2016 (8) TMI 532 - AT - Central Excise

Cenvat credit - eligibility - wrong availment of credit on the strength of endorsed Bills of Entry - Held that - the appellants have furnished along with these endorsed Bills of Entry, the invoices issued by the importer as well as the TR6 challan evidencing the payment of customs duty. Also the appellants themselves sought clarification from the Department regarding the eligibility and entitlements of CENVAT credit on the endorsed Bill of Entry. On receiving clarification that credit cannot be availed, they voluntarily reversed the credit. The Department issued show-cause notice after such reversal of credit, which was unwarranted. When the endorsed Bill of Entry is accompanied by proper invoice and evidence the payment of duty the credit cannot be denied treating it as not a valid document for taking credit. - Decided against the Revenue

Summary

Issues:
1. Challenge to the order confirming demand of CENVAT credit.
2. Eligibility of availing credit on the strength of endorsed Bills of Entry.

Analysis:
1. The appeal was filed by the Revenue challenging the order passed by the Commissioner(Appeals) confirming the demand of CENVAT credit allegedly wrongly availed by the appellants on endorsed Bills of Entry. The primary authority confirmed the demand and imposed a penalty, leading the appellants to file an appeal before the Commissioner(Appeals) who allowed the appeal. The Revenue then appealed against this decision.

2. The main issue was whether the appellants were entitled to avail credit on the endorsed Bills of Entry. The appellants, engaged in manufacturing pesticides and fertilizers, received goods from an importer under invoice with endorsed Bills of Entry. The Department contended that Rule 9 of CENVAT Credit Rules does not mention endorsed Bills of Entry as valid documents for availing credit. However, the Commissioner(Appeals) noted that the goods were duty paid, received in the factory, and utilized in manufacturing final products. The denial of credit was solely based on the Bills of Entry being endorsed.

3. The Commissioner(Appeals) referred to a decision in Meenakshi Match Industries case and a judgment of the Hon'ble High Court of Punjab & Haryana in CCE vs. Pepsi Foods Ltd. The High Court held that ownership of goods is not a criterion for denying credit if the Bill of Entry is endorsed in favor of the recipient. The Commissioner(Appeals) found that when the endorsed Bills of Entry were supported by proper invoices and evidence of duty payment, the credit could not be denied.

4. It was noted that the appellants, upon seeking clarification from the Department regarding credit eligibility on endorsed Bills of Entry and receiving a response disallowing it, voluntarily reversed the credit. Subsequently, a show-cause notice was issued, which was deemed unwarranted given the proper documentation accompanying the endorsed Bills of Entry. The judgment upheld the decision of the Commissioner(Appeals) based on the facts presented and judicial precedents cited.

In conclusion, the judgment dismissed the appeal, emphasizing that when endorsed Bills of Entry are supported by proper documentation and duty payment evidence, the denial of credit solely based on the nature of the Bills of Entry is unwarranted. The decision was based on legal precedents and the facts of the case, affirming the eligibility of the appellants to avail the CENVAT credit.