2018 (12) TMI 363 - AT - Central Excise

CENVAT Credit - duty paying documents - denial of cenvat credit on the allegation that all the duty paying documents were under the name of M/s Johnson Matthey Chemicals Pvt. Ltd. and not in the appellant s name - Held that - The issue decided in appellant own case M/S AKZO NOBEL INDIA LTD. (FORMERLY, ICI INDIA LTD.) VERSUS C.C.E., - KANPUR 2016 (10) TMI 1156 - CESTAT ALLAHABAD , where it was held that The existence of commercial arrangement between the appellant and JMCIPL is only to carry out the commercial activities for the purpose of business of the company in the light of the need for financing control, sales, marketing and allied activities to run the business and in no way, does it disentitle the manufacturer of excisable goods i.e. ICI India Limited (presently Akzo Nobel Ltd.) to Cenvat Credit of the duty paid on inputs and capital goods. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of cenvat credit based on invoices under a different name; Proper eligibility of cenvatable documents; Commercial arrangement impact on cenvat credit entitlement; Judicial review of denial of cenvat credit.

Analysis:

The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved a dispute regarding the denial of cenvat credit to an appellant engaged in manufacturing catalyst and refractory insulators. The appellant availed cenvat credit of duty paid on inputs and capital goods. The issue arose when audit reports alleged that duty paying documents were under a different entity's name, M/s Johnson Matthey Chemicals Pvt. Ltd., not in the appellant's name, leading to a proposal to deny cenvat credit. The appellant clarified that M/s Johnson Matthey Chemicals Pvt. Ltd. managed their business under an agreement, sharing the same address, and received goods for manufacturing the final product, justifying their entitlement to cenvat credit.

The proceedings resulted in an Order-in-Original denying cenvat credit, confirmed by the Commissioner, but challenged by the appellants before the Tribunal. The Tribunal's Final Order resolved the dispute in favor of the assessee, emphasizing that the denial of cenvat credit was unsustainable both factually and legally. The Tribunal highlighted that the appellant received duty paid inputs and utilized them for manufacturing excisable goods, with proper accountal of the goods. The judgment criticized the denial of credit on technical grounds and emphasized that unsubstantiated allegations should not disentitle the manufacturer from cenvat credit. The Tribunal also noted the importance of fair hearing and proper verification before confirming demands arbitrarily.

In the subsequent proceedings, the appellants were again denied cenvat credit and faced penalties. However, considering the earlier Tribunal's order and the consistent facts, the Appellate Tribunal set aside the impugned order, allowing both appeals and providing consequential relief to the appellants. The judgment reiterated the importance of proper verification, fair hearings, and not denying credit based solely on technicalities or assumptions, aligning with established legal principles and precedents.

Overall, the judgment highlighted the significance of factual verification, fair treatment, and adherence to legal principles in matters concerning cenvat credit entitlement, emphasizing the need for a thorough review before denying such credits to manufacturers.