2018 (3) TMI 337 - AT - Central Excise

CENVAT credit - duty paying documents - Revenue felt that the said supplementary invoices were not the proper documents as defined under Rule 9 of CCR 2004 - Held that - Cenvat Credit Rules prescribe the documents on which Cenvat credit can be taken. One of the documents is supplementary invoice issued by the manufacturer from his factory on which the recipient can take the Cenvat credit - In the instant case, the recipient did not accept the impugned invoices. In that situation, the impugned invoices do not become the eligible document for taking the credit by the manufacturer himself as the invoices are in the name of recipient. In the BDH Industries 2008 (7) TMI 78 - CESTAT MUMBAI , it was held that the suo motu credit of duty or refund cannot be taken by assessee without sanction by a proper officer. Appeal dismissed - decided against appellant.

Summary

Issues:
- Validity of availing Cenvat credit on supplementary invoices issued to customers who refused to accept them.
- Interpretation of Cenvat Credit Rules, 2004 regarding eligibility of documents for Cenvat credit.
- Compliance with prescribed procedures for cancellation of invoices and availing Cenvat credit.
- Applicability of case laws allowing suo motu credit on duty paid invoices.
- Consideration of Tribunal judgments on the availment of suo motu credit without proper officer sanction.

Analysis:
1. Validity of Cenvat Credit on Supplementary Invoices:
The appellant, engaged in manufacturing Stainless Steel Tubes, availed Cenvat credit on supplementary invoices issued to customers who refused to accept them due to increased exchange rates. The Revenue contended that these invoices did not meet the requirements under Rule 9 of Cenvat Credit Rules, 2004. The appellant argued that they were justified in availing the credit as their buyers rejected the invoices. However, the tribunal noted that the recipient did not accept the invoices, making them ineligible for credit by the manufacturer.

2. Interpretation of Cenvat Credit Rules:
The tribunal examined the Cenvat Credit Rules, which specify the documents eligible for Cenvat credit. It was highlighted that supplementary invoices issued by the manufacturer to the recipient allow for credit. In this case, since the recipient did not accept the invoices, they did not qualify as eligible documents for the manufacturer to claim credit. The tribunal referred to the prescribed procedure in Chapter IV for cancellation of invoices, emphasizing the need to follow specific actions when canceling invoices to maintain eligibility for credit.

3. Compliance with Prescribed Procedures:
The tribunal emphasized that the appellants failed to follow the prescribed instructions for canceling invoices, as outlined in the CBEC's Excise Manual. The failure to send the cancelled invoices to the Range Superintendent as required meant that the appellants could not avail Cenvat credit based on the original and duplicate copies of the invoices. The tribunal clarified that the Trade Notice of 1969 cited by the appellant did not apply to the current situation.

4. Applicability of Case Laws on Suo Motu Credit:
The appellant cited various case laws supporting the availment of suo motu credit on duty paid invoices. However, the tribunal distinguished these cases from the present situation. It noted that the judgments relied upon by the appellant were not directly applicable due to differing factual circumstances. Additionally, the tribunal highlighted that suo motu credit could not be taken without proper officer sanction, as established in previous tribunal and Supreme Court decisions.

5. Judgment and Dismissal of Appeal:
After considering the arguments and precedents, the tribunal upheld the order of the Commissioner (Appeals) and dismissed the appeal. The tribunal concluded that the specific procedure prescribed by the CBEC must be followed, and suo motu credit could not be availed without proper officer sanction. Therefore, the appellant's appeal was rejected based on these findings.