2013 (3) TMI 161 - AT - Central Excise

CENVAT Credit disallowed - Commissioner (Appeals) set aside the order of disallowance CENVAT Credit however upheld the penalty of ₹ 5,000/- imposed under rule 27 of Central Excise Rules, 2002 - whether assessee entitled to avail input credit on the strength of the invoices in question having no serial no. ? - Held that - CBEC vide Circular No. 441/7/99-CX. dated 23-2-1999 has clarified that Cenvat credit should not be denied for minor procedural lapse. However, AC/DC should ensure that inputs/capital goods have suffered duty and are being used/ are to be used in process of manufacture. Circulars and clarifications issued by C.B.E. & C. are binding on the Excise & Customs authorities as per various judgments of Supreme Court. However Deputy Commissioner has not followed the said Circulars in which it was categorically mentioned that AC/DC of the jurisdiction, before issuing Show Cause Notice for wrong availment of Modvat credit shall conduct enquiries with regard to duty paid nature of the goods as the goods as the suppliers send, ensure that necessary information as mentioned in the Notification are available on the invoice and satisfies himself whether the goods have been used or are intended to be used as contemplated in the Modvat Rules. Thus in the present case Dy. Commissioner, Sonarpur Division has not followed the said Circular and raised SCN without conducting any enquiry and issued SCN based on suspicion and doubt. Also it is seen that the Range Superintendent has categorically stated that so far no discrepancy appears to have found in respect of purchase of goods and passing of Cenvat credit by the said dealer during impugned period. Therefore no reason to disallow the Cenvat credit passed on by the said dealer. Rule 11 of Cenvat Credit Rules, 2002 provides that credit can be taken on the strength of invoice which shall be serially numbered. On going through the above provisions, it is found that there is no requirement in the rules that the invoice number should be printed on the invoice. The only requirement is that invoice should be serially numbered. It is not the case of the Revenue that invoices are not serially numbered. Therefore, the appellant have fulfilled the requirement of Cenvat Credit Rules, 2004 - Appellant Dealer has violated the provisions of Rules 11(2) & 11(6) of Central Excise Rules, 2002 which are technical in nature for which they are liable for penal action.

Summary

Issues:
Appeal against disallowance of CENVAT Credit and penalty imposed under Rule 27 of Central Excise Rules, 2002.

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Appeal setting aside the disallowance of CENVAT Credit but upholding the penalty of Rs. 5,000 under Rule 27. The case involved the respondent not submitting necessary declarations regarding invoices and procedural lapses in the invoice books.

2. The department argued that the requirement of pre-printed serial numbers on invoices was mandatory, citing relevant case laws. They contended that the failure to intimate invoice serial numbers was a serious breach. On the other hand, the respondent relied on different rules under CENVAT Credit Rules and circulars to support their case against the procedural lapses.

3. The Commissioner (Appeals) found that the respondent had not intimated invoice serial numbers before use, but noted that the invoices contained necessary details like consignee, goods description, duty payable, etc. The Commissioner highlighted that the jurisdictional Superintendent did not find any misuse of CENVAT credit and failed to establish any misuse instances, only raising suspicions.

4. The Commissioner also referenced Tribunal judgments emphasizing the importance of duty payment on inputs and their use in final products. Additionally, the Circular No. 441/7/99-CX was cited, stating that CENVAT credit should not be denied for minor procedural lapses, emphasizing the duty payment and usage of goods in the manufacturing process.

5. The Tribunal analyzed Rule 11 of CENVAT Credit Rules, 2002, noting that the invoices were serially numbered, meeting the rule's requirements. They upheld the Commissioner's decision, stating that the invoices fulfilled the necessary criteria for availing input credit. The Tribunal also referenced the Pepsico India Holdings Pvt. Ltd. case supporting a similar view and reiterated the Circular's stance on not issuing show cause notices for technical lapses.

6. Ultimately, the Tribunal dismissed the appeal, upholding the Commissioner's order in its entirety, as they found no merit in the Revenue's contentions regarding the procedural lapses in the case.