2020 (2) TMI 36 - AT - Central Excise

CENVAT credit - denial for want of duty paying documents - scope of SCN - HELD THAT - There is no denial about the receipt of the inputs/raw-material by the respondent-assessee in their factory from their another unit at Haridwar for those inputs/raw-material to be used in the manufacture of dutiable final product by the assessee-respondent. There is also no denial to the facts that liability towards Excise Duty on such final product has already been discharged by the appellant. Apparently and admittedly, under Rule 9 (1) an invoice and Bill of Entry are valid documents based on which a manufacturer of final product can avail credit. The allegation of the show cause notice are pointing merely a procedural lapse - Procedural law is not to be a tyrant but a servant, not an obstruction but an aid to justice. A procedural prescription is the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice. The endorsed invoice otherwise qualify the intent of the legislature in terms of proviso to Rule 9 (2) of CCR. Appeal dismissed - decided against appellant.

Summary

Issues:
Claim of Cenvat Credit on the basis of endorsed invoices/Bill of Entries contravening Rule 9 of Cenvat Credit Rules, 2004.

Analysis:

1. The Department challenged an Order-in-Appeal alleging the respondent had availed Cenvat Credit of a specific amount on ineligible documents, violating Rule 9 of Cenvat Credit Rules, 2004. A show cause notice was issued for recovery, and the subsequent Order-in-Original confirmed the proposal. The appeal against this order was allowed, prompting the Department to appeal to the Tribunal.

2. The Department argued that availing Cenvat Credit on endorsed invoices was a clear violation of Rule 9, as these documents were not specified as relevant for claiming credit. The Commissioner (Appeals) had given a contrary finding, which the Department sought to challenge.

3. In response, the respondent's counsel contended that the Cenvat Credit was claimed on inputs received from another unit through endorsed invoices/Bill of Entries. They argued that these endorsed documents remained valid under Rule 9 (1) (a) and 9 (1) (c) of the Cenvat Credit Rules.

4. The Tribunal observed that the denial of Cenvat Credit was based on the lack of eligible documents, despite the acknowledgment of receiving inputs for manufacturing dutiable final products. The Tribunal noted that Rule 9 did not specify that invoices or Bill of Entries could not be endorsed. Citing past decisions, the Tribunal upheld the validity of endorsed invoices for claiming Cenvat Credit.

5. The Tribunal highlighted that the show cause notice's grounds were procedural and not substantive. Citing legal precedents, the Tribunal emphasized that the intent of the legislature was met by endorsed invoices, as per the proviso to Rule 9 (2) of CCR. The Tribunal found no infirmity in the Commissioner (Appeals) order, which had referenced relevant case law supporting the admissibility of Cenvat Credit based on endorsed documents.

6. Ultimately, the Tribunal upheld the Commissioner (Appeals) order, dismissing the appeal and affirming the validity of availing Cenvat Credit based on endorsed invoices. The decision was based on the principle that procedural rules should not obstruct substantive justice, especially when there is no dispute regarding the receipt and utilization of materials for manufacturing final products.

This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved and the Tribunal's reasoning in arriving at its decision.