of the Commissioner (Appeals) regarding the denial of Cenvat credit and the reduction of penalty.