2014 (4) TMI 138 - AT - Central Excise

Waiver of pre-deposit - Denial of CENVAT Credit - duty paying document - endorsement on the face of Invoice by the Job workder - Denial of the credit is on the ground that the relevant invoices were not issued to the appellant by the manufacturer of inputs - Held that - I have perused Rule 9 of the CCR, 2004 and have found no mention of endorsed invoice in the list of documents prescribed under the Rule. I am not oblivious of the need to interpret the provisions harmoniously. But any provision so interpreted should be squarely applicable to the given factual situation so as to enable the appellant to claim CENVAT credit. If the manufacturer of inputs had issued the invoices to the appellant (principal manufacturer of final product) while sending the goods to the latter s job worker, it would have been consistent with the established trade practice. In the instant case, the manufacturer of inputs sent the goods along with invoices to the appellant s job worker and the latter made endorsements on the documents. The invoices so endorsed do not figure in the list of documents prescribed under Rule 9. Therefore, the appellant has failed to make out a case on merits - Conditional stay granted.

Issues:
1. Denial of CENVAT credit due to invoices issued to job worker instead of the appellant.
2. Interpretation of Rule 3(1) and Rule 9 of the CENVAT Credit Rules 2004.
3. Time-barred demand raised in a show-cause notice.
4. Lack of financial hardship plea by the appellant.

Analysis:
1. The appellant sought waiver of pre-deposit and stay of recovery for the denied CENVAT credit of Rs. 67,589/- from October to December 2006. The denial was based on invoices issued to the job worker instead of the appellant by the manufacturer of inputs. The appellant used endorsed invoices from the job worker to claim the credit. The appellant's counsel argued that Rule 3(1) allows job workers to use inputs for manufacturing, but the Deputy Commissioner (AR) referenced Rule 9, stating endorsed invoices are not prescribed for credit availment. The Tribunal noted that endorsed invoices were not listed in Rule 9 and ruled against the appellant for failing to meet the requirements.

2. The Tribunal considered the interpretation of Rule 3(1) and Rule 9 of the CENVAT Credit Rules 2004. While Rule 3(1) allows job workers to use inputs for manufacturing intermediate products, it does not specify the issuance of invoices. On the other hand, Rule 9 does not mention endorsed invoices as prescribed documents for credit availment. The Tribunal emphasized the need for provisions to be applicable to the factual situation, highlighting that endorsed invoices were not recognized under Rule 9, leading to the appellant's failure to justify the credit claim.

3. The appellant argued that the demand was time-barred as it was raised in a show-cause notice in August 2009 for the period of October to December 2006, alleging suppression of facts. The appellant contended that they had informed the authorities in October 2006 about using job workers for manufacturing, but this did not include claiming CENVAT credit on endorsed invoices. The Tribunal found that the appellant's letter did not constitute the necessary intimation of the material fact, thus rejecting the time-barred defense.

4. The appellant did not plead financial hardships, which could have been a mitigating factor in the case. Despite the absence of such a plea, the Tribunal directed the appellant to pre-deposit the entire CENVAT credit amount within six weeks and report compliance. Upon compliance, waiver and stay of the penalty imposed on the appellant were granted, subject to the specified conditions.

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