2022 (9) TMI 268 - HC - Central Excise

CENVAT Credit - valid duty paying documents or not - Transfer Memos - Endorsed Bill of Entry - case of the revenue is that the credit has been availed based upon a transfer memo which shows only a quantity of Manganese ore was diverted to the Durgapur factory of the respondent/assessee - Rule 9 of the CENVAT Credit Rules, 2004. Whether merely because part of the goods which were imported and duty paid was transferred to one of the units of the assessee pursuant to a transfer memo can be the sole reason for denying credit? HELD THAT - It is to be noted that the bill of entry is one of the approved documents in terms of Rule 9 (1)(c) of the Rules. The bill of entry being the basic document, the assessee was entitled to avail credit based upon the duty paid pursuant to the import effected which was established by producing bill of entry. The decision in the case of BSNL Limited 2017 (9) TMI 153 - ALLAHABAD HIGH COURT is clearly distinguishable on facts as in the said case no document was produced and, therefore, the Court thought fit to remand the matter for fresh consideration. There are no grounds to interfere with the order passed by the learned Tribunal. The appeal filed by the revenue is dismissed and the substantial questions are answered against the revenue.

Summary

Issues:
1. Whether Cenvat Credit availed based on "Transfer Memos" beyond Rule 9 is valid?
2. Applicability of precedent in Union of India vs. Marmagoa Steel Limited.
3. Validity of the Tribunal's order.

Analysis:
1. The main issue in this case is whether the Tribunal correctly allowed the assessee to avail CENVAT credit based on a bill of entry for imported goods, despite the use of "Transfer Memos" not listed in Rule 9 of the CENVAT Credit Rules, 2004. The revenue argued that the credit was illegal as per Rule 9, citing the case of Principal Commissioner of Customs vs. BSNL Limited. However, the respondent contended that the bill of entry, an approved document under Rule 9, supported the credit claim, and the goods were used in manufacturing as evidenced by duty payment and import proof.

2. The second issue involved determining the relevance of the decision in Union of India vs. Marmagoa Steel Limited to the current case. The respondent argued that the Supreme Court's decision in Marmagoa Steel Limited, which the Tribunal relied on, supported their position. The Court noted that the Marmagoa Steel Limited case was distinguishable from the present case, as it involved the absence of documents, leading to a remand, whereas in this case, the bill of entry was produced and duty payment was not disputed.

3. The final issue was the validity of the Tribunal's order, which the revenue challenged as perverse and bad in law. After hearing arguments from both sides, the Court found that the import of Manganese ore and its utilization in manufacturing were not disputed by the department. The Court held that the bill of entry, being an approved document under Rule 9, entitled the assessee to avail credit based on duty payment for imports. The Court distinguished the case of BSNL Limited and upheld the Tribunal's decision based on the precedent of Marmagoa Steel Limited, dismissing the revenue's appeal and answering the substantial questions against the revenue.