2019 (11) TMI 229 - AT - Central Excise

CENVAT Credit - duty paying documents - period from March, 2010 to January, 2011 - it is alleged that credit availed on the basis of improper documents - Rule 9 of Cenvat credit Rules 2004 - HELD THAT - Perusal of this provision makes it clear that Sub-Rule 2 uses word shall due to which, no doubt, it is mandatory that before availing Cenvat credit with all complete particulars as are prescribed under Rule 11(2) of Central Excise Rules, 2002 and Rule 4 (A)(1) of Service Tax Rules, 1994 are required to be contained in the document for availment of Cenvat credit is concerned. However, the proviso thereof makes it abundantly clear that the Cenvat credit can still be allowed in the absence of any prescribed document provided the details of duty etc as mentioned therein are mentioned in the tendered document - Thus, it becomes clear that any document if doesn't bear the name of the service recipient the absence thereof is not as relevant as to deny the substantial benefit which otherwise is accruing to the assessee. There is no denial to the fact that the service recipient is Rampura Agucha Mines the short form thereof cannot be ruled out to be RAM which is, specifically, mentioned in the said invoices. Department has not come up with any documentary or otherwise evidence to substitute said RAM mentioned in the invoice to someone else than the service recipient - Not only this, the Appellant has also produced on record the copies of the supplementary invoices where RAM is clarifying to mean as R.A, Mines of Hindustan Zinc Ltd. In the given circumstances, the findings of Commissioner Appeals that the impugned letters are not the integral part of the invoices they being of a bit prior to the invoice are not reasonably sustainable. CBEC Circular No. 441/7/99 dated 23.02.1999 - HELD THAT - This Circular itself in para 3 thereof directed that the adjudicating authorities of the Department to ensure that show cause notices are not issued for procedural lapses as mentioned in the Notification without making proper enquiries and it has to be issued only the enquiry and it is only if Assistant Commissioner is satisfied that the credit availed is incorrect that the adjudication should be started. Extended period of limitation - HELD THAT - The entire issue was in the notice of the department since February, 2011. The notice of 30.05.2013 is definitely beyond one year of the said date of knowledge, hence is definitely barred by limitation - Department was not entitled to invoke the extended period of limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat credit on service tax availed due to alleged improper documents.
2. Allegation of wrongful availment of Cenvat credit beyond the normal period.
3. Interpretation of Rule 9(2) of Cenvat Credit Rules, 2004 regarding mandatory requirements for availing Cenvat credit.
4. Examination of invoices and supporting documents to determine compliance with Rule 9(2).
5. Consideration of CBEC Circular No. 441/7/99 regarding denial of Cenvat credit based on procedural grounds.
6. Assessment of the limitation period for issuing the show cause notice.
7. Application of legal precedents supporting the principle that substantive benefits cannot be denied on procedural grounds.

Analysis:

1. The Appellant, engaged in the manufacture of Zinc and lead concentrates, was alleged to have wrongly availed Cenvat credit on service tax due to improper documents. The dispute arose from invoices lacking the name of the Appellant as the service recipient, triggering a show cause notice for recovery of the credit amount.

2. The Appellant argued against the allegations, emphasizing that the invoices did mention the service recipient as Rampura Agucha Mines (RAM) of Hindustan Zinc Ltd. They contended that relevant letters accompanying the invoices clarified the recipient's name, and the department's audit in 2011 had already addressed the issue, making the subsequent show cause notice beyond the normal period.

3. The judgment delved into the interpretation of Rule 9(2) of Cenvat Credit Rules, 2004, emphasizing the mandatory nature of containing prescribed particulars in documents for availing Cenvat credit. However, the proviso allowed credit even if certain details were missing, provided essential information like duty payable and recipient details were present.

4. Upon examining the invoices and supporting documents, the Tribunal found that the invoices did contain necessary particulars, including the service recipient's name as RAM. The contention that the letters accompanying the invoices were integral for clarity was upheld, dismissing the department's argument against their relevance.

5. The analysis considered CBEC Circular No. 441/7/99, which clarified that Cenvat credit should not be denied solely on procedural grounds. The circular mandated proper inquiries before issuing show cause notices for credit discrepancies, emphasizing reasoned orders based on thorough investigation.

6. Regarding the limitation period for the show cause notice, the Tribunal noted that the issue had been known to the department since 2011, rendering the 2013 notice time-barred. The Appellant's proactive response to the department's queries further negated any claims of suppression or extended limitation invocation.

7. Drawing on legal precedents, the judgment affirmed the principle that substantive benefits should not be denied based on procedural lapses. Citing relevant case law, the Tribunal emphasized that substantial benefits like Cenvat credit should not be withheld due to minor discrepancies or misinterpretations, ultimately allowing the appeal and setting aside the order under challenge.