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TMI Blog2024 (11) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1985 and is registered with the department. 3. During the course of audit of their accounts by the internal audit wing of the jurisdictional Commissionerate, it was noticed that, in certain cases, the appellant had taken cenvat credit on the basis of the documents that were issued in the name of M/s. Xomax Sanmar Limited wherein the address of the consignee / buyer/recipient was mentioned as '89/1, Vadugapatti Village, Viralimalai' and the ECC No. (Central Excise Registration No. of the consignee/buyer/recipient was mentioned as 'AAACX0247KXM001'). The name, address and the ECC Number mentioned in such invoices belonged to another unit which is M/s. Xomox Sanmar Limited, Unit 1, Viralimalai who are also manufacturers of industrial valves, albeit under a distinct Central Excise Registration. The Department, being of the view that such credit taken is inadmissible, issued a show cause notice dated 31.07.2014 alleging that taking of the credit on the basis of such documents has been suppressed by the appellant with intent to evade payment of duty and that by taking such credit the appellant has contravened the provisions of Rule 3(1) and Rule 9(1) of the Cenvat Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Sanmar Ltd. Unit 2 (Pacific Valve Division) is engaged in the manufacture of globe valves, check valves, gate vales and spares. That the appellant has raised purchase order and materials were also received by the appellant and that the vendors inadvertently raised invoices in the name of Unit 1 of Xomox Division. iv) The appellant produced all the documents to prove that the materials were received by appellant and accounted as stock in their books and utilised for manufacture. v) The adjudicating authority vide Order in Original No. TCP / Excus / 011/2016(CEX) dated 13.01.2016 passed an order confirming the proposal to deny the cenvat credit. The Order in Original ignored the factum of receipt and utilization of the inputs and the report submitted by the Jurisdictional Assistant Commissioner. vi) The appellant has produced documentary evidence such as Goods Receipt Note and other connected records for verification. The Order in Original at Para 8 has admitted that the appellant produced copies of specimen purchase orders. At para 9 of the OIO the adjudicating authority refers to the report submitted by the Divisional Officer. vii) The adjudicating authority ought to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s allowed to take cenvat credit on inputs, capital goods and input services only if the following conditions are satisfied: a. The inputs should be received in the factory of the manufacturer of the final products, i.e. in the factory of the manufacture of excisable goods that are manufactured from inputs. b. The inputs should be used in the manufacture of final products. c. The inputs should not be goods having no relationship whatsoever with the manufacture of final products. d. The capital goods should be used in the factory of the manufacture of final products. e. The input services should be received by the manufacture of final products and such input services should be used by the manufactured in or in relation to the manufacture of the final products. f. The documents on the basis of which credit is taken should conform to the requirements of Rule 9(1) of the CCR. g. The manufacturer should maintain the records for the receipt, consumption etc. of the inputs, capital goods and input services. The burden of proof regarding the admissibility of the credit lies on the manufacturer taking credit. ii. The jurisdictional Assistant Commissioner from whom a verificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel for the appellant are distinguishable and have been rendered in different facts and circumstances. 8. We have heard both sides and perused the records. The issues that arise for determination are whether in the given facts and circumstances, the appellant is eligible to avail credit on the invoices that are addressed to unit I of the appellant, the availment of which is alleged to be in contravention of the provisions of Rule 3(1) and Rule 9(1) of the Cenvat Credit Rules 2004; given also the verification report submitted by the jurisdictional Divisional Assistant Commissioner and whether the extended period of limitation has been rightly invoked. 9. Upon delving into the records, we find that the learned adjudicating authority has called for a verification report from the jurisdictional Divisional Officer regarding receipt of goods to the factory of the appellant after getting it verified from the relevant documents, including GR documents, inward-outward registers, input stock account registers etc., and this aspect is recorded in para 9 of the impugned Order in Original as under: "Accordingly, the Divisional Assistant Commissioner submitted a report vide No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments: i. In respect of goods, screen shots of GRN titled as 'Display Material Document' taken from their computerized system to show the accounting of the receipt of the goods in the assessee unit. ii. In respect of services, screen shots taken from their computerized accounts showing the availment of service tax credit by the assessee unit. 11. We notice that the learned adjudicating authority, in his findings at para 12 of the impugned Order in Original, holds that the cardinal principal of Cenvat Credit Rules 2004 is that when there are any typographical errors in the invoices or any mistakes committed by the sellers in the preparation of the invoices, the substantive benefit should not be denied. Again, in para 15 of the Order in Original ibid, the learned adjudicating authority finds that as per the provisions of Rule 9(2) of the Cenvat Credit Rules, 2004, and as per the decision rendered on the subject issue by various Tribunals, when the substantive issue of receipt of the goods in the factory of the manufacturer and its use in the manufacture of the final product is established beyond doubt, any other procedural lapses such as mistakes in the invoices, should not l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of the goods in question in their books of accounts, however, no documentary evidence of any sort has been produced by them in proof that the subject goods/services were used by them in or in relation to the manufacture of their products and the report received does not throw light as to how it was concluded that the goods covered in the case have been actually utilised/consumed in the manufacture of dutiable excisable goods. 14. Undoubtedly, the finding of the learned adjudicating authority that when there are any typographical errors in the invoices or any mistakes committed by the sellers in the preparation of the invoices, and any other procedural lapses such as mistakes in the invoices, that ought not to result in the denial of the substantive benefit of cenvat credit, does reflect the correct understanding of the position in law as laid down by the various decisions of Tribunal and higher judicial forums. However, we are unable to concur with his rejection of the report of the jurisdictional Divisional Assistant Commissioner and consequent denial of cenvat credit availed on the invoices addressed to Unit I, for the reasons elaborated infra. 15. We opine that the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s availed as per the statement submitted during that particular period by the appellant; there is no reason to disbelieve that the said officer has not verified the receipt and utilization of the goods and services from the relevant documents including GR documents, inward-outward registers, input stock account registers etc to the extent it has been stated as verified in his report. On the contrary, we are of the view that it would be farfetched to think that the jurisdictional Divisional Assistant Commissioner, when tasked with the responsibility of submitting a verification report and after being specifically instructed as to the relevant documents and records that he was required to verify, would then submit a report categorically averring that the goods and services have been received and utilized, without having verified the records and registers as instructed. 18. We find no reason to disbelieve the appellant's contention of having produced the relevant records for verification, merely because the Divisional Assistant Commissioner who has otherwise conducted the verification of records as instructed has, instead of forwarding all the records and registers, chosen to forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent. Under these circumstances, their averment that some of the vendors who supplied the inputs have inadvertently mentioned the address of the Unit I in the invoices for supply of goods to Unit II is an entirely plausible explanation. The learned adjudicating authority has also recorded that in respect of all such inputs that inadvertently mentioned the address of Unit I, to substantiate their contention that purchase orders were only placed by Unit II, copies of specimen purchase orders were also produced by the appellant during personal hearing. The learned adjudicating authority has also no cavil on the availment of credit on invoices that had mistakes, provided it is proved that the inputs have been received in the factory and utilised. We notice that the learned adjudicating authority has further found that the appellant has filed monthly ER-1 returns mentioning the consolidated amount of cenvat credit taken on the inputs and input services during the month. The learned adjudicating authority, de hors the verification report, concedes that the appellant has produced evidences in the form of computer printouts taken from their computerized accounts which would be proof of hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of credit on the invoices that are the subject matter of the show cause notice in the aforesaid manner as now recorded by the learned adjudicating authority in the impugned Order in Original as the acceptable method of discharge of the burden of proof regarding admissibility of cenvat credit. It is a settled principle of law that the assessee is required to meet only the allegations in the show cause notice and that the department cannot go beyond the allegations raised in the show cause notice. In Commissioner of C. Ex, Bhubaneswar-I v. Champadany Industries Ltd, reported in 2009 (241) ELT 481 (SC), the Honourable Supreme Court in para 50 has held as under: "50. Apart from that, the point on Rule 3 which has been argued by the learned counsel for the Revenue was not part of its case in the show-cause notice. It is well settled that unless the foundation of the case, is made out in the show-cause notice, Revenue cannot in Court argue a case not made out in its show-cause notice. {See : Commissioner of Customs, Mumbai v. Toyo Engineering India Limited - (2006) 7 SCC 592, para 16}." 23. We therefore hold that the appellant is eligible to avail credit on the invoices that ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chemical Industries v CCE, Noida, reported in 2014 (300) ELT 451 (Tri Del), wherein it was held as under: "7.1 Though with effect from 1-10-1996, self-assessment has been introduced and the monthly ER-1 return filed by an assessee are not required to be assessed by the Range Superintendent (RO), in terms of the following instructions issued by the Central Board of Excise & Customs (CBEC) not only every ER-1 return filed by an assessee is required to be scrutinized by the RO for correctness of rate of duty applied to the goods cleared, arithmetical accuracy of duties/amounts dues and payable; Cenvat credit availment, valuation etc., this scrutiny must be completed within 3 months and the returns of the units whose annual duty payment is Rs. 1 crore to Rs. 5 crores and more than Rs. 5 crores, are also to be cross checked by the Assistant Commissioner and Additional Commissioner, respectively. (1) Circular No. 249/83/96-CX., dated 11-10-1996 (para 3); (2) Circular No. 311/27/97-CX., dated 15-4-1997 (regarding maintenance of register of scrutiny and reporting progress of scrutiny of ER-1 returns in monthly Technical Report being sent to the Board.) (3) Circular No. 818/15/2005- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that suppression means failure to disclose full information with intent to evade the payment of duty and mere omission to give certain information is not suppression of fact unless it is deliberate with intention to evade the payment of duty. The above condition for invoking extended period prescribed in these judgments is not satisfied in this case." 27. In our view, allowing the assessee to self-assess the tax is a mere facility extended to the assessee. That in no way detracts or dilutes the statutory responsibility of the jurisdictional central excise officers to ensure correctness of the assessment and duty payments made, which duty payments would include, not only the payment of duty in cash, but also the payment utilizing cenvat credit from the cenvat credit balance available as per the records maintained by the assessee. The aforesaid responsibility of the jurisdictional central excise officers to scrutinize the returns filed reflecting the information of cenvat credit taken and the failure to take up the information for scrutiny is not to be held to the detriment of the appellant by invoking of the extended period of limitation. In view of the mandatory responsibilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Revenue by verifying and scrutinizing the information being furnished in the returns by the assessee, to be diligent and inquire into the details of such cenvat credit taken and utilized within the mandated period prescribed for such scrutiny as laid down in the Department circulars and instructions in order to ensure correctness of the assessment and ensure complete remittance of the requisite duty. In the instant case, the extended period sought to be invoked is from July 2009 and even before the audit officers visited the appellant's factory, there was ample opportunity for the jurisdictional central excise officers to carry out their mandated responsibility and detect any irregularities. In the light of the ratio of the decisions stated supra, we are of the view that the learned adjudicating authority has erroneously invoked the extended period of limitation and therefore we hold that the entire demand is wholly barred by limitation. Since the few invoices that the Divisional Assistant Commissioner has recorded as not produced for verification pertains to the period beyond the normal period and in respect of which the GRNs are conceded as having been produced and considering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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