2017 (5) TMI 1330 - AT - Central Excise

CENVAT credit - duty paying invoices - The ingredients and packing materials are provided to the appellant by BIL - denial of credit on the ground that availment of credit on the basis of endorsed invoices for the above period is irregular particularly in view of the change in the position of rules w.e.f. 01/04/1994 - Held that - The Larger Bench of the Tribunal in the case of Barmer Lawrie & Co. Ltd. 2000 (1) TMI 74 - CEGAT, NEW DELHI has held that after 01/04/1994 endorsed invoices are not valid documents for claiming CENVAT credit. Appeal allowed - decided in favor Revenue.

Summary

Issues:
Appeal against disallowed CENVAT credit based on endorsed invoices for the period 01/04/1994 to 31/10/1994.

Analysis:
The appellant, engaged in manufacturing goods for another company, filed an appeal against the disallowance of CENVAT credit amounting to &8377; 12,87,992 for the mentioned period. The dispute arose due to the irregularity of availing credit based on endorsed invoices post the amendment in Central Excise Rules effective from 01/04/1994. The appellant received goods in original packing under endorsed invoices, but the law prohibited credits on such documents after the specified date. The appellant argued entitlement to credit based on the endorsed invoices, citing the duty payment by the supplier and a High Court decision supporting their claim.

The authorities upheld the disallowance, citing the amendment in rules from 01/04/1994 which replaced gate passes with invoices for claiming credits. The new procedure restricted credits based on endorsed invoices, making the appellant's CENVAT credit irregular for the mentioned period. Various case laws were referenced, including a Larger Bench decision disallowing credits on endorsed invoices post 01/04/1994. The conflicting decisions of different High Courts led to the Tribunal following the more recent decision of the Gujarat High Court, which emphasized the mandatory nature of the new rules for availing CENVAT credit.

The Gujarat High Court's decision highlighted the importance of invoices issued under Rule 52A for claiming CENVAT credit post the rule amendments in 1994. The Tribunal's error in overlooking the statutory changes and allowing credits on endorsed invoices was rectified, leading to the reversal of the Tribunal's decision in favor of the Revenue. The impugned order was upheld, and the Revenue's appeal was allowed, emphasizing compliance with the amended rules for claiming CENVAT credit based on valid documents like invoices issued under the prescribed rules.

In conclusion, the judgment focused on the irregularity of claiming CENVAT credit based on endorsed invoices post the 1994 rule amendments, emphasizing the significance of complying with the revised procedures for availing credits. The decision highlighted the mandatory nature of the new rules and the need for invoices issued under Rule 52A to claim CENVAT credit, ultimately upholding the Revenue's appeal against the disallowed credit for the mentioned period.