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PJ/Case Laws/2012-13/1266

Credit cannot be denied on account of procedural lapses like non endorsement of bill of entry.

CASE:BHARAT HEAVY ELECTRICALS LTD. V/S COMMISSIONER OF CENTRAL EXCISE, BHOPAL

 
CITATION: 2011 (274) E.L.T. 359 (Tri. - Del.)
  
BRIEF FACTS: The appellant imported a consignment and bill of entry was filed in the name of its International Operation Division and the imported goods have been received in the appellant’s factory at Bhopal and credit of Rs. 6,28,351/- has been taken. The department has denied the credit on the ground that the International Operation Division of the appellant has not endorsed the bill of entry in the name of appellant’s factory which is in violation of the procedure prescribed by the Board vide Circular No. 179/13/96-CX., dated 29-2-1996.
 
The second issue relates to denial of credit in respect of inputs procured by the appellant from Hindustan Copper Limited which were not received in the factory of the appellant but directly sent to the job worker and the intermediate products manufactured by the job worker was received by the appellant from the job worker who cleared the said goods after availing the benefit of Notification No. 214/86, dated 25-3-1986. The department has denied the credit on the ground that the materials procured from Hindustan Copper Limited have not been received in the factory and has not been sent from the premises of the appellant under challans to the job worker and this is in violation of the procedure prescribed under Circular No. 33/33/94- CX.8, dated 4-5-94.
 
APPELLANT’S CONTENTION:The appellant submits that the material required for export production are centrally procured by the International Operation Division and the material has been directly received in the factory from the port of import as evidenced by store receipt voucher, and non-endorsement by the International Operation Division is a technical violation which cannot take away substantial benefit of credit specially when there is no dispute about the materials having been received by the appellant and used for the intended purpose.
 
Regarding the material procured from Hindustan Copper Limited, he submits that to avoid unnecessary transportation and freight, the material procured were sent directly to the job worker’s premises and the intermediate product was received in their factory premises and the job worker has availed the benefit of Notification No. 214/86. Moreover, the appellant has also given undertaking to the jurisdictional Central Excise authorities in charge of job worker for availing the benefit of Notification No. 214/86 and accordingly the department has allowed duty free movement of the goods manufactured by the job worker to the appellant’s premises. Therefore, in this case also the inputs, though not physically received by the appellant’s factory as inputs, the intermediate products manufactured using the said inputs have been received from the job worker’s premises.
 
RESPONDENT’S CONTENTION:The respondent submits that in both cases the appellant have failed to follow the procedure prescribed and, therefore, they are not entitled to the benefit of the cenvat credit. He also submits that no evidence of receipt of the impugned imported goods have been produced by the appellant. In respect of the inputs procured from Hindustan Copper Limited, it has not been received as such in the factory and it has been received only as intermediate product manufactured by the job worker.
 
REASONING OF JUDGEMENT:Since, the appellant has produced the Stores Receipt Voucher (SRV) as evidence for receiving the material in the factory which has been duly noted by the Commissioner, it does not make the Bill of Entry being not in the name of the appellant.  It is pertinent to note that the appellant’s factory in Bhopal comes directly under the jurisdiction of Commissioner, Bhopal and, therefore, the finding that in the absence of endorsement in the bill of entry by the International Operations Division, it was not possible to ascertain as to whether the goods covered by the said bill of entry were received and used in the assessee factory, cannot be appreciated.
 
Regarding the second issue , the explanation that the appellant have taken constructive delivery of the inputs and instead of receiving it in their factory and then again sending to the job worker has directly sent it to the job worker deserves to be accepted. The fact that the job worker has processed the material and sent the intermediate goods manufactured using the inputs following Notification No. 214/86 has not been rebuted. In the given facts and circumstances of the case, the transport of material directly to the job worker’s premises to avoid payment of extra freight and time, cannot lead to denial of credit.
 In view of the above, it is found that the appellants have, in the facts and circumstances of the case complied substantially with the conditions for availing the cenvat credit and minor aberrations in not following the procedure prescribed by the Board cannot stand in the way of availing the credit by the appellant.
 
DECISION:The appeal is disposed off.
 
Comment: It is well established fact that Cenvat Credit cannot be denied merely on account of technical breaches and procedural non compliance as far as the inputs for which Cenvat Credit is availed are proved to be used in or in relation to the manufacture of final product and evidence is given regarding its proper receipt in the factory of the manufacturer.
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