2016 (5) TMI 10 - HC - Central Excise

Cenvat credit on the inputs on the basis of documents endorsed by the consignee - Duty paying document - Availing modvat credit on duty paid inputs under Rule 57A of the Central Excise Rules, 1944 - Held that - in exercise of powers under Rule 57G of the Central Excise Rules, 1944, the Central Government under notification dated 30.3.1994 prescribed invoices issued by a manufacturer from his factory or depot or wholesale distributor or dealer of a manufacturer who has bought the excisable goods either from the manufacturer at the factory or from the manufacturer s depot or an importer from his godown subject to certain conditions, as document for the purpose of said Rules. Likewise, under notification dated 4.7.1994, the Central Government had prescribed invoices issued by a manufacturer from the factory or his depot or dealer of an excisable goods registered with the Central Excise Officer or an importer from his godown or dealer of an imported goods registered with the Central Excise Officer containing the details, as are prescribed under Rule 57GG as the documents for the purpose of Rule 57G. In other words, subject to fulfilling the conditions provided in the said notifications, the invoices issued by the said category of persons would qualify a manufacturer to avail cenvat credit on the inputs used. This decision was completely lost sight of by the Tribunal. We find that major changes were made in the procedure prescribed in availing cenvat credit. By virtue of such changed procedure, only upon the invoices being issued under Rule 52A, the cenvat credit, on the strength of such documents could be availed by the manufacturer. The Tribunal thus committed an error. Therefore, the decision of the Tribunal is reversed. - Decided in favour of revenue

Summary

Issues:
- Interpretation of Rule 57G of the Central Excise Rules, 1944 regarding Modvat credit eligibility based on endorsed invoices.
- Admissibility of Modvat credit on inputs received under endorsed invoices.
- Application of relevant case laws in determining Modvat credit eligibility.
- Compliance with statutory changes in availing Cenvat credit.

Interpretation of Rule 57G - Modvat Credit Eligibility:
The case involved a dispute over the eligibility of Modvat credit based on endorsed invoices under Rule 57G of the Central Excise Rules, 1944. The appellant had taken Modvat credit on duty paid inputs received under endorsed invoices, which the excise department contended to be contrary to the provisions of Rule 57G. The department issued a show cause notice to the assessee, challenging the admissibility of the credit and imposing penalties. The Commissioner (Appeals) upheld the disallowance of Modvat credit, citing the amended rule eliminating endorsement of duty paying documents and emphasizing the use of prescribed duty paying documents for credit availing.

Application of Case Laws - Modvat Credit Eligibility:
The assessee appealed to the Tribunal, which allowed the appeal and reversed the decisions of the revenue authorities. The Tribunal referred to various case laws, including M/s. Crop Health Products Ltd, M/s. Gufic Chem Pvt. Ltd, and M/s. Spa Pharmaceuticals Pvt. Ltd, to support the entitlement of Modvat credit even when invoices were issued in the name of another company or endorsed in favor of the appellant. The Tribunal emphasized the acceptance of endorsed invoices as valid documents for Modvat credit under Rule 57G.

Compliance with Statutory Changes - Cenvat Credit Availment:
However, the department contended that the Tribunal erred in allowing the appeal, disregarding the amended requirement of Section 57G, which mandated specific documents for Cenvat credit eligibility. The Tribunal's decision was deemed erroneous as it overlooked the statutory changes mandating invoices issued under Rule 52A for availing Cenvat credit. The Tribunal failed to consider the mandatory nature of the requirements under the notifications dated 30.3.1994 and 4.7.1994, which eliminated the endorsement of invoices for credit purposes.

Conclusion:
Ultimately, the High Court reversed the Tribunal's decision, siding with the revenue authority. The Court highlighted the significance of complying with the amended procedures for availing Cenvat credit, emphasizing the necessity of invoices issued under Rule 52A for credit eligibility. The Court concluded that the Tribunal's oversight of the statutory changes constituted an error, leading to the reversal of the Tribunal's decision. Consequently, the Tax Appeal was allowed in favor of the Revenue, and the issue was resolved in compliance with the amended provisions governing Modvat and Cenvat credit availing processes.