2009 (11) TMI 268 - AT - Customs

Cenvat Credit- The appellants are manufacturer of biscuits and they have received sugar directly from the manufacturer and occasionally from the dealers and have been availing Cenvat credit of duty paid on the sugar. A Circular by CBEC dated 6-3-2003 was issued permitting the credit of AED (GSI) in respect of the inputs received from 1-4-2000. An amendment to Rule 3 of the Cenvat Credit Rules was made on 1-3-2004 giving retrospective application to the amendment granting Cenvat credit of AED (GSI). The appellant received supplementary invoices on 30-8-2003 and availed AED (GSI) in respect of sugar procured from the dealers during the period 2000-01 to 2002-03. A show cause notice was issued alleging that the supplementary invoices issued by the dealers are not covered under Rule 7 of the Cenvat Credit Rules as specified documents for the purpose of availing the Cenvat credit and therefore, they are not eligible for the same. The original authority accordingly disallowed the credit of Rs. 6,66,108/-along with interest and also imposed equal amount as penalty. Commissioner (Appeals) has upheld the order of the original authority. Held that- the appellants shall be eligible for the Cenvat credit of the AED (GSI) paid by the manufacturer in respect of consignments in question However, the fact of payment and the quantum of AED (GSI) as mentioned in the supplementary invoices has to be verified with reference to the documents referred to by the appellants. In the given facts and circumstances of the case, which involved a conscious amendment to give retrospective benefit of credit of AED (GSI), the question of imposition of penalty does not arise. In view of the above, Penalty is set aside. And matter is remanded to the original authority to allow the credit of AED (GSI) with reference to the supplementary invoices issued by the registered dealers subject to verification of particulars of manufacturer s invoices referred in the original invoices of the registered dealers. The original authority will issue order after granting reasonable opportunity of hearing to the appellants.

Summary

Issues:
Appeal against disallowance of Cenvat credit on AED (GSI) received from dealers based on supplementary invoices not recognized under Rule 7 of Cenvat Credit Rules.

Analysis:
The appellants, biscuit manufacturers, availed Cenvat credit of duty paid on sugar procured from dealers. The dispute arose as dealers' supplementary invoices did not specify AED (GSI) separately, which was not admissible during the relevant period. The Circular dated 6-3-2003 clarified retrospective eligibility of AED (GSI) credit. The appellants argued that dealers' invoices, though lacking AED (GSI) mention, referred to manufacturers' invoices indicating duty payment. The Tribunal noted retrospective amendment allowing AED (GSI) credit and held appellants eligible for it, emphasizing the context of law at the time. Verification of AED (GSI) payment details was ordered before allowing credit.

Penalty Issue:
The learned Advocate contended that penalty imposition was unwarranted due to retrospective Cenvat credit clarification. The Tribunal concurred, setting aside the penalty and remanding the matter to the original authority for credit allowance verification based on manufacturers' invoice details referenced in dealers' invoices.

This judgment highlights the importance of legal context, retrospective amendments, and verification in Cenvat credit disputes, ultimately emphasizing adherence to rules and proper documentation for credit eligibility.