2018 (12) TMI 158 - AT - Central Excise

CENVAT Credit - duty paying invoices - denial of credit on inputs availed on the basis of Bills of entry and Transfer memos for Durgapur Factory - Rule 9 of the Cenvat Credit Rules, 2004 - Held that - Since the entire quantity covered by the bill of entry, has not been moved to one unit, the appellant has issued an internal document termed as transfer memo in which the quantities transferred to Durgapur unit has been indicated - There is no dispute regarding the receipt of such goods in the Durgapur unit or the use of such raw material in manufacture of the final product. Similar case has been considered by the Hon ble Supreme Court in the case of Union of India Vs. Marmagoa Steel Ltd 2008 (7) TMI 95 - SUPREME COURT . In the said case, the Apex Court has allowed the Cenvat Credit on the basis of the Bill of Entry attached with a delivery challan indicating the quantities. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to avail Cenvat Credit for inputs based on Transfer Memos.
2. Interpretation of Rule 9 of the Cenvat Credit Rules, 2004.
3. Discrepancies in quantities received and availed Cenvat Credit.
4. Application of case laws for allowing Cenvat Credit.

Analysis:

Issue 1: Entitlement to avail Cenvat Credit for inputs based on Transfer Memos
The appellant, engaged in manufacturing Ferro Alloys, imported Manganese Ore for its two factories. The dispute pertained to the Durgapur factory, where the Revenue contended that Cenvat Credit could not be availed based on Transfer Memos. The appellant argued that the credit was based on Bills of Entry for raw material clearance, with Transfer Memos only indicating quantities diverted to specific units. The Tribunal noted no dispute on receipt or use of raw materials, allowing the credit based on the Bills of Entry and Transfer Memos.

Issue 2: Interpretation of Rule 9 of the Cenvat Credit Rules, 2004
The Adjudicating Authority disallowed Cenvat Credit, citing Rule 9, which did not specify Transfer Memos as eligible documents. However, the Tribunal observed that the Bill of Entry indicated duty payment for imported goods, with Transfer Memos detailing quantities transferred to units. Considering the direct transfer to manufacturing units and the use of raw materials, the Tribunal allowed the Cenvat Credit based on the Bills of Entry and Transfer Memos.

Issue 3: Discrepancies in quantities received and availed Cenvat Credit
The Revenue highlighted discrepancies between Bill of Entry quantities and Transfer Memo quantities for the Durgapur unit. Despite this, the Tribunal found no dispute on the receipt or utilization of raw materials in manufacturing final products. The Tribunal's decision to allow Cenvat Credit was based on the proper documentation and utilization of imported raw materials in the manufacturing process.

Issue 4: Application of case laws for allowing Cenvat Credit
The Tribunal referenced the Supreme Court case of Union of India Vs. Marmagoa Steel Ltd, where Cenvat Credit was allowed based on Bills of Entry and delivery challans. Citing this precedent and other Tribunal decisions, the Tribunal allowed the Cenvat Credit availed by the appellant. Consequently, the impugned orders disallowing the credit were set aside, and the appeals were allowed, emphasizing the importance of proper documentation and adherence to legal requirements for availing Cenvat Credit.