2015 (3) TMI 174 - AT - Central Excise

Reversal of CENVAT Credit - Credit mistakenly taken by head office - Held that - Goods were received by the appellant directly whereas the credit was wrongly availed by the Head office and the said mistake was subsequently rectified by issuance of reverse invoices on the basis of which the present appellant took credit, I also note that the credit was availed in March 97 and was duly reflected by the appellant in their Return filed for the said period. The Show Cause Notice stands issued on 04.02.2002 i.e. beyond the normal period of limitation. The appellant has also filed the reconciliation statement on record and the Revenue is not disputing the fact of the goods having reached the Gurgaon Factory directly. In such a scenario, the non-following of the procedure by itself cannot be held to be a ground for denial of credit. Accordingly, I set aside the impugned order on merits as also on limitation - Decided in favour of assesse.

Summary

Issues:
1. Eligibility for modvat credit due to procedural lapses.
2. Validity of documents for Cenvat credit.
3. Time limitation for issuing Show Cause Notice.

Analysis:
1. The appellant, a unit of a company, imported raw materials for its factories in Gurgaon and Kanpur. The appellant mistakenly took modvat credit at the Head Office in Kanpur instead of the Gurgaon Factory. The credit was reversed upon realization of the error and fresh invoices were issued. The appellant argued that despite procedural lapses, as the goods reached the destination, they should be eligible for modvat credit. The appellant cited a Circular by the Central Board of Excise and Customs and acknowledged the technical lapse in not fulfilling all conditions. However, the credit was availed within the stipulated time under modvat regulations.

2. The Revenue contended that the goods did not move along with the invoices issued by the Head Office, questioning the validity of the documents for Cenvat credit. The Tribunal noted that the goods were received by the appellant directly at the Gurgaon Factory, and the mistake in availing credit at the Head Office was rectified by issuing reverse invoices. The credit was reflected in the appellant's Return for the period, and the Show Cause Notice was issued beyond the normal limitation period. The appellant provided a reconciliation statement, and the Revenue did not dispute the direct receipt of goods at the Gurgaon Factory. The Tribunal held that the non-compliance with procedures alone cannot be a ground for denying credit.

3. Considering the facts presented, the Tribunal set aside the impugned order on both merits and limitation issues, allowing the appeal with consequential relief to the appellant. The Tribunal emphasized that the procedural lapses should not hinder the eligibility for modvat credit when the goods had reached the intended destination and the credit was rectified within the prescribed time frame.