2016 (12) TMI 83 - AT - Central Excise

Whether M/s SMV Beverages Pvt. Ltd. (main appellant) is eligible to avail CENVAT Credit of additional Excise duty, which was paid by the Sugar factory or otherwise, and whether the appellant No. 2 i.e. individual is also liable for penalty? - Held that - The Rule 7(1)(b) of Cenvat Credit Rules, 2002 for the period in question indicate that the supplementary invoices issued by the manufacturer or importer of inputs is to be considered as a document for availment of CENVAT Credit. On reading of the said rule, I find that the additional amount of duty is being raised on the supplementary invoices should be clearly additional duty become payable and should not be the duty which is recoverable from the manufacturer or importer of inputs by invoking the extended period of time - In the case in hand, I find that the supplementary invoices are issued by the registered dealer indicating the payment of AED done by the sugar factory. Undisputedly, sugar factory has issued earlier invoices for the clearance of sugar for the period prior to 1.3.2003. The supplementary invoices which was issued by the registered dealer cannot be a document for availment of CENVAT Credit, as the said supplementary invoices did not indicate that the manufacturer has paid any excise or additional duty but is a invoice issued by the dealer in his capacity as a registered dealer for not issuing proper duty paying documents at the first instance. In my considered view, this supplementary invoice on which credit was availed by the main appellant are not the document on which such Credit can be availed - CENVAT credit not allowed to M/s SMV Beverages Pvt. Ltd. As regards the penalty imposed on the registered dealer, I find that such penalty has been imposed under the provisions of Rule 13 of the Cenvat Credit Rules, 2002. In my view, provisions of Rule 13 of the Cenvat Credit Rules, 2002 does not contemplate imposition of penalty on the registered dealer and that also for issuing of supplementary invoices to the purchaser of goods. In view of this, I set aside the penalty imposed on the appellant No. 2, who is a registered dealer. Appeal disposed off - decided against M/s SMV Beverages Pvt. Ltd. and in favor of individual appellant.

Summary

Issues involved:
- Eligibility of M/s SMV Beverages Pvt. Ltd. for CENVAT Credit of additional Excise duty
- Liability of individual appellant for penalty under Cenvat Credit Rules, 2002

Analysis:
1. Eligibility for CENVAT Credit:
The issue in consideration was whether M/s SMV Beverages Pvt. Ltd. was entitled to avail CENVAT Credit of additional Excise duty paid by the Sugar factory. The Tribunal reviewed the history of the case, noting that it was the second round of litigation. The main question was whether the Sugar factory had paid Central Excise duty and additional excise duty under the Additional Duty of Excise (Goods of Special Importance) Act, 1957. The main appellant availed CENVAT Credit on supplementary invoices issued by the registered dealer of the Sugar factory. However, the Tribunal found that these supplementary invoices did not clearly indicate the payment of excise or additional duty by the manufacturer, making them ineligible documents for availing CENVAT Credit. Consequently, the Tribunal rejected the appeal filed by the main appellant.

2. Penalty Imposed on Registered Dealer:
The Tribunal also examined the penalty imposed on the registered dealer, the individual appellant. The penalty was imposed under Rule 13 of the Cenvat Credit Rules, 2002. However, the Tribunal determined that Rule 13 does not provide for the imposition of penalties on registered dealers for issuing supplementary invoices to purchasers of goods. Therefore, the penalty imposed on the registered dealer was set aside. In conclusion, the Tribunal disposed of the appeals by rejecting the main appellant's appeal and setting aside the penalty imposed on the registered dealer.

This judgment highlights the strict interpretation and application of CENVAT Credit Rules, emphasizing the importance of proper documentation and compliance with statutory provisions to claim credits. The decision underscores the significance of clear and unambiguous documentation to support CENVAT Credit claims and the limitations on penalties under the Cenvat Credit Rules.