2016 (12) TMI 1217 - AT - Central Excise

Cenvat credit - whether the appellant will be eligible to take cenvat credit on documents of the manufacturer when consignee (appellant) is directly receiving the inputs along with the documents but there is an intermediate buyer - Held that - it is clear that such persons who are taking part in transit sale need not get themselves registered as per provisions of Rule 57G of the Central Excise Rules, 1994 - there is no dispute that both the duty paid inputs and the documents indicating payment of duty were received by the appellant and used in the manufacture of finished goods. It is now a well accepted legal proposition that minor procedural lapses cannot be made as a basis for denying credit to the manufacturer - Appeal allowed - decided in favor of the assessee

Summary

Issues:
- Eligibility of appellant to take cenvat credit on documents of the manufacturer when consignee is directly receiving the inputs with an intermediate buyer involved.

Analysis:
The appellant filed an appeal against the Order-in-Appeal upholding the denial of cenvat credit by the Adjudicating Authority. The appellant, represented by Sri Prosenjit Das, argued that they received inputs directly from a manufacturer who was registered and paid appropriate duty, even though a middle man was involved in the transaction. The appellant relied on CBEC Circular No. 218/52/96-CX to support their claim that no separate invoice is required when inputs are directly received by the assessee under a manufacturer's invoice. On the other hand, Sri K.Chaudhari, representing the Revenue, contended that the documents were improper for cenvat credit as they included the name of an unregistered intermediate buyer. The key issue revolved around whether the appellant could claim cenvat credit when directly receiving inputs with an intermediate buyer in the transaction.

The First Appellate Authority referred to CBEC Circular No. 218/52/96-CX but held a contrary view, stating that the particulars of the invoices did not satisfy the conditions of Rule 11 of the Central Excise Rules, 2002. The Circular clarified that persons involved in transit sale need not be registered dealers. The Tribunal noted that the appellant's procedure aligned with the department's guidelines, emphasizing that minor procedural lapses should not be a reason to deny credit to the manufacturer. It was established that both duty paid inputs and documents indicating duty payment were received and used in manufacturing finished goods. Consequently, the Tribunal allowed the appeal, emphasizing that the appellant's actions were in line with prescribed procedures and legal principles, ultimately granting them the cenvat credit.

In conclusion, the Tribunal's decision favored the appellant, allowing them to claim cenvat credit despite the presence of an intermediate buyer in the transaction. The judgment highlighted the importance of adherence to prescribed procedures and recognized that minor procedural discrepancies should not impede a manufacturer's right to claim credit for duty paid inputs used in the manufacturing process.