2014 (8) TMI 324 - AT - Central Excise

CENVAT Credit - duty paying documents - extra copy, Xerox/photo copies - documents on the strength of which credit has been taken were not specified under Central Excise Rules, 1944 - Held that - CENVAT Credit scheme adopted and operationalized in India is based on the Tax Credit Method which relies upon sanctity of the documents. That is why certain documents have been prescribed statutorily for availing of the credit. If those documents are not submitted, there is no vested right accruing to the assessee for taking the credit. The argument that credit can be taken even when there are procedural infraction is not acceptable for the reason that a 5 Member Bench of the Hon ble Apex Court in the case of Hari Chand Sri Gopal - 2010 (11) TMI 13 - SUPREME COURT OF INDIA and Indian Oil Corporation Ltd. 2013 (5) TMI 675 - SUPREME COURT OF INDIA held that in order to claim the benefit under the law, substantial compliance is not enough and the procedures prescribed in the statute should be mandatorily followed. This ratio laid down by the Hon ble Apex Court prevails over the case laws - Decided against assessee.

Summary

Issues:
Denial of CENVAT Credit based on non-specified documents, Procedural delay in adjudication proceedings.

Analysis:
1. Denial of CENVAT Credit based on non-specified documents:
The appeal challenged the denial of CENVAT Credit amounting to Rs. 1,08,263 to the appellant by the lower appellate authority on the grounds that the documents used for claiming credit were not specified under the Central Excise Rules, 1944. The appellant argued that despite the procedural infraction, they were still eligible for credit as there was no finding that they were ineligible. The appellant relied on previous tribunal decisions to support their contention. However, the presiding judge emphasized the importance of statutory documents for availing CENVAT Credit under the Tax Credit Method, stating that without the specified documents, no vested right accrues to the assessee for claiming credit. The judge referred to Supreme Court decisions emphasizing mandatory compliance with statutory procedures and ruled that the appellant was ineligible for credit based on non-specified documents.

2. Procedural delay in adjudication proceedings:
The appellant also raised the issue of inordinate delay by the department in initiating adjudication proceedings, citing a Bombay High Court decision. However, the judge noted that this point was not raised before the lower authorities and that the appellant had participated in the proceedings without objection. The judge highlighted that the appellant had already reversed the wrongly taken CENVAT Credit. Therefore, the judge concluded that the appellant could not now claim inordinate delay as a ground for dropping the proceedings. Ultimately, the judge found no merit in the appeal and dismissed it, upholding the denial of CENVAT Credit based on non-specified documents and rejecting the argument of procedural delay in adjudication proceedings.