2008 (11) TMI 225 - AT - Central Excise

Cenvat / Modvat Credit Doty paying documents invoice issued by non registered dealer - The respondents purchased Furnace Oil and took Cenvat credit on the basis of the invoices issued by M/s. Indian Oil Corporation Ltd., Tondiarpet. During the relevant period, M/s. IOCL, Tondiarpet was not a registered dealer. To that extent, the invoice issued is strictly not a document on which Cenvat credit could have been taken. Therefore, Revenue proceeded against the Respondents for recovery of the Cenvat credit taken held that - there is no dispute with regard to the duty paid nature of the goods. Moreover, M/s. IOCL is a very huge Public Sector Undertaking. M/s. IOCL, Tondiarpet is a part of this undertaking. Merely due to non-registration of M/s. IOCL, Tondiarpet, the denial of credit on duty paid Furnace Oil is not justified credit allowed.

Summary

Issues:
1. Entitlement to Cenvat credit based on invoices from unregistered dealer.
2. Interpretation of relevant case laws - Balmer Lawrie and Co. Ltd. v. Commissioner and Vimal Enterprise v. UOI.
3. Validity of Cenvat credit on duty paid goods from unregistered dealer.

Entitlement to Cenvat credit based on invoices from unregistered dealer:
The case involved the Respondents purchasing Furnace Oil and claiming Cenvat credit based on invoices from M/s. Indian Oil Corporation Ltd., Tondiarpet, who was unregistered during the relevant period. The Revenue challenged this claiming the invoices were unreliable. The Original Authority upheld the demand, but the Commissioner (Appeals) partially allowed the appeal, reducing the penalty. The Revenue contended that credit cannot be taken on unreliable documents citing the Balmer Lawrie case. The Respondents argued that the Balmer Lawrie decision was overruled by the Hon'ble High Court of Gujarat in the Vimal Enterprise case. The Tribunal found no dispute on the duty paid nature of the goods and upheld the entitlement to credit, emphasizing the genuineness of the transaction despite the supplier's non-registration.

Interpretation of relevant case laws - Balmer Lawrie and Co. Ltd. v. Commissioner and Vimal Enterprise v. UOI:
The Revenue relied on the Balmer Lawrie case, emphasizing that registration is mandatory to prevent misuse. However, the Respondents cited the Vimal Enterprise case where the Hon'ble High Court of Gujarat emphasized that if the supplier's identity and transaction genuineness are established, denial of credit is unwarranted. The Tribunal concurred with the Vimal Enterprise decision, highlighting that the Balmer Lawrie decision did not provide sufficient reasoning to deny credit based on non-registration alone.

Validity of Cenvat credit on duty paid goods from unregistered dealer:
The Tribunal concluded that the denial of credit on duty paid Furnace Oil due to the supplier's non-registration was unjustified. Considering M/s. Indian Oil Corporation Ltd.'s status as a significant Public Sector Undertaking, the Tribunal upheld the entitlement to credit. The decision was supported by the Hon'ble Gujarat High Court's ruling in the Vimal Enterprise case. Consequently, the Tribunal dismissed the Revenue's appeal, deeming the impugned order legal and proper.