2009 (10) TMI 316 - AT - Central Excise

Cenvat Credit- As regards denial of credit of Rs. 3,91,342/-, the same relates to inputs received from M/s. Clutch Auto Ltd., Faridabad which has been disallowed on the ground that certain investigation are in progress against the said supplier. However, the Commissioner has directed the Jurisdictional Assistant Commissioner to ascertain the genuineness of the documents and duty paid nature and restore the credit if found in order. Denial of credit pending verification is not appropriate. The demand in this regard is not sustainable. However, as per direction of the Commissioner, the jurisdictional Assistant Commissioner/Dy. Commissioner is free to cause verification about genuineness of the documents and take appropriate action for recovery of the credit as per law if found wrongly availed. As regards denial of credit amounting to Rs. 19,597/-, the same has been denied on the ground that name of the input has not been given in the invoice. Held that- this involves only interpretational difference and does not involve any intention to evade payment of duty. We have allowed substantial part of credit denied. Therefore the penalty of Rs. 5.00 Lakhs imposed under Rule 173Q is not justified and accordingly the same is set aside.

Summary

Issues: Denial of credit for certain amounts, denial of credit for specific reasons, imposition of penalty under Rule 173Q.

Analysis:
1. Denial of Credit - Rs. 44,500/- and Rs. 867/-:
- The appellant did not contest the denial of credit for these amounts.

2. Denial of Credit - Rs. 3,91,342/-:
- The denial of credit for this amount was related to inputs received from a specific supplier under investigation.
- The Commissioner directed verification of the genuineness of documents and duty paid nature before restoring the credit.
- The Tribunal held that denial of credit pending verification was not appropriate and directed the jurisdictional Assistant Commissioner to take necessary action based on verification results.

3. Denial of Credit - Rs. 19,597/-:
- Credit was denied due to the absence of the input name in the invoice.
- The appellant argued that the industry practice involved a broad description of the input, which was accepted by the Tribunal.
- The denial of credit was deemed unjustified, and the demand was set aside.

4. Denial of Credit - Rs. 1,020/-:
- Credit was denied because the duty debit reference was not mentioned in the invoice.
- The Tribunal considered this omission as a technical one, as other necessary details were provided in the invoices.
- The denial of credit was found unjustified, and the demand was set aside.

5. Imposition of Penalty under Rule 173Q:
- The Tribunal concluded that the case involved interpretational differences and not an intention to evade duty payment.
- Since a substantial part of the denied credit was allowed, the imposed penalty of Rs. 5.00 Lakhs was deemed unjustified and set aside.

6. Conclusion:
- The appeals were disposed of based on the above considerations.

This judgment addressed various issues concerning the denial of credit for specific amounts, the reasons for denial, and the imposition of a penalty under Rule 173Q. The Tribunal emphasized the importance of verifying the genuineness of documents before denying credit and considered industry practices in determining the justification for denial. Ultimately, the Tribunal set aside the demands for certain denied credits and the imposed penalty, highlighting the technical nature of some omissions and the lack of intent to evade duty payment.