2017 (12) TMI 1437 - HC - Central Excise

CENVAT credit - relevant documnets for clearing the goods - inputs in question were duly received at Malanpur Unit and used in the manufacture of the Plastic Laminates and Paper Laminates which were removed by the Appellant from Malanpur Unit on payment of appropriate Central Excise Duty under paper invoices to the buyers - Held that - in absence of any provision akin to erstwhile Rule 57GG wherefrom provision of gate passes were omitted by N/N. 15/1994 dated 30/03/1994 and invoices were brought in their place as valid documents under which goods could be cleared from the factory by the manufacturer or could further be passed on by the dealer to the third party; and that N/N. 15/1994 the Government having not issued the instructions replacing gate passes with the invoice as valid documents allowing endorsement of the invoices from availing Cenvat Credit and the fact that the unit at Haridwar is not operating under the Cenvat Scheme, their final product being exempted, we perceive that no substantial question arises for consideration - appeal dismissed.

Issues Involved:
1. Eligibility of Cenvat Credit based on endorsed invoices.
2. Allegation of availing double benefit.
3. Procedural adherence in transferring inputs.
4. Applicability of extended time limit for recovery.
5. Validity of substantial questions of law proposed by the appellant.

Issue-wise Detailed Analysis:

1. Eligibility of Cenvat Credit based on endorsed invoices:
The appellant, engaged in manufacturing Plastic Laminates and Paper Laminates, transferred surplus inputs from its Haridwar unit to its Malanpur unit. The Haridwar unit, operating under an exemption, endorsed the invoices for these inputs. The Commissioner disallowed the Cenvat Credit on the grounds that the Haridwar unit, not operating under the Cenvat Scheme, was not authorized to pass on Cenvat Credit. The Tribunal upheld this decision, noting that the Cenvat Credit Rules, 2004, do not recognize "endorsement of the vouchers" and that the appellant failed to provide any legal precedent supporting their claim.

2. Allegation of availing double benefit:
The Tribunal observed that allowing Cenvat Credit in this scenario would result in the appellant availing a "double benefit," as the Haridwar unit was already enjoying an area-based exemption. The appellant argued that there was no specific allegation of double benefit in the show cause notice and that the Haridwar unit did not avail any Cenvat Credit. However, the Tribunal maintained that procedural lapses in transferring inputs did not entitle the appellant to claim Cenvat Credit.

3. Procedural adherence in transferring inputs:
The Commissioner highlighted that the endorsed invoices did not comply with Rule 11 of the Central Excise Rules, 2002, which prescribes detailed requirements for valid invoices. The Tribunal supported this view, stating that the appellant's procedure was not in line with the Board's Circulars and that only registered assessees operating under the Cenvat Credit Scheme could issue fresh invoices for transferring goods.

4. Applicability of extended time limit for recovery:
The Commissioner invoked the extended time limit under Section 11A(4) and Section 11A(5) of the Central Excise Act, 1944, citing fraud, collusion, willful misstatement, and suppression of facts by the appellant. The Tribunal agreed, noting that the fraudulent availment of Cenvat Credit was discovered during an audit and that the appellant had not disclosed these facts to the Department.

5. Validity of substantial questions of law proposed by the appellant:
The High Court found that the substantial questions of law proposed by the appellant were primarily factual and did not challenge the core findings of the Assessing Authority and the Tribunal. The Court noted that the relevant notifications and rules did not support the appellant's claim for Cenvat Credit based on endorsed invoices, and no substantial question of law arose for consideration.

Conclusion:
The High Court dismissed the appeal, affirming the Tribunal's decision that the appellant was not entitled to Cenvat Credit on the basis of endorsed invoices from a unit operating under an exemption. The Court held that no substantial question of law was involved, and the procedural lapses and fraudulent practices justified the denial of Cenvat Credit and the invocation of the extended time limit for recovery. The appeal was dismissed in limine with no costs.

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