2017 (11) TMI 1100 - HC - Central Excise

CENVAT credit - duty paying documents - Whether the Tribunal is justified in allowing the CENVAT credit of ₹ 27,33,393/- on unverified/re-constructed bills of entry without giving a chance to Revenue to verify them when the same were not proper/legal documents as per CCR? - Held that - credit on duty paid on air conditioners installed in office of the factory is admissible - In Board s Circular NO. 943/4/2011-CX dated 29.04.2011, it is mentioned that goods such as furniture and stationary used in an office within the factory are goods used in the factory and are used in relation to the manufacturing, business and hence, the credit on the same is to be allowed - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Admissibility of CENVAT credit on unverified/reconstructed bills of entry.
2. Eligibility of CENVAT credit on documents older than one year.
3. Allowance of CENVAT credit on air conditioners not installed in the factory.
4. Comparison of the current case with a previous judgment regarding CENVAT credit.

Analysis:

1. Admissibility of CENVAT credit on unverified/reconstructed bills of entry:
The appellant challenged the Tribunal's decision allowing CENVAT credit on unverified/reconstructed bills of entry. The Counsel for the appellant raised concerns about the validity of such credits without proper verification, citing the CENVAT Credit Rules. However, the Tribunal considered the situation in detail. It noted that the original documents were lost, and reconstructed copies were obtained and authenticated by customs officers. Relying on a precedent (Klockner Supreme Pentaplast Ltd. vs. CCE), the Tribunal concluded that denial of credit based on reconstructed copies was unjustified. The genuineness of the documents was established through authentication, leading to a ruling in favor of the assessee.

2. Eligibility of CENVAT credit on documents older than one year:
Another issue raised was the eligibility of CENVAT credit on documents older than one year, contrary to Rule 4(1) of the CENVAT Credit Rules. The Tribunal clarified that these rules do not impose a time limit for availing credit. Consequently, the disallowance of credit based on document age was deemed unjustified, supporting the appellant's position.

3. Allowance of CENVAT credit on air conditioners not installed in the factory:
Regarding the CENVAT credit on air conditioners, the appellant argued that they were installed in the office premises, which they considered part of the factory. Citing a Board's Circular, the Tribunal agreed that goods used in an office within the factory are deemed used in the manufacturing process, making the credit admissible. This decision favored the appellant, highlighting the importance of the location of assets in relation to the factory.

4. Comparison with a previous judgment on CENVAT credit:
The appellant referenced a judgment by the Karnataka High Court involving similar substantial questions of law. The Division Bench had ruled in favor of the revenue in that case. Acknowledging the similarity in issues, the present Court aligned its decision with the earlier judgment pending adjudication before the Supreme Court. The appeal was allowed, answering the substantial questions of law in favor of the revenue, pending the final outcome of the Supreme Court's decision.

In conclusion, the High Court dismissed the appeal, noting that no substantial question of law warranted interference. The decision was based on factual findings diverging from a central government circular and a previous judgment by the CESTAT Northern Bench, which did not support the department's position.