DOCUMENTS FOR AVAILING CENVAT CREDIT

[Mr. M. GOVINDARAJAN]

The CENVAT Credit Rules, 2004 ('Rule' for short) allows the assessees to avail credit on the excise duty, service tax etc., paid on capital goods, inputs, input services against the excise duty, service tax etc., paid to the credit of the Central Government.   To avail CENVAT credit documents are highly required.  

Rule 9 provides that the CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of the following documents only-

(a) an invoice issued by-

(i) a manufacturer for clearance of-

(I) inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from   where the goods are sold by or on behalf of the said manufacturer;

(II) inputs or capital goods as such;

(ii) an importer;

(iii) an importer from his depot or from the premises of the consignment agent of the  said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002;

 (iv) a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002; or

(b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under Sec. 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non levy or short levy by reason of fraud, collusion or any willful misstatement or suppression of facts or contravention of any provisions of the Central Excise Act, or of the Customs Act or the Rules made there under with intent to evade payment of duty.

For removal of doubts it is clarified in the Rule that supplementary invoice shall also include challan or any other similar document evidencing payment of additional amount of additional duty leviable under Sec. 3 of the Customs Tariff Act,

(c) a bill of entry; or

(d) a certificate issued by an appraiser of customs in respect of goods imported through a Foreign Post Office; or

(e) a challan evidencing payment of service tax by the person liable to pay service tax; or

(f) an invoice, a bill or challan issued by a provider of input service;

(g) an invoice, bill or challan issued by an input service distributor;

The additional duty of customs levied under Sec. 3(5) of the Customs Tariff Act shall not be allowed if the invoice or the supplementary invoice, as the case may be, bears an indication to the effect that no credit of the said additional duty shall be admissible.

No CENVAT Credit shall be taken unless all the particulars as prescribed under the Central Excise Rules or the Service Tax Rules, as the case may be, are contained in the said document.  If the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, central excise or service tax registration number of the person issuing the invoice, as the case may be, name and address of the factory or warehouse or premises of first or second stage dealer or provider of taxable service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the CENVAT credit.

The CENVAT credit in respect of input or capital goods purchased from a first stage dealer or second stage dealer shall be allowed only if such first stage dealer or second stage dealer, as the case may be, has maintained records indicating the fact that the input or capital goods was supplied from the stock on which duty was paid by the producer of such input or capital goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him.

The manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value, duty paid, CENVAT credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit.

The manufacturer of final products or the provider of output service shall maintain proper records for the receipt and consumption of the input services in which the relevant information regarding the value, tax paid, CENVAT credit taken and utilized, the person from whom the input receipt has been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit.

Some case laws relating to documents for availing CENVAT credit are furnished as below:

CASE LAWS:

1. Raaj Khosle & Co., V. Commissioner of Central Excise, New Delhi - 2008 (10) STR 600 (Tri. Del)

The address of the firm as given in the invoice was different from the address given in the Registration Certificate.   The contention is that the appellants are working from different places and subsequently all the places were got registered with the Revenue and the Registration Certificate was amended.   The address given in the invoice in dispute is now included in the Registration Certificate.   In these circumstances, as the invoice is used in or in relation to the service provided by the appellant, the credit cannot be denied.

The invoice contains the brand name 'M/s Shelters' of client and address of the appellant.   The contention of the appellant is that they entered into an agreement with the Citibank for the use of their brand name 'Shelters' and telephones were in the name of Shelters only.   The tribunal held that the documents are not in the name of the appellant.   Therefore the appellants are not entitled for this credit.   The denial of the credit is upheld.

2. Commissioner of Central Excise, Delhi III, Gurgaon V. Myron Electricals Private Ltd., - 2008 -TMI - 4682 - HIGH COURT OF PUNJAB AND HARYANA

The assessee claimed credit during the period from January 2000 to August 2000.   The department issued a show cause notice disputing the claim of the assessee on the ground that the registered dealer had stopped functioning from the registered premises with effect from 30.9.1999.   The demand was confirmed by the Adjudicating Authority and upheld by Appellate Authority.   The tribunal allowed the appeal of the assessee holding that payment of duty, receipt of inputs and use of inputs in the final product stand proved.   As per the clarification from the Board credit could not be disallowed once payment of duty and receipt and use of inputs was established.

The High Court held that the contention, there was a statutory requirement that invoice should have been issued by the dealer from the premises registered with the department has no merit and overlooks the clarification by the Board itself in the circular relied upon by the Tribunal viz., circular No. 441/7/99, dated 23.02.99 as well as Notification No. 7/99-CE amending Rule 57 of the Central Excise Rules, 1944, to the effect that if the goods were received and payment of duty and the use thereof was verifiable, credit could not be denied merely on the ground that the documents did not contain all the particulars.

3. Amar Forgings Private Ltd., V. Commissioner of Central Excise, Indore - 2008 -TMI - 4737 - CESTAT, NEW DELHI

The perusal of the record shows that the credit was availed by the appellant on extra copy of the invoice which is not permissible under the law.   The contentions of the appellant that the truck in which the goods were being transported met with an accident and as a result of which driver died and the duplicate copy was lost, cannot be accepted for want of corroboration from any material evidence.   No copy of FIR regarding the accident was even lodged by the appellant.   Moreover, even if it is assumed for sake of argument that the driver died in the accident, the appellants could seek permission from the department for taking credit on the original copy of the invoice but they could not avail the credit on the extra copy.

4. India Glycols Ltd., V. Commissioner of Central Excise, Meerut - II - 2008 -TMI - 30684 - CESTAT NEW DELHI

TR-6 challan submitted by the appellant should have been taken to be adequate proof/evidence of payment of service tax entitling appellant to claim CENVAT credit.

5. India Gateway Terminal (P) Ltd., V. Commissioner of Central Excise, Cochin - 2008 -TMI - 30610 - CESTAT BANGLORE

Documents for availing credit though not specified, contained all details.   Irregular maintenance of documents cannot be a ground to deny credit.

6. Gail India Ltd., V. Commissioner of Central Excise, Indore - 2008 (11) STR 538 (Tri. Del)

Credit cannot be denied merely on ground that invoices are not authenticated if other particulars are available in the invoice and verified by authorities.

7. Flex Engineering Ltd., V. Commissioner of Central Excise, Noida - 2008 (12) STR 94 (Tri. Del)

Invoices issued by manufacturer to first and second hand dealers who further issued invoices to assessee, are alleged to be not proper documents.   As no error/omission/mis-construction has been alleged by the Revenue against assessee no demand sustainable.

8. Commissioner of Central Excise, Delhi - II V. Usha Engineering Works - 2008 (12) STR 82 (Tri. Del)

The omission of the name of the respondent in the invoice as consignee of goods cannot be termed as a technical lapse.   At no stage the respondents ever made any attempt to get the mistakes corrected by manufacturer.   Credit was rightly disallowed.

9. Commissioner of Central Excise, Bhopal V. Diamond Cements - 2008 -TMI - 3842 - CESTAT NEW DELHI

Credit in respect of security agency service was disallowed on bills which did not provide specific name and address.   The assessee produced certificate before Commissioner (Appeals) to establish that services had been rendered by the service provider to them.   No fault can be found on reliance placed by Commissioner (Appeals) on certificate produced before him in this regard.

10. Commissioner of Central Excise, Raipur V. Vandana Energy & Steel Pvt. Ltd., - 2008 -TMI - 2507 - CESTAT, NEW DELHI

Credit taken based on photocopy is inadmissible.  Insistence on document evidencing payment of duty on inputs is not mere technicality to be complied with for availing credit but mandatory to be followed.