2018 (5) TMI 1186 - AT - Central Excise

CENVAT credit - The allegation of the Department is that the raw material for manufacture of cigarette has not been purchased in the books of accounts - Held that - the original purchase was duty paid in a different unit and used for final product in another unit. When it is so then the respondent is entitled to avail the cenvat credit. When it is so there are no reason to interfere with the impugned order - appeal dismissed - decided against Revenue.

Summary

Issues involved:
- Appeal filed by Revenue against Order-in-Original denying cenvat credit for raw materials.
- Interpretation of Cenvat Credit Rules regarding purchase vs. procurement of goods.
- Transfer of raw materials between units and its impact on cenvat credit eligibility.

Analysis:
The appeal before the Appellate Tribunal CESTAT Kolkata was filed by the Revenue challenging the Order-in-Original passed by the Commissioner of Central Excise, Kolkata VI, which allowed cenvat credit for raw materials used in the manufacture of cigarettes. The period under dispute in this case was from April 2000 to February 2003. The Department alleged that the raw materials, including cigarette paper and cut-tobacco, were not purchased as per the books of accounts, leading to the denial of cenvat credit. However, the Commissioner allowed the credit, prompting the Revenue to file the appeal.

Upon hearing both sides and examining the records, the Tribunal noted that the raw material in question was transferred from one unit to another, eliminating the need to show it as a purchase. The Tribunal referred to Notification No. 13/2003-CE (NT) and highlighted that the substitution of "purchased" with "procured" did not impact the availability of cenvat credit under Rule 4 of the Cenvat Credit Rules, 2002. The Rules focus on the receipt of goods in the factory for manufacturing final products, regardless of whether the goods were purchased or procured. The Commissioner's order acknowledged this distinction and emphasized that the amendment only affected the nature of information to be maintained, not the entitlement to credit.

The Tribunal concluded that since the original purchase of raw materials was duty paid in a different unit and used in the final product in another unit, the respondent was entitled to avail the cenvat credit. Therefore, the Tribunal upheld the Commissioner's order, finding no grounds to interfere with it. Consequently, the appeal filed by the Revenue was dismissed, affirming the decision in favor of the respondent.