2015 (3) TMI 379 - AT - Central Excise

Denial of CENVAT Credit - Held that - There is no dispute about the fact that the manufacturers of the inputs raised the cenvatable invoices, giving all the details, including duty payment particulars. The inputs were received by the appellants, who took the credit based upon the declaration made by the manufacturer. The question which arise as to when the manufacturer has given wrong declaration as regards duty payments in the invoices raised by them, whether the credit can be denied to the input recipient or the Revenue s remedy lies at the manufacturer end for the demand of duty. - issue is no more res integra and stands settled by the Board Circular No.766/82/2003-CX, dated 15.12.2003 as also by various decisions of the Tribunal 2006 (11) TMI 494 - CESTAT, MUMBAI laying down that in such scenario, the input recipient cannot be denied the credit. Demand is hit by bar of limitation. Admittedly, the appellants had taken the credit by reflecting the same in their records. When the invoices received by them are showing duty payment, the input recipient cannot be expected to know that the manufacturer has not actually discharged the duty burden. Accordingly, I hold that the demand is also barred by limitation. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
- Denial of CENVAT credit based on incorrect declaration of duty payment by the manufacturer
- Liability of the input recipient when the manufacturer provides wrong declaration
- Bar of limitation in demanding duty payment

Analysis:
The case involved the appellants, manufacturers of white cement and putty, who availed CENVAT credit based on invoices from another manufacturer, M/s. Rishabhdev Techno Cables Ltd., during March to August 2003. The Revenue raised a Show Cause Notice in 2008 proposing to deny the CENVAT credit due to the failure of duty liability discharge by the input manufacturer. The subsequent order confirmed the denial of credit along with interest and penalty, which was upheld by the Commissioner (Appeals), leading to the present appeal.

During the proceedings, it was established that the input manufacturer had issued invoices with duty payment details, which were relied upon by the appellants to claim credit. The key issue was whether the credit could be denied to the input recipient when the manufacturer provided incorrect duty payment declarations. The Tribunal referred to Circular No.766/82/2003-CX and previous decisions, including the case of Bhuwalka Steel Industries Ltd. Vs. CCE, to assert that in such scenarios, the input recipient cannot be denied credit.

Furthermore, the appellants contended that the input manufacturer had subsequently paid the duty in question, but this claim was rejected by the Commissioner (Appeals) due to lack of evidence linking the payment to the invoices. The Tribunal noted that the demand for duty payment was also barred by limitation, considering that the appellants had recorded the credit in their books based on the invoices showing duty payment, and they could not be expected to verify the actual discharge of duty by the manufacturer.

Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellants and providing them with consequential relief. The judgment highlighted the importance of correct declaration by manufacturers for availing CENVAT credit and emphasized the limitations on denying credit to input recipients in cases where duty payment details were provided in the invoices.