2008 (3) TMI 153 - AT - Central Excise

Disallowance of the credit because of invalid documents receipt of the inputs in the factory is disputed - held that excise law does not provide for availment of credit on the basis of the endorsed invoices - it was not appropriate on the part of the appellants to have taken the stock credit and the money credit in RG23A Part I and RG23A. Part II respectively on the basis of the third party invoices - credit has been rightly disallowed by the lower authorities on the impugned invoices

Summary

Issues involved: Disallowance of Cenvat credit on invoices due to various grounds including consignment to third parties, endorsement of invoices, lack of documentary evidence, and non-receipt of inputs in the factory.

Analysis:
1. Disallowed Cenvat credit on four invoices (Sr. No. 5 to 8): The issue pertains to the disallowance of Cenvat credit on invoices consigned to M/s. Raymond Ltd. and credit taken on samples. The Assistant Commissioner and Commissioner (Appeals) held that no proof was provided regarding the receipt of inputs in the factory, leading to the disallowance upheld by the authorities.

2. Disallowed Cenvat credit on one invoice (Sr. No. 9): The credit was proposed to be disallowed as the invoice was in the name of a different entity. Similar to the previous case, lack of documentation proving receipt of inputs in the factory led to the disallowance of Cenvat credit, which was upheld by the authorities.

3. Disallowed Cenvat credit on five invoices (Sr. No. 11, 12, 13, 16, 17): The invoices were consigned to third parties and not the appellants, leading to the disallowance of credit. The absence of proof of receipt of inputs in the factory based on the endorsed invoices resulted in the rightful disallowance of Cenvat credit by the lower authorities.

4. Applicability of excise law on endorsed invoices: The excise law does not permit the availment of credit based on endorsed invoices. The judgment emphasized that allowing credit on such invalid documents poses a risk to revenue, justifying the disallowance of credit on endorsed invoices.

5. Contention on mandatory consignee name in invoices: The appellants argued that mentioning the consignee's name in the excise invoice was not mandatory before a specific date. However, the judgment rejected this plea as the consignee names on the invoices were third parties, and the receipt of inputs in the factory was disputed by the lower authorities.

6. Penalty and interest imposition: The judgment upheld the imposition of penalties and the demand for interest based on the circumstances of the case, concluding that the orders passed by the lower authorities were justified, leading to the rejection of the appeal.

In conclusion, the judgment addressed various issues related to the disallowance of Cenvat credit on invoices due to different grounds, emphasizing the importance of proper documentation, adherence to excise laws, and the receipt of inputs in the factory. The decision upheld the lower authorities' rulings and rejected the appeal, highlighting the significance of compliance and substantiation in claiming Cenvat credit.