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2018 (5) TMI 382 - AT - Central ExciseCENVAT credit - inputs - HR Sheets - Whether in the facts and circumstances of the case, the Cenvat credit can be denied to the appellant for contravention of Rule 57AB of the Cenvat Central Excise Rules, 1944 and Rule 3 of Credit Rules, 2002/2004 or not? - Difference of opinion - majority order. Held that - there was no investigation to have been conducted in respect of procuring of inputs for manufacture of final product on which duty was collected by Revenue - also, there was no investigation from the transporter and also in respect of payment made to the supplier. It is settled in the law that for taking Cenvat credit on the inputs, the inputs should be received in the factory and they should be duty paid and used in the final product. The allegation in the SCN that the inputs on which Cenvat credit was availed was not received in the factory is not sustainable - credit allowed. In view of the majority decision, the appeals are allowed.
Issues Involved:
1. Denial of Cenvat credit on inputs (HR Sheets) due to discrepancy in the description of goods in invoices. 2. Investigation and evidence regarding the actual receipt and use of inputs in manufacturing. 3. Applicability of Rule 7(1)(a) of the Cenvat Credit Rules, 2004. 4. Validity of the invoices and the role of suppliers in the alleged discrepancy. 5. Burden of proof under Rule 9(5) of the Cenvat Credit Rules, 2004. Detailed Analysis: 1. Denial of Cenvat Credit on Inputs: The appellants were denied Cenvat credit on HR Sheets because the invoices described the goods as CRC Sheets. The Revenue's position was that this discrepancy indicated that the appellants had only procured invoices without receiving the actual goods, thereby contravening Rule 7(1)(a) of the Cenvat Credit Rules, 2004. 2. Investigation and Evidence: The appellants contended that they did receive HR Sheets, which were used in manufacturing, and that the description in the invoices was incorrect. They argued that the term "CRC Sheets-HROP" (Hot Rolled Oil Pickled) was used, which should be considered as HR Sheets. The Tribunal noted that the Revenue did not investigate whether the suppliers issued only invoices without supplying goods, nor did they investigate the transporters to confirm the delivery of goods to the appellant's factory. 3. Applicability of Rule 7(1)(a) of the Cenvat Credit Rules, 2004: The Tribunal referenced the case of Omex Autos Ltd. vs. CCE, where a similar issue was adjudicated. It was established that if the goods were physically received and used in manufacturing, the description discrepancy in the invoices alone could not justify the denial of Cenvat credit. The Tribunal concluded that the appellants were entitled to Cenvat credit as they had received and used the HR Sheets in their manufacturing process. 4. Validity of the Invoices and Role of Suppliers: The Revenue's investigation revealed that the suppliers, M/s Hero Cycles Ltd. and M/s J.D. Sons Steel Pvt. Ltd., stated that they supplied CRC Sheets as per the invoices. The appellants, however, maintained that they received HR Sheets and used them in manufacturing. The Tribunal found discrepancies in the suppliers' statements and the actual use of HR Sheets by the appellants, leading to the conclusion that the appellants had correctly taken Cenvat credit. 5. Burden of Proof under Rule 9(5) of the Cenvat Credit Rules, 2004: The Tribunal held that the appellants had sufficiently demonstrated the receipt and use of HR Sheets in their manufacturing process. The lack of investigation by the Revenue into the actual procurement and use of inputs, as well as the payment to suppliers, weakened the Revenue's case. The Tribunal concluded that the appellants had met the burden of proof required under Rule 9(5). Separate Judgments: Majority Decision: The majority decision, including the opinion of the third member, Anil G. Shakkarwar, concluded that the appellants were entitled to Cenvat credit. The lack of thorough investigation by the Revenue and the evidence provided by the appellants regarding the receipt and use of HR Sheets led to the decision to allow the appeals. Dissenting Opinion: The dissenting opinion by Member (Technical) Devender Singh upheld the denial of Cenvat credit, emphasizing the discrepancies in the purchase orders and the suppliers' statements. He argued that the appellants failed to lodge any protest regarding the incorrect description in the invoices and concluded that the appellants had not received the inputs as claimed. Final Order: In view of the majority decision, the appeals were allowed, and the appellants were granted Cenvat credit with consequential relief.
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