2018 (3) TMI 762 - AT - Central Excise

Cenvat Credit - Suo moto credit taken once again - The case of the department is that after reversal of credit duty, due to availability of invalid documents, appellant on their own should not have taken credit, they should have followed the procedure of Central Excise Act and rules made thereunder - Held that - There is no specific copy was earmarked in terms of Rule 9 of Cenvat Credit Rules, 2004 for availing Cenvat Credit. As regard the credit availed on Xerox/extra copies of invoices, credit cannot be denied only on the basis that the invoices are not original. The purchase of goods made from the foreign/domestic supplier. If all these aspects are found to be correct then merely on the basis of copies, of Cenvatabe documents are other than original copies credit cannot be denied. Matter remanded to the Original adjudicating authority with clear direction that only on the nature of document prevailing in the present case credit cannot be denied - appeal allowed by way of remand.

Summary

Issues:
Availment of Cenvat credit on extra and xerox copies of invoices/Bills of Entry, denial of credit by the department, reversal of credit, appellant's re-availment of credit, issuance of show cause notice, disallowance of Cenvat credit, penalty under Section 11AC, rejection of appeal by Commissioner (Appeals), provision for taking suo moto credit without sanction by the proper officer.

Analysis:
The appellant availed Cenvat credit during a specific period on extra and xerox copies of invoices/Bills of Entry. The department contended that these documents were not proper for availing Cenvat credit, leading to the proposed denial of credit. After being pointed out by the audit group, the appellant reversed the credit. However, the appellant re-availed the credit suo moto upon finding the original copies of Bills of Entry and invoices. Subsequently, a show cause notice was issued, culminating in an adjudication order disallowing the Cenvat credit and imposing a penalty under Section 11AC. The Commissioner (Appeals) rejected the appeal, upholding the Order-in-Original due to the absence of a provision for taking suo moto credit without proper officer sanction.

The appellant, although not present during the proceedings, submitted that they had produced relevant documents such as Bills of Entry, invoices, and related documents demonstrating receipt and payments made to suppliers for input purchases. They argued that the documentary proofs were not considered by the appellate authority, highlighting their possession of exchange control copies of Bills of Entry. The appellant contended that Rule 9 of Cenvat Credit Rules, 2004 did not specify a particular copy of Bill of Entry for availing credit, making credit on exchange control copies permissible. They also provided evidence of goods receipt in the factory through material inward memo and gate entry stamps on copies of Bills of Entry. Additionally, they cited precedents supporting the admissibility of credit on xerox and extra copies of invoices.

The Revenue representative reiterated the findings of the impugned order during the proceedings. Upon careful consideration of the submissions and records, the Member (Judicial) observed that Cenvat credit could not be denied solely based on the copies not being original. Emphasizing the importance of verifying goods receipt and payments to suppliers, the Member highlighted that credit should not be denied if these aspects align with the records maintained by the appellant. Consequently, the matter was remanded to the Original adjudicating authority with clear directions to assess the receipt of goods and their utilization based on the records and payments. The appeal was allowed by way of remand for the limited purpose of evaluating the receipt and use of goods, focusing on the nature of documents rather than denying credit solely on the basis of document copies.