Admissibility of cenvat credit when address mentioned on the invoice is that of another unit.

PJ/Case Law/2012-13/2040

Case:- M/S MARS ASSOCIATES PVT LTD V/S THE COMMISSIONER OF CENTRAL EXCISE, DELHI-II

Citation:- 2013-TIOL-1717-CESTAT-DEL

Brief Facts: - The appellant company having its office in New Delhi, has two manufacturing units. The appellant in this case has his one factory at Plot No. 23, Sector-3, IMT Manesar, Gurgaon and the second factory is at Khasra No. 23, Naharpur Village, Gurgaon. The allegation against the appellant unit is that during Dec. '08 to Aug.'09, they took Cenvat Credit of Rs. 6,74,582/- on the basis of certain invoices for capital goods, consumables and a small quantity of inputs and in these invoices, the consignee; address mentioned was the address of the second unit at Naharpur Village, Gurgaon instead of Manesar, Gurgaon. On this basis after issue of Show Cause Notice, the Jurisdictional Joint Commissioner vide order-in-original dt. 18.07.2011 confirmed the demand for the above-mentioned Cenvat Credit along with interest and imposed penalty of equal amount. This order had been passed after verification got done by joint Commissioner under panchnama for ascertaining as to whether the machinery covered under the invoices is actually installed in the Manesar Factory of the appellant. The Central Excise Officers during verification found that out of seven machines purchased only two were installed in the Manesar Factory and remaining five machines had been sent to the Naharpur plant of the appellant under the returnable challans. This order of the Joint Commissioner was upheld by Commissioner (Appeals) vide order-in-appeal dt. 05.03.2013. Aggrieving by the said order, the assessee filed the present appeal.

Appellant’s contention:- The appellants contended that though the invoices on the basis of which the Cenvat Credit had been taken have the address of the other unit at Naharpur Village, the goods covered under these invoices have been received by their unit at Manesar. Further, certain machinery had been transferred to other unit, but the remaining machinery had been found installed, that the machinery which had been transferred to Naharpur Unit was on return basis. The dies and inputs had been received in Manesar Unit and for the same reason they are not mentioned in the verification panchnama, that after issue of Show Cause Notice the goods covered under the invoices and which had been sent to Naharpur under returnable challans had been received back in their unit. In view of this, the impugned order denying the Cenvat Credit is not sustainable. They have a strong prima facie case in their favour and hence the requirement of pre-deposit of Cenvat Credit demand, interest thereon and penalty may be waived for hearing of the appeal and recovery thereof may be stayed till the disposal of the appeal.

Respondent’s contention:- The Respondent opposed the stay application by reiterating the findings of the Commissioner (Appeals) and emphasized that even on verification done on the instructions of the Adjudicating Authority, five out of seven machines covered under the invoices were found at the Appellant's Naharpur Unit. They pleaded that there is no evidence as to whether the dies and inputs covered under the invoices were used in the Manesar Unit. Further, there is no evidence to show that the machinery which was found in Naharpur Unit was returned back to Manesar Unit. In view of this, there is no infirmity in the impugned order and hence this is not a case for waiver.

Reasoning of Judgment:- The Hon’ble Tribunal held that the allegation against the appellant unit located at Manesar, Gurgaon is that they have availed Cenvat Credit of Rs. 674582/-, on the basis of invoices which mentioned the consignee's address as the address of the Naharpur Unit. They find that admittedly out of seven machines covered by the invoices, five machines were found installed in Naharpur Unit and there is no evidence produced that the same have been returned back to Manesar Unit which had taken the Cenvat Credit. There is no verification done to ascertain that the Naharpur Unit has not taken Cenvat Credit on the basis of the same invoices. In view of this, this is not the case of total waiver. The appellant are directed to deposit an amount of Rs. 100000/- within the period of four weeks. On deposit on this amount within the stipulated period the requirement of pre-deposit of balance amount of Cenvat Credit demand, interest thereon and penalty shall be stand waived for hearing of the appeal and recovery thereof stayed.

Decision:- Part Pre deposit ordered.

Comment:- The substance of this case is that when the credit is taken on the strength of invoice in which there is some discrepancy, even if it is regarding the wrong mention of the address of the unit, the burden to prove that credit is rightly taken lies on the assessee and the assessee is required to prove the admissibility of the credit taken by them substantiated by proper evidences. The assessee is also required to substantiate the fact that the credit has not been wrongly taken twice on account of wrong mention of address of their other unit on the invoice. In the present case, as the assessee was unable to prove the eligibility of credit, the pre-deposit was ordered.

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PJ/Case Law/2012-13/2040

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