Whether credit could be taken on the strength of endorsed invoices?

PJ/Case Law/2013-14/2098

Case:- PRIYADARSHINI POLYSACKS LTD Vs CCE, PUNE-II

Citation:- 2014-TIOL-282-CESTAT-MUM

Brief facts:- The appellants were in appeal against the impugned order wherein the credit taken by them was denied on the premise that the inputs received by the appellant were under the cover of endorsed invoices. Brief facts of the case were that the appellants had two units. The invoice was in the name of their Unit No.1 but the goods were used by the Unit No. 2, therefore the first unit endorsed the invoices of their Unit No.2. The Revenue denied the credit on the premise that the appellants could not take credit on the endorsed invoices as per Rule 7 of the CENVAT Credit Rules, 2004.

Appellant’s contentions:- The learned Counsel for the appellants submitted that on a similar issue, in the case of CCE v. Coimbatore Murugan Mills - 2003 (160) ELT 825 (Tri Chennai), the Tribunal held that if there was transfer of goods between the same appellant in different units, credit could be taken on the basis of endorsed invoices. He also relied on the decisions in the case of Flex Industries Ltd.- 2004 (178) ELT 1029 (Tri-Del.) and Arunodaya Construction Company P. Ltd.- 2001 (137) ELT 426 (Tri- Kolkata).

Respondent’s contentions:- On the other hand, the learned A.R. strongly opposed the contentions of the learned Counsel and submitted that endorsed invoices were not correct documents to avail CENVAT Credit. In this regard he relied on the decision in the case of Paper Products Ltd. vs. CCE Mumbai III – 2003 (159) ELT 823 (Tri-Mum).

Reasoning of judgment:- The Hon’ble judge held that the case law relied upon by the learned A.R. was not relevant to the facts of this case. In that case, the credit was taken on the basis of invoices endorsed by a whole sale dealer whereas in this case the facts were totally different as invoice had been issued on unit No.1 which was a sister unit and the goods had been transferred to Unit No. 2 therefore the first unit endorsed the invoices of their Unit No. 2. In the case of Coimbatore Murugan Mills (supra) the Tribunal held that if there was transfer of goods between the same appellant in different units, credit could be taken on the basis of endorsed invoices. In this term, it was held that the appellants were entitled to take credit.
In view of the above cited submissions, the impugned order was set aside and the appeal was allowed with consequential relief, if any.

Decision:- Appeal allowed.

Comment:- The analogy drawn from the case is that if inputs are transferred from one unit to the other unit owned by same assessee, in that case, Cenvat credit on the inputs could be availed on the basis of invoices endorsed by one unit to other unit.

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PJ/Case Law/2013-14/2098

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