2021 (11) TMI 730 - AT - Central Excise

Area Based Exemption - availment of inadmissible cenvat credit (on inputs) on improper and inadmissible documents - extended period of limitation - HELD THAT - The disallowance under each of the annexures to the show cause, is of similar nature. Further, from the demonstration made by the counsel for the appellant, it is satisfying that this is a case of only clerical error and the appellant s Plant No.9 has received the inputs in question, making the proper entries in the records and have further made the payments through its bank accounts. It is also found that there is no other allegation as to diversion of raw materials or of any fraudulent activity on the part of the appellant. Extended period of limitation - HELD THAT - The extended period of limitation is not available to the Revenue. Further, cenvat credit in dispute is allowable to the appellant/assessee. Appeal allowed -

Summary

Issues:
Disallowance of cenvat credit on inputs for manufacturing unit.

Analysis:
The appellant, a manufacturer of automobile components, appealed against the disallowance of cenvat credit amounting to ?17,07,064 for the receipt of inputs for the manufacturing unit. The dispute arose due to the use of invoices not directly related to the appellant's Plant No.9, leading to allegations of inadmissible credit. The appellant demonstrated that despite clerical errors in invoices, the goods were received at Plant No.9, utilized for manufacturing, and payments were made from its bank account. The Adjudicating Authority confirmed the demand, but the Commissioner (Appeals) upheld the rejection of credit, prompting the appellant to appeal to the Tribunal.

During the hearing, the appellant's counsel showcased sample invoices to prove clerical errors in mentioning the Plant No., but established the correlation with purchase orders, inward receipt documents, and payment records from Plant No.9's bank account. The appellant maintained separate bank accounts and accounting systems for each plant, emphasizing the clerical nature of the errors. The appellant contended that the show cause notice was flawed due to limitation issues and maintained proper transaction records in their books of accounts.

After considering the arguments and evidence presented, the Tribunal found the disallowance to be a result of clerical errors. It was established that the inputs were indeed received by Plant No.9, with proper entries and payments made through the correct channels. No evidence of diversion of raw materials or fraudulent activities was found. Consequently, the Tribunal ruled in favor of the appellant, holding that the extended limitation period was not applicable, and allowed the cenvat credit in dispute. The impugned order was set aside, granting the appellant consequential benefits as per the law.