2024 (3) TMI 492 - AT - Central Excise

Recovery of CENVAT Credit already taken - allegation is that the Invoices under which the Cenvat Credit has been taken are not proper documents in terms of Rule 9 Rule 11 of the Cenvat Credit Rules, 2004 - time limitation - suppression of facts or not - HELD THAT - Admittedly, there is no dispute that the goods in question have been received by the Appellant and the same have been taken in their Stock Register and have been consumed by them in the factory premises. On going through the endorsed invoices, it is seen that the agent Krishna Chemicals has endorsed to the effect that the entire consignment in respect of the Invoices have been sold to the Appellant. Coming to the Circular issued on 05/05/2015, it is seen that under Para 5 (iii), it has been clarified that when unregistered dealer sells the entire consignment in respect of particular invoice with endorsement to that effect, the recipient would be eligible to take the Cenvat Credit - this Circular has been issued clearly specifying that clarifications are being given after the amendments have been carried out vide Notification No. 08/2015-CE (NT) dated 01/03/2015. Therefore, the Commissioner (Appeals) is correct in taking the stand that the Circular would be effective from 01/03/2015 only cannot be applied retrospectively for the period 2012-13 and 2013-14. However, when compared the amendments carried out under Notification No. 08/2015 and the clarifications given in the Circular, it is found that this Notification No. 8/2015 has not amended any provision with regard to the endorsement to be done by un-registered dealer. Thus, the unregistered dealer Krishna Chemicals has correctly endorsed the invoice and the Appellant has correctly taken the Cenvat Credit. Further, there is no dispute about the goods having been received and used by the Appellants. Therefore, on merits the appeal succeeds. Time Limitation - suppression of facts or not - HELD THAT - There are force in the arguments of the Learned Advocate that the Appellant has received the goods, taken the same in the stocks and accounted for the same in RG 23A Part I and Part II and also has declared the details in their Monthly ER-1 Returns. Therefore, the Department has not made out any case of suppression against the Appellant. Accordingly, the confirmed demand is required to be aside on account of limitation also. Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the validity of taking Cenvat Credit based on invoices procured from unregistered dealers, the applicability of a circular clarifying the credit eligibility criteria, and the invocation of the extended period provisions by the Department.

Validity of Cenvat Credit:
The Appellants procured Nitric Acid from an unregistered dealer through their distributor and took Cenvat Credit based on the invoices. The Department raised concerns about the validity of the invoices under Rule 9 & Rule 11 of the Cenvat Credit Rules, 2004. The Appellant argued that they properly received and recorded the goods, and the Circular issued by CBEC clarified that the credit can be taken if the unregistered dealer endorses the invoice. The Tribunal held that the endorsement by the unregistered dealer was correct, and the Appellant correctly took the Cenvat Credit, as there was no dispute regarding the receipt and use of the goods.

Applicability of Circular and Limitation:
The Appellant contended that the Circular issued after the relevant period should be applied retrospectively. The Department argued that the Circular should only be effective from the date of the related Notification. The Tribunal noted that the Circular did not amend any provision related to the endorsement by unregistered dealers, and it merely clarified existing practices. Therefore, the Tribunal held that the Appellant's Cenvat Credit was valid. Additionally, the Tribunal agreed with the Appellant that there was no suppression on their part, as they properly recorded the transactions in their returns, leading to the confirmed demand being set aside on account of limitation.

Conclusion:
The Tribunal allowed the appeal, providing consequential relief as per law, based on the validity of the Cenvat Credit taken by the Appellant and the absence of suppression on their part, ultimately ruling in favor of the Appellant.