2012 (5) TMI 523 - AT - Central Excise

CENVAT Credit - Endorsement of bill on entry - whether an endorsed bill of entry can be considered to be an eligible document for the purpose of availing CENVAT credit - Held that - invoice issued by the importer stands specified as an eligible document. As such, it can be safely concluded that if M/s. Brakes India Ltd., would have issued invoices, instead of endorsed bill of entry, there can be no objection by the Revenue - proviso to sub-rule (2) of Rule 9 is to the effect that if all the particulars are contained in the document, the authorities will not deny the CENVAT credit. In the present case, there is no dispute about the fact of receipt of the inputs by the applicants, their duty-paid character, their utilisation in the manufacture of the final product and payment of duty on the final product. As such, in our view, denial of substantive benefit, if otherwise available to the applicants, on the hyper-technical procedural violation is not justified - applicant has a prima facie case in its favour - Stay granted.

Summary

Issues:
Prayer to dispense with pre-deposit of Rs. 2,44,78,395/- and penalty; Eligibility of endorsed bill of entry for availing CENVAT credit.

Analysis:
The judgment dealt with the appeal regarding the condition of pre-deposit of a substantial amount and penalty imposed on the applicants for denying them the benefit of CENVAT credit availed during a specific period. The applicants were engaged in manufacturing automobile components on a job work basis for a company that imported items, paid customs duty, endorsed bills of entries in favor of the applicants, and sent the goods directly to the applicant's unit for further utilization in manufacturing final products. The dispute revolved around whether an endorsed bill of entry could be considered an eligible document for availing CENVAT credit. Rule 9 of CENVAT Credit Rules, 2004 specifies the bill of entry as an eligible document, but there is ambiguity regarding the eligibility of an endorsed bill of entry. The absence of a provision debarring CENVAT credit based on endorsed bills of entries was noted. The judgment highlighted that an invoice issued by the importer is a specified eligible document, indicating that if invoices were issued instead of endorsed bills of entries, there would be no objection from the revenue authorities.

The judgment also referenced the proviso to sub-rule (2) of Rule 9, emphasizing that if all particulars are contained in the document, authorities should not deny CENVAT credit. In this case, there was no dispute regarding the receipt, duty-paid status, utilization of inputs, and payment of duty on the final product by the applicants. The judgment emphasized that denial of a substantive benefit based on hyper-technical procedural violations is unjustified. It cited a precedent where credit on an endorsed bill of entry accompanied by a declaration was held admissible to a job worker, and this decision was confirmed by the Gujarat High Court and the Supreme Court. Considering these aspects, the tribunal found that the applicant had a prima facie case in their favor, leading to the unconditional allowance of the stay petition.

In conclusion, the judgment focused on the eligibility of an endorsed bill of entry for availing CENVAT credit, highlighting the absence of a clear provision in the rules and emphasizing the importance of substantive compliance over technical procedural issues. The decision was based on precedents and legal interpretations supporting the admissibility of CENVAT credit in similar circumstances.