2017 (11) TMI 1001 - AT - Central Excise

CENVAT credit - mismatch of coding and description between the supplier s document and the records maintained by the receiver - Revenue entertained a view that the transport of duty paid Vacuum Circuit Breakers from SLW to AEI unit of the appellants are not duly accounted for and the credit availed by AEI unit on such items are not available due to various reasons - Held that - there is no overwriting or manipulation of the invoices as inferred in the original order. In fact, there is no description of the goods in the invoices and only code numbers are mentioned and admittedly the multiple grades of inputs were shown separated by stroke - It is not correct to allege that the descriptions are not matching when there is no description based on words to explain the nature of goods in the duty paid document. Item code is the description and as explained the codes are not varied substantially except for making it more specific in the recipient s end for further accounting and monitoring - there is no legal or factual basis for denial of credits. Appeal allowed - decided in favor of appellant.

Summary

Issues: Entitlement of Cenvat credit on duty paid Vacuum Circuit Breakers cleared by one unit and received by another unit; Denial of credit based on mismatch of coding and description.

In this case, the appellant, engaged in manufacturing Vacuum Circuit Breakers, faced proceedings initiated by the Commissioner of Central Excise, Calcutta VI Commissionerate, challenging the Cenvat credit availed by the appellant's unit in Calcutta. The main issue was the mismatch of coding and description between the goods cleared from one unit to another. The original authority denied the credit of a substantial amount and imposed penalties. The appellant's defense highlighted the comprehensive accounting system based on SAP used by both units, emphasizing that the coding system ensures proper tracking of goods. The appellant argued that the denial was unjustified as there was no evidence of substitution of duty paid items. The Revenue contended that investigations revealed discrepancies in coding and descriptions, justifying the denial of credit. The original authority upheld the denial based on the mismatch of coding and descriptions, suspecting tampering of invoices to create a false impression of goods receipt.

Upon appeal, the Tribunal analyzed the documents and found no evidence of overwriting or manipulation in the invoices. The Tribunal noted that the invoices lacked detailed descriptions, only containing code numbers, and that the coding system was consistent with specific grades of inputs at the receiving end. The Tribunal concluded that there was no legal or factual basis for the denial of credits. Additionally, the Tribunal observed that there was no evidence of alternate sourcing or diversion of duty paid inputs to other destinations. As a result, the Tribunal set aside the impugned order, allowing the appeal. The judgment emphasized the importance of proper documentation and tracking of goods to support Cenvat credit claims and highlighted the burden on the manufacturer to ensure accurate receipt and accounting of duty paid inputs.