2015 (4) TMI 890 - AT - Central Excise

Cenvat credit of SAD - appellant was not liable to pay SAD - refund claim was rejected - appellant found that they are unable to utilise the amount in the EPCG licence as they were going to redeem the licence in a shorter period and therefore they have taken credit in the Cenvat account - Held that - Appellant is entitled to avail the cenvat credit of SAD as evident from the Notification in 97/2004-CUS, which was also noted by the DGFT authority and after considering that they have availed this amount in their cenvat account, this amount was not reduced towards the value of export obligation. Thus, it is clearly evident that the applicant is eligible to avail the cenvat credit on merit. - Challan is not a document for the purpose of availment of the cenvat credit. It is also observed that the appellant could have taken the credit in the cenvat account on the basis of Bill of Entry. It is revealed from the record that the appellant paid the duty by challan on the basis of the Bill of Entry generated through EDI on 13.3.2006. It is observed that the appellant has shown the reference of the Challan in their cenvat account. In my considered view, the appellant could have mentioned the reference of Bill of Entry number in their cenvat account. The appellant is also eligible to avail credit on the basis of Challan under Rule 9 of the Cenvat Credit Rule 2004 as held by the Tribunal in the case of Essar Oil Ltd (2014 (2) TMI 766 - CESTAT AHMEDABAD). - when there is substantial compliance of law the benefit of cenvat credit cannot be denied on procedural lapse - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of cenvat credit and imposition of penalty.
2. Eligibility to avail cenvat credit under Notification No. 97/2004-CUS.
3. Doctrine of election in choosing between refund claim and cenvat credit.

Analysis:
1. The case involved disallowance of cenvat credit of a specific amount along with the imposition of a penalty. The Assistant Commissioner of Customs rejected the refund claim and directed re-credit of the amount on the EPCG license. The appellant argued that they were unable to utilize the amount on the license due to an early redemption plan and thus availed cenvat credit. The Commissioner (Appeals) upheld the disallowance, leading to the appeal.

2. The appellant contended that they were eligible to avail cenvat credit under Notification No. 97/2004-CUS and had informed the DGFT authorities about utilizing the amount in their cenvat account for export obligations. The Tribunal noted that the appellant fulfilled export obligations, and the amount was not reduced, indicating eligibility for cenvat credit.

3. The issue of the doctrine of election arose as the Revenue argued that opting for a refund claim barred the appellant from availing cenvat credit. However, the Tribunal found that the appellant was entitled to cenvat credit as per the notification, and the doctrine of election did not apply in this case. The Tribunal cited the Hon'ble Supreme Court decision in a similar context to support the appellant's eligibility for cenvat credit.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief. The decision emphasized the appellant's eligibility for cenvat credit under the relevant notification and rejected the application of the doctrine of election in this scenario.