2018 (2) TMI 7 - AT - Central Excise

CENVAT credit - duty paying invoices - Invoices issued by Aurangabad Unit to their sister Units namely Sultanganj and Manikchak Units - Held that - Proviso to Sub Rule (2) of Rule 9 had given an option to allow the credit even after the said documents does not contain all the particulars but contains the details of duty or Service Tax payable, description of goods or taxable service or Service Tax Registration of the person issuing the Invoice, name and address of the Factory or Warehouse of the first or second stage dealer subject to its satisfaction that the goods covered by the said documents have been received and accounted for in the books of accounts of the receiver. In the present case there is no dispute that the appellant received the duty paid packing materials under the cover of Central Excise Invoice issued by their Sister Unit - It has been mentioned that when inputs or capital goods on which Cenvat Credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the credit availed in respect of such inputs and such removal shall be made under the cover of Invoice issued under Rule 9 of the Rules. As such it is a case of Inter Unit transaction of the input materials. In such situation, the Cenvat Credit cannot be denied for non-observance of procedural condition of technical nature. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Contravention of Rule 9 of the Cenvat Credit Rules, 2004.
2. Denial of cenvat credit on packaging materials.
3. Compliance with procedural conditions for availing Cenvat Credit.
4. Interpretation of Rule 9(1) and Rule 9(2) of the Cenvat Credit Rules.

Analysis:
1. The case involved contravention of Rule 9 of the Cenvat Credit Rules, 2004, where two units were issued show-cause notices for contravention. The Adjudicating Authority confirmed the demands, and on appeal, the Commissioner (Appeals) upheld the orders. The issue was brought before the Tribunal.

2. The appellants contended that they received duty paid packaging materials at their units, and the denial of cenvat credit on these materials was unjustified. They argued that the procedural and technical infirmities should not lead to the denial of substantial benefit. They cited relevant case laws to support their argument.

3. The Tribunal analyzed Rule 9(1) and Rule 9(2) of the Cenvat Credit Rules, emphasizing the requirement for documents to contain prescribed particulars for availing Cenvat Credit. The Tribunal noted that the invoices issued by the Aurangabad Unit lacked essential information, such as the Registration Number of the Consignor, leading to the denial of credit by the lower authorities.

4. Referring to legal precedents, the Tribunal highlighted that non-observance of procedural conditions of a technical nature should not result in the denial of Cenvat Credit. The Tribunal cited the case of Union of India Vs. Bharat Aluminium Co. Ltd., where it was held that procedural lapses attributable to the supplier should not disentitle the assessee from claiming credit if goods were used in the final product manufacture and duty was paid.

5. In another case, Exide Industries Limited Vs. Commissioner of Central Excise, Haldia, the Tribunal allowed the appeal concerning input receipt from a sister unit, emphasizing that the use of inputs in manufacturing and payment of appropriate duty were crucial, irrespective of the term "purchase."

6. Based on the discussions and legal principles, the Tribunal set aside the impugned orders, allowing the appeals filed by the appellants. The judgment was pronounced in open court on 25.01.2018.