2017 (9) TMI 447 - AT - Central Excise

CENVAT credit - duty paying invoices - whether CENVAT credits have been rightly denied to the appellant-assessee on the ground that they had taken CENVAT credit on the basis of Xerox copy of the original of the bills of entry instead of the prescribed document being the duplicate copy of the bill of entry? - Held that - the appellant have received the imported raw material in question in their factory of production and also regarding the duty paid character of the same - in view of the fact that the appellant produced the original/duplicate copy and/or importers copy before the adjudicator already. Further there is no finding that the duplicate copy of bills of entry so produced were forced or concocted. Thus for mere venial breach the substantial benefit of CENVAT credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of CENVAT credits based on photocopies of bills of entry instead of prescribed documents.

Analysis:
The appeal revolves around the denial of CENVAT credits to the appellant-assessee for availing credit on photocopies of bills of entry instead of the prescribed duplicate copy. The appellant, a manufacturer of Aluminium Ingot alloys, availed CENVAT credit amounting to &8377;19,86,081/- on raw materials during March to April 2011 based on photocopies of bills of entry. However, upon scrutiny, it was discovered that the appellant did not possess the relevant original copies of the bills of entry as mandated by Rule 9(1) of CENVAT Credit Rules, 2004. Consequently, the appellant was directed to reverse the credit taken immediately. The subsequent show-cause notice proposed to demand the reversed credit along with interest and penalty under the Central Excise Act.

The Order-in-Original dated 31/10/2012 adjudicated the show-cause notice, noting that the appellant failed to produce the duplicate/importer's copy of the bills of entry during the credit availing process. The Additional Commissioner observed discrepancies between the original and duplicate copies of the bill of entry, concluding that the appellant violated CENVAT Credit Rules. The appellant's contention of technical issues causing delay in producing original documents was deemed unsustainable. The demand was confirmed, and penalty imposed under Rule 15 of CENVAT Credit Rules, 2004.

Upon appeal, the learned Commissioner (Appeals) upheld the demand and penalty, citing non-compliance with statutory provisions. The appellant contested this decision before the Tribunal, emphasizing that the imported raw materials were used in manufacturing finished goods, and the denial of credit was based on untenable grounds. The appellant relied on legal precedents to support the argument that technical violations should not lead to the denial of substantial benefits like CENVAT credit.

After considering the arguments, the Tribunal found that the appellant had received the imported raw materials and the duty paid character was established. The denial of CENVAT credit for minor breaches was deemed unjustified, especially since the appellant had produced the necessary documents during adjudication. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appellant to reclaim the reversed CENVAT credit.

In conclusion, the Tribunal's decision highlights the importance of complying with documentation requirements for availing CENVAT credits while emphasizing that minor procedural irregularities should not result in the denial of substantial benefits. The ruling underscores the need for a balanced approach between regulatory compliance and ensuring that genuine claims for credits are not unjustly rejected.