2017 (3) TMI 783 - AT - Central Excise

Denial of CENVAT credit - interest - penalty - the main allegation against the appellant is that the appellant failed to submit any documentary evidence to substantiate their claim that the goods have been received from the manufacturer or dealers and used in or in relation to the manufacture of finished goods - Held that - Rule 9(4) is applicable in respect of maintenance of the records by the dealers. It is a case that the appellant availed the credit on the basis of the documents through a middleman and the inputs were directly received by the appellant from the dealer who was registered with the Central Excise authorities - the Tribunal on an identical issue in the case of Jupiter Alloy & Steel (India) Ltd. v. CCE, Kolkata-IV, 2016 (12) TMI 1217 - CESTAT KOLKATA , where it was held that such persons who are taking part in transit sale need not get themselves registered as per provisions of Rule 57G of the CER, 1994 - appeal allowed - demand set aside - decided in favor of appellant.

Summary

Issues: Allegation of improper Cenvat Credit utilization and maintenance of records by the appellant.

Analysis:
The case involved the appellant, engaged in manufacturing steel products, facing allegations from the Revenue regarding improper Cenvat Credit utilization. The Revenue claimed that the appellant purchased goods from non-registered dealers, leading to a Show Cause Notice proposing denial of Cenvat Credit, interest, and penalty. The Adjudicating Authority confirmed the demand of Central Excise duty, which was upheld by the Commissioner(Appeals), prompting the appellant to file the present appeal.

Upon hearing both sides, the main allegation against the appellant was their failure to provide documentary evidence substantiating the receipt of goods from manufacturers or registered dealers for manufacturing finished products. The Revenue argued a violation of Rule 3(4) of the Cenvat Credit Rules, 2004, emphasizing the importance of maintaining records by dealers under Rule 9(4) of the same rules. The appellant availed credit based on Rule 9(1) documents and maintained records as required by Rule 9(5), indicating compliance with the rules.

The Tribunal's analysis focused on Rule 9, highlighting that Cenvat Credit should be based on specified documents and disallowed if particulars are missing. Rule 9(4) pertains to dealer record-keeping, not directly applicable to the appellant who received inputs from a registered dealer. The Tribunal referenced a similar case where credit was allowed when the consignee directly received inputs with documents, despite an intermediate buyer. The Tribunal cited a CBEC Circular supporting such transactions and emphasized that minor procedural lapses should not deny credit to the manufacturer.

Ultimately, the Tribunal set aside the impugned order, allowing the appellant's appeal based on the procedural compliance observed and the legal precedence established in similar cases. The judgment emphasized the importance of following prescribed procedures and documentation requirements while acknowledging the validity of transactions where goods are received directly by the consignee, even through an intermediate buyer.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's decision based on the interpretation of relevant rules and precedents.