2016 (5) TMI 1122 - AT - Central Excise

Cenvat credit on purchase of raw material - sponge iron being the raw material/inputs purchased from registered dealer - goods received on endorsed invoices - goods were sold in transit - Held that - From a perusal of the invoices in question, it is find that the so-called certificate (invoices) as mentioned in the Order-in-Original, in the invoices, has been mis-conceived by the adjudicating authority as a certificate by the appellant. In fact, it is certified by the seller of inputs - M/s Chachan Metals Pvt. Ltd., Shamli dated 18/9/2007, certifying that the goods covered by the invoice where received directly from factory/Depot/consignment agent located at Ramchandrapur, Orissa. As find that the adjudicating authority misread the document by interpreting it as this certificate is given by the appellant leading to the illogical conclusion drawn. Thus, find that the impugned orders suffer with mistake of fact and accordingly, the same is fit to be set aside. Further it is the admitted case of Revenue that M/s Chachan Metals Pvt. Ltd., Shamli, received the goods along with the endorsed invoices, which is a normal trade practice where goods are resold during transit. That there is nothing wrong in diverting the goods in transit by the same Company, that is M/s Chachan Metals Pvt. Ltd., Kanpur to their own office at Shamli. Further, find that it is an admitted fact that the revenue have accepted the taking of credit by M/s Chachan Metals Pvt. Ltd., Shamli. Accordingly, allow the appeal in favour of assessee.

Summary

Issues:
Appeal against denial of Cenvat credit on purchase of raw material.

Analysis:
1. The appellant, a manufacturer of MS ingots, appealed against the denial of Cenvat credit on the purchase of sponge iron as raw material from a registered dealer. An audit revealed discrepancies in the invoices issued by the seller, leading to a show cause notice proposing disallowance of the Cenvat credit.

2. The appellant contended that they had received valid duty paying documents from the seller, M/s Chachan Metals Pvt. Ltd., Shamli, and had no reason to doubt the validity of the invoices. They argued that any lapses on the part of the seller should not adversely affect the appellant. The appellant cited precedents to support their case, emphasizing that without fraud or collusion, the extended period of limitation should not apply.

3. The Original Adjudicating Authority confirmed the demand of duty, citing discrepancies in the invoices and lack of evidence regarding the movement of goods from the manufacturer to the appellant. The authority concluded that the invoices were not proper duty paying documents, leading to the disallowance of the Cenvat credit.

4. The Commissioner (Appeals) upheld the decision of the Adjudicating Authority, prompting the appellant to file an appeal before the Tribunal. The appellant argued that the demand was based on assumptions and lacked proper investigation. They relied on judgments supporting their position that the burden of proof had been discharged and that the extended period of limitation was not applicable.

5. Upon reviewing the invoices and considering the contentions of both parties, the Tribunal found that the adjudicating authority had misinterpreted the documents and set aside the impugned order. The Tribunal noted that the goods were received along with endorsed invoices, a common trade practice, and that the Revenue had accepted the credit taken by the seller. Consequently, the Tribunal allowed the appeal and granted the appellant consequential benefits.

This detailed analysis of the judgment highlights the key arguments, findings, and decisions made by the Tribunal regarding the denial of Cenvat credit on the purchase of raw material.