2012 (12) TMI 923 - AT - Central Excise

Denial of CENVAT credit - Validity of documents on which Credit was taken - Held that - impugned order passed by the Commissioner (Appeals) clearly states that the goods, in question, had been imported by M/s. Siemens Ltd. and subsequently, the same were sold to SVACPL, who in turn have sold them to the appellant thereby passing on the cenvat credit to the tune of Rs.5,72,286/-. Thus, this is case where the it is not disputed that M/s. Siemens Ltd. were registered as a dealer and subsequently after taking over of the business of Automotive division of the Siemens Ltd. by SVACPL, SVACPL also obtained registration as a registered dealer. When it is not disputed that the goods, in question, on which the cenvat credit had been taken by the appellant, had been sold to M/s. SVACPL, who, in turn, sold the same to the appellant, it would not be correct to deny the cenvat credit when both the M/s. Siemens Ltd. and M/s. SVACPL were registered as dealers. SVACPL can be treated as second stage dealer and the invoice issued by them would be valid document for cenvat credit. I also find that in identical case of M/s. Venus Stampings Pvt. Ltd. (2006 (7) TMI 65 - CESTAT,NEW DELHI) when the business of one registered dealer is taken over by another registered dealer along with stock of goods, the invoices issued by that registered dealer who had taken over the business along with the stock, would be valid document for cenvat credit - Decided in favour of assessee.

Summary

Issues: Validity of cenvat credit on imported transponders purchased from a registered dealer.

Analysis:
The case involved the appellants, manufacturers of motor vehicle parts, who availed cenvat credit of Rs.5,72,286 in relation to imported transponders purchased from a registered dealer, M/s. Siemens VDO Automotive Components Pvt. Ltd. The dispute arose due to the department's contention that the invoices used for claiming the cenvat credit were not valid documents. The Addl. Commissioner confirmed the cenvat credit demand and imposed a penalty, a decision upheld by the Commissioner (Appeals), leading to the current appeal.

The appellant's counsel argued that the goods were originally imported by M/s. Siemens Ltd., a registered dealer, and later sold to SVACPL, who then sold them to the appellant. They emphasized compliance with relevant rules and cited precedents where invoices from a registered dealer acquiring another dealer's business were deemed valid for cenvat credit. On the other hand, the Departmental Representative maintained that since M/s. Siemens Ltd. surrendered their registration before the sale of goods to SVACPL, the invoices from SVACPL were invalid for cenvat credit.

Upon review, the judge noted that the goods in question were imported by M/s. Siemens Ltd. and subsequently sold to SVACPL, who further sold them to the appellant, passing on the cenvat credit. Given that both M/s. Siemens Ltd. and SVACPL were registered dealers, the judge concluded that denying cenvat credit based on the change in ownership was incorrect. Drawing parallels to precedent, the judge deemed SVACPL a second-stage dealer, making their invoices valid for cenvat credit. Consequently, the impugned order was set aside, and the appeal was allowed.