2017 (6) TMI 100 - AT - Central Excise

CENVAT credit - duty paying invoices - improper invoices, in as much as, they were photocopies of invoices and some invoices were not in their name - Held that - the CENVAT credit taken on the basis of photocopy is not permissible - the CENVAT credit taken on the basis of photocopy is rejected. The appellant has taken CENVAT credit on the basis of invoices which are not addressed to it and are addressed to its sister concern which is only a technical lapse - the rejection of CENVAT credit on this ground is not legally justified. Appeal allowed - decided partly in favor of appellant.

Summary

Issues: Appeal against rejection of CENVAT credit based on improper invoices.

Analysis:
The appellant, a public sector undertaking manufacturing fertilizer, availed CENVAT credit based on improper invoices, leading to a demand of ineligible credit. The Original Authority confirmed the demand, along with interest and penalty, under relevant provisions of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this decision, prompting the appellant to file the present appeal.

The appellant argued that the impugned order disregarded judicial precedents and contended that since the goods were received by them, denial of credit due to discrepancies in the invoices was unjustified. They emphasized that the receipt of goods at their factory was undisputed, and therefore, denial of CENVAT credit solely based on the invoices not being in their name was legally untenable. The appellant asserted that technical lapses, such as non-endorsement of invoices, should not result in credit denial, citing legal precedents to support their position.

In contrast, the respondent reiterated the findings of the impugned order, emphasizing that availing CENVAT credit based on photocopies of invoices was impermissible under the law. They supported the Commissioner (Appeals)' decision to deny credit based on photocopies of invoices, citing relevant legal decisions in favor of their argument.

Upon considering the submissions of both parties, the Judicial Member concluded that availing CENVAT credit based on photocopies of invoices was impermissible, aligning with the legal precedents cited by the respondent. However, regarding the invoices not being addressed directly to the appellant but to their sister concern, the Member found this to be a technical lapse, following the appellant's cited legal precedents. Consequently, the appeal was partly allowed, recognizing the distinction between impermissible practices and technical lapses in availing CENVAT credit.

In the operative part of the order pronounced on 07/04/2017, the Judicial Member upheld the rejection of CENVAT credit based on photocopies of invoices while allowing the credit taken on invoices addressed to the appellant's sister concern, thereby partially allowing the appeal against the rejection of CENVAT credit.