2014 (8) TMI 218 - AT - Central Excise

Denial of CENVAT Credit - description of the goods was changed from wire rods to steel rods or steel rounds alongwith the change in tariff entry - Imposition of penalty - Held that - During the course of further investigation the statement of Shri Vijay Kohli, authorised signatory of the appellant was also recorded wherein he clarified that they have procured Steel Rods/Steel rounds from M/s.Regal Metals & Ferro Alloys and except the procurement of the goods from the said dealer on which they have availed the credit, they have not received any other raw-material from any other source. The said raw-material received by them has been used in the manufacture of final product which was cleared on payment of duty - Revenue s case is only based upon assumptions and presumptions. Revenue is infact, not disputing that the appellant had not received raw-material from the dealer. Merely because the description of wire rods was changed in some cases to steel rods or steel rounds, which is an alternative description of the wire rods, the Revenue cannot deny the credit to the appellant, who had admittedly received the goods and have utilized the same in the manufacture of their final product. As such, I set aside the impugned orders, without going into the alternative plea of the appellant, as regards the demands being time barred - Decided in favour of assessee.

Summary

Issues Involved:
Identification of goods for cenvat credit eligibility based on description discrepancies in invoices.

Analysis:
The judgment by Mrs. Archana Wadhwa of the Appellate Tribunal CESTAT New Delhi dealt with the issue of cenvat credit eligibility concerning the procurement of raw materials by an appellant engaged in auto parts manufacturing. The appellant sourced raw materials from a dealer who, in turn, procured goods from manufacturers. The main raw material, wire rod, was classified under heading 7213 by the manufacturer. However, discrepancies arose in the dealer's invoices where the goods were described as steel rods or steel rounds instead of wire rods as per the manufacturer's invoices. The Revenue contended that due to these discrepancies, the appellant was not entitled to cenvat credit, leading to the initiation of proceedings resulting in demands and penalties against the appellant.

The tribunal considered statements from both the partner of the dealer and the authorized signatory of the appellant. The partner of the dealer clarified that the change in description from wire rods to steel rods or steel rounds in the invoices was due to a perception that these terms were interchangeable in commercial parlance. He attributed the discrepancies to the clerical staff's lack of education who prepared the invoices. On the other hand, the authorized signatory of the appellant confirmed procuring steel rods/steel rounds from the dealer for their manufacturing process, utilizing the raw material in their final product cleared after duty payment.

The tribunal highlighted that the Revenue's case relied on assumptions and presumptions, acknowledging that the appellant did receive the raw material from the dealer and used it in their manufacturing process. The tribunal emphasized that merely changing the description from wire rods to steel rods or steel rounds, which were considered alternative descriptions, should not be grounds for denying cenvat credit to the appellant. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief granted to the appellant. The judgment emphasized that the appellant's receipt and utilization of the goods should be the primary consideration for cenvat credit eligibility, rather than discrepancies in descriptions in the invoices.