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2007 (10) TMI 113 - AT - Central ExciseCredit taken on invoices issued by person who was a manufacturer but only trader After omission of Rule 12B C.E. Act, supplier cannot be considered as a manufacturer, was in knowledge of the appellant Credit is not allowed which is taken on such invalid duty paying documents.
Issues: Availment of Cenvat credit based on invoices from a trader post-omission of Rule 12B of Central Excise Rules, 2002.
In this case, the appellants availed Cenvat credit and education cess based on invoices issued by a trader, M/s. Keetex, after the omission of Rule 12B of the Central Excise Rules, 2002. The show cause notice contended that since M/s. Keetex was no longer a deemed manufacturer post the omission, the appellants were not entitled to avail credit based on their invoices. The advocate for the appellants argued that they had paid duty on the final products manufactured using the inputs from M/s. Keetex, and thus the credit should not be denied. Reference was made to precedents emphasizing that the recipient of inputs should not be penalized for any duty payment errors made by the supplier. Upon reviewing the submissions, the Member (T) noted that the appellants had indeed taken credit based on invoices from a non-manufacturer, M/s. Keetex, knowingly. The Member highlighted that under Rule 6 of the Cenvat Credit Rules, only invoices from a manufacturer are considered valid duty paying documents for availing credit. Given that M/s. Keetex was no longer a manufacturer post the rule omission, the credit based on their invoices was rightly denied. The Member upheld the Commissioner (Appeals) order and dismissed the appeal. The judgment underscores the importance of adhering to the provisions of the Cenvat Credit Rules and verifying the validity of invoices for availing credits, especially post any relevant rule changes. It clarifies that availing credit based on invoices from a non-manufacturer, even if used in the production process, is not permissible under the rules, and the recipient is expected to exercise due diligence in verifying the authenticity of the documents.
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