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2006 (1) TMI 6 - AT - Central ExciseReturned Goods (part of the consignment) Cenvat Credit availed on the basis of triplicate copy of their own invoice
Issues: Denial of CENVAT credit on returned final product due to allegedly inadmissible documents.
1. The appellant was denied CENVAT credit of Rs. 11,018 on a quantity of final product returned by the buyer, citing the absence of a valid cenvatable document. The appellant contended that the goods were duty-paid and reprocessed into defect-free final products, fulfilling substantive requirements. The appellant argued that Rule 7 of the Cenvat Credit Rules, 2002 did not prohibit the use of triplicate invoices for CENVAT purposes, relying on Rule 11(3) of the Central Excise Rules, 2002 and CBEC's Supplementary Instruction No. 4 of 2005. The appellant asserted that the defective final product returned by the buyer should be deemed as 'input' for them, allowing the use of the triplicate copy of the invoice for CENVAT credit. 2. The Tribunal considered the arguments and accepted the appellant's position. Rule 16(1) of the Central Excise Rules, 2002 allowed a manufacturer to take CENVAT credit on final products returned by the buyer for remaking, refining, etc., treating them as 'inputs'. The Tribunal noted that the denial of credit was based on the alleged inadmissibility of the documents, specifically the triplicate invoices issued by the appellant. However, the Tribunal held that under the deeming provisions of Rule 16(1), the duty-paying document covering the returned goods should be deemed as issued by the input manufacturer, enabling the appellant to claim CENVAT credit on the duty paid. The Tribunal emphasized that CBEC's instructions and Rule 11(3) did not specify which copy of the invoice could be used for CENVAT purposes, allowing the use of the triplicate copy for credit. 3. The respondent relied on a Trade Notice revising the procedure for receiving returned final products under Rule 16(1), stating that CENVAT credit would not be allowed without valid duty-paying documents. However, the Tribunal reiterated that during the dispute period, the use of a triplicate copy of the invoice was valid for CENVAT credit purposes based on Rule 11(3) of the Central Excise Rules, 2002, CBEC's Supplementary Instruction No. 4, and Rule 7 of the Cenvat Credit Rules, 2002. The Tribunal further clarified that the revised procedure in the Trade Notice issued later could not impact the cenvatability of the deemed inputs received by the appellant's factory earlier. 4. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, emphasizing the validity of claiming CENVAT credit on the returned final products based on the legal provisions and instructions applicable during the relevant period.
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