2014 (7) TMI 436 - AT - Central Excise

Denial of CENVAT Credit - Availment of credit on the strength of commercial invoice issued by a dealer not registered with Central Excise - Penalty u/s 11AC - Held that - Commissioner (Appeals) has taken a view that the dealer did not register himself with the department as first stage dealer and second stage dealer and invoice issued by him could not have been the basis for taking Cenvat credit. I find that this ground is correct. However availment of credit by the appellant can be considered as technical error. In this case, admittedly, manufacturer s invoice had been sent by dealer. Therefore the appellant could have taken credit on the manufacturer s invoice only. The original authority has dropped the proceedings. The original adjudicating authority has power to condone and condoned the omission in the invoice and allowed credit. He has satisfied that the goods received have been used for the manufacture of final products and appropriate duty has been paid and other relevant requirements as prescribed under Rule 9 of Cenvat Credit Rules, 2004 are available. appellant is eligible for credit taken by them - Decided in favour of assessee.

Summary

Issues:
1. Denial of Cenvat credit availed during September 2003 to September 2005 under Central Excise Act, 1944.
2. Validity of availing credit based on invoices issued by a dealer not registered with Central Excise.
3. Adjudication on the eligibility of credit based on the receipt of goods by the assessee for manufacturing purposes.
4. Appeal against the decision of the Commissioner (Appeals) regarding the rejection of credit.

Analysis:
1. The judgment revolves around the denial of Cenvat credit amounting to Rs. 16,29,325/- availed by the assessee between September 2003 and September 2005, leading to the imposition of interest and penalty under Section 11AC of the Central Excise Act, 1944.

2. The primary issue addressed is the validity of availing credit based on invoices issued by a dealer not registered with Central Excise. The assessee, a manufacturer of aluminium ingots, procured aluminum profiles and availed credit based on commercial invoices issued by an unregistered dealer. The adjudicating authority initiated proceedings to recover the ineligible credit, citing non-compliance with Rule 9 of the Cenvat Credit Rules, 2004.

3. The judgment further delves into the adjudication on the eligibility of credit based on the receipt of goods by the assessee for manufacturing purposes. The Commissioner (Appeals) held that the dealer's invoices could not be the basis for availing Cenvat credit as the dealer was not registered as a first or second stage dealer. However, the original adjudicating authority condoned the technical error and allowed the credit after verifying that the goods were used in manufacturing final products and duty was duly paid.

4. Lastly, the appeal against the decision of the Commissioner (Appeals) regarding the rejection of credit is analyzed. The rejection was based on the timing of goods receipt in relation to the invoices, implying a transit sale scenario. However, the appellate tribunal found that the rejection on this ground was not sustainable, as no time limit is prescribed for goods receipt after clearance by the manufacturer. The tribunal concluded that the appellant was eligible for the credit, and the appeal was allowed.

In conclusion, the judgment clarifies the criteria for availing Cenvat credit under the Central Excise Act, emphasizing compliance with registration requirements and proper documentation. It highlights the importance of verifying the actual receipt and utilization of goods for manufacturing purposes to determine the eligibility of credit, ultimately allowing the appeal in favor of the appellant.