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2022 (5) TMI 576 - HC - Central ExciseCENVAT Credit - admissibility of credit on inputs received on stock transfer - applicability of Rule 57AE of the Central Excise Rules, 1944 and Rules 7(3) and 7(4) of the Cenvat Credit Rules, 2001/2002 as were in force at the material point of time - purchase of inputs and maintaining a record inventory of the inputs so purchased are mandatory conditions to be fulfilled for availing Cenvat Credit on inputs received by a manufacture prior to February 28, 2003 - discharge of burden of proof fulfilling the criterion of keeping a records on inventory of th inputs purchased by them while availing Cenvat Credit or not? - HELD THAT - Tribunal had followed the decision in the case of EXIDE INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., HALDIA 2008 (1) TMI 190 - CESTAT, KOLKATA and allowed the appeal filed by the assessee. The decision in Exide Industries appears to have attained finality and the Tribunal had been consistently following the said decision in other cases as well. In one such case, COMMISSIONER OF CENTRAL EXCISE, KOLKATA-VI VERSUS M/S. COATES OF INDIA LTD. 2018 (7) TMI 251 - CESTAT KOLKATA , the learned Tribunal had followed the decision in Exide Industries. The decision in Coates of India Limited was appealed against by the revenue before this Court and Hon ble Division Bench by judgment COMMISSIONER OF CENTRAL EXCISE, KOLKATA-VI VERSUS M/S. COATES OF INDIA LIMITED 2019 (7) TMI 1926 - CALCUTTA HIGH COURT dismissed the appeal noting that the Tribunal in the said case had followed the decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD 2007 (8) TMI 10 - SUPREME COURT - There are no distinguishing circumstances in the case on hand and more importantly, the revenue has not raised any ground to state as to why the decision in Exide Industries or the decision in Ballapur Industries Ltd. cannot be made applicable to the assessee s case. There are no ground to interfere with the order passed by the Tribunal - appeal dismissed - decided against Revenue.
Issues:
1) Admissibility of Cenvat Credit on inputs received on stock transfer. 2) Mandatory conditions for availing Cenvat Credit on inputs received by a manufacturer. 3) Burden of proof regarding maintaining records on inventory of inputs purchased while availing Cenvat Credit. Analysis: 1) The appeal challenged the order passed by the Customs, Excise and Service Tax Appellate Tribunal regarding the admissibility of Cenvat Credit on inputs received on stock transfer. The appellant contended that the Tribunal erred in not appreciating the relevant provisions of the Central Excise Rules and Cenvat Credit Rules. The High Court noted that the Tribunal had relied on the decision in Exide Industries and Commissioner of Central Excise, Kolkata-VI Vs. Coates of India Ltd., where similar issues were addressed. The High Court found that the Tribunal consistently followed the decision in Exide Industries, which was considered final. The Court emphasized that the definition of "input" under the rules did not explicitly require the input to be purchased for claiming Cenvat credit. The Court also highlighted that the rules did not impose a mandatory condition of purchase for availing Cenvat credit, and the mode of acquisition of the input was deemed immaterial. Additionally, the Court referred to relevant notifications and legal interpretations to support the conclusion that procurement and use of input were essential requirements for availing Cenvat credit. 2) The second issue revolved around the mandatory conditions for availing Cenvat Credit on inputs received by a manufacturer before a specific date. The Court examined the relevant rules, notifications, and legal precedents to determine whether the conditions of "purchase" of inputs and maintaining a record inventory were essential for claiming Cenvat credit. The Court emphasized that the substitution of the word "procured" for "purchase" in the rules indicated the legislative intent to obviate any difficulty in interpretation. The Court further noted that the rules did not explicitly require the term "purchase" to be satisfied for claiming Cenvat credit, and the use of the input was a crucial factor. The Court analyzed the period involved in the proceeding and highlighted that the absence of evidence regarding the non-use of inputs in manufacturing or the lack of appropriate duty payment before procurement weakened the revenue's case. Ultimately, the Court found that the decisions cited and the legislative intent supported the assessee's position, leading to the dismissal of the appeal. 3) The third issue pertained to the burden of proof regarding maintaining records on the inventory of inputs purchased while availing Cenvat Credit. The Court examined the record and adjudication order to assess whether the respondent had fulfilled the criterion of keeping records on the inventory of inputs purchased. The Court noted that the order failed to demonstrate that "purchase" was an essential condition for claiming Cenvat credit, especially considering the substitution of the term "procured" in the relevant rules. The Court emphasized that the legislative intent and the absence of any prohibition on reading the substitution for the relevant period supported the respondent's position. The Court further highlighted that the decisions cited by the learned counsel favored the respondent's case, as the rules did not imply a mandatory requirement of purchase for availing Cenvat credit. Consequently, the Court found no grounds to interfere with the Tribunal's order and dismissed the appeal, answering the substantial questions of law against the revenue.
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