2016 (10) TMI 910 - AT - Central Excise

Denial of CENVAT credit - imposition of penalties - correctness of documents covering the import and local procurement of various capital goods for availing credits - manufacture of Iron Ore Concentrates - Held that - there is no dispute about the receipt and utilization of the capital goods at the appellant s plant. As the documents contain full details of the product, duty paid on the same and the full address of the appellant/supplies issuing the invoice, the credit cannot be denied to the appellants - reliance placed on the decision of case LARSEN & TOUBRE LIMITED Versus COLLECTOR OF C. EXCISE, BHUBANESWAR 1994 (4) TMI 146 - CEGAT, CALCUTTA where the case was decided in favor of appellant. The credit of ₹ 1,52,422/- rightly denied - invoices consigned to Essar Steel India Ltd., Chitrakonda - There is no indication that they have a registered manufacturing unit of Chitrakonda. Time bar - Held that - the appellants have filed monthly ER-1 statements indicating the credits taken along with copies of the duty paying documents. As the photocopies of the duty paying documents were filed along with ER-1 Return, full details were in the knowledge of the department regarding various credits availed by the appellants. As such, we find that invoking extended period of demand in the present case is not legally sustainable. The impugned order not justifiable on merits as well as substantially on time bar also - appeal allowed.

Summary

Issues:
1. Disallowance of cenvat credit by the Original Authority.
2. Dispute regarding documentation for availing credits.
3. Denial of credits based on address discrepancies in bills of entry and invoices.
4. Applicability of the extended period of demand.
5. Legal justification for denial of credits.

Analysis:

1. The appeal challenged the order of the Commissioner of Central Excise disallowing cenvat credit of a specific amount and imposing an equivalent penalty on the appellant, engaged in the manufacture of Iron Ore Concentrates. The dispute primarily revolved around the correctness of documents related to the import and local procurement of capital goods for availing credits under the Cenvat Credit Rules, 2004.

2. The Tribunal considered the disallowance of credits amounting to different sums based on discrepancies in the bills of entry and invoices. It was noted that in cases where duty paying documents were addressed to the Head Office or other units of the company, credits should not be denied, as clarified by relevant circulars and established precedents.

3. Various amounts of credits were disallowed due to issues such as the address reflecting a different unit or a merged entity, without valid reasons provided in the impugned order. The Tribunal found no justification for such denials, emphasizing the physical receipt and use of the capital goods by the appellant.

4. The Tribunal addressed the question of the extended period of demand, highlighting that the department had full knowledge of the credits availed by the appellant through monthly ER-1 statements and duty paying documents filed. Citing a previous dropped case on a similar point, the Tribunal concluded that invoking the extended period of demand was not legally sustainable.

5. The judgment referenced various decided cases in favor of the appellant regarding denial of credits based on documentation discrepancies. It was emphasized that the denial of credits was primarily due to documents bearing the appellant's head office address or another manufacturing unit's address, with specific legal precedents supporting the appellant's position.

In conclusion, the Tribunal found the impugned order unjustifiable both on merits and in terms of the extended period of demand. The appeal was allowed, except for the irregular credit amount initially reversed by the appellant, which was rightly denied.