2019 (2) TMI 758 - AT - Central Excise

CENVAT Credit - deemed manufacturer - deemed credit availed on the invoices issued by M/s. Shree Laxmi Textiles, M/s. S.P. Cotton Mills and M/s. Hindustan Cotton Mills - period August 2004 to September 2004 - deletion of Rule 12B of the Central Excise Rules, 2002 - Held that - CBE &C Circular No. 345/2/2004- TRU dated 28-7-2004 have categorically clarified that the trader can discharge the duty liability on the goods, which were received by him prior to 9-7-2004. It is not clear in this case whether such goods, duty was paid on the goods invoiced to appellant, on which credit was availed were in fact received by the trader prior to 9-7-2004. If the trader issues an invoice of 18-8-2004, it has to be presumed that the Excise registration certificate issued to him was valid. If that be so, the issue needs to be considered from this angle also. Matter needs re-examination - appeal allowed by way of remand.

Summary

Issues:
Appeal against order-in-appeal, Admissibility of Cenvat credit, Deletion of Rule 12B of Central Excise Rules, Recovery of credit with interest and penalty, Interpretation of Board circular, Precedent set by Tribunal.

Admissibility of Cenvat Credit:
The appellant availed deemed credit on invoices issued by specific suppliers during August-September 2004. The issue arose when the supplier's status as a deemed manufacturer changed due to the deletion of Rule 12B of the Central Excise Rules, 2002. A demand notice was issued for recovery of the credit with interest and penalty. The Commissioner (Appeals) confirmed the demand, leading to the appellant's appeal. The Tribunal considered a similar case and a relevant Board circular. The circular clarified that even after the rule's deletion, the trader could clear goods under an invoice after paying duty. However, it was crucial to determine if the goods for which credit was availed were received by the trader before the rule's deletion. Since this point was not addressed, the Tribunal set aside the lower authorities' orders and remanded the matter for reconsideration, emphasizing the principles of natural justice. The appeal was allowed based on this reasoning.

Interpretation of Board Circular:
The Tribunal analyzed a Board circular stating that traders could clear goods under an invoice post-rule deletion by paying duty if the goods were received before the rule change. The Tribunal emphasized the need to establish whether the goods for which credit was availed were received by the trader before the rule's deletion. The absence of findings on this crucial point led to the decision to set aside the lower authorities' orders and remand the matter for a fresh consideration, ensuring adherence to natural justice principles. The appeal was allowed based on the Tribunal's interpretation of the circular and the need for further investigation into the goods' receipt timeline.

Precedent Set by Tribunal:
The Tribunal cited a previous case involving a similar issue to support the appellant's claim. The precedent highlighted the importance of verifying if the goods for which credit was availed were received by the trader before the rule's deletion. The Tribunal's decision in the previous case, based on the principles outlined in a Board circular, guided the current judgment. By following the precedent and emphasizing the need for a thorough examination of the goods' receipt timeline, the Tribunal set aside the impugned order and allowed the appeal with any consequential relief as per the law, ensuring consistency in decision-making and application of legal principles.