Whether credit is deniable on grounds of delay in receipt of goods in factory?

PJ/CASE LAW/2015-16/2824

Case:-FERROCARE MACHINES PVT. LTD. VERSUSCOMMISSIONER OF C. EX., PUNE-III

Citation:- 2015 (322) E.L.T. 513 (Tri. - Mumbai)

Brief Facts:-The brief facts of the case are that the appellant cleared the impugned goods on 2-3-1998 by paying duty but as they found that these goods are not to be cleared to Shipping Corporation, Karwar, they immediately informed to their customer and to the Range Superintendent and took credit of duty paid on these goods by cancelling the invoice on 3-3-1998. On 6-3-1998, they actually received the goods also. But on 3-3-1998 as the goods were not in their factory and they have taken the credit, therefore a show cause notice was issued for denial of the credit. Accordingly, impugned proceedings were issued, demands were confirmed against the appellant. Aggrieved from the said order, appellant is before the tribunal.

Appellants Contention:-Counsel for the appellant submits that although on 3-3-1998 they have taken credit, they informed the Range Superintendent and the goods have been received by them on 6-3-1998 due to transportation problem. It is the contention that there was only a procedural lapse at the end of the appellant and they have actually received the goods in their factory which were cleared by them on payment of duty on 2-3-1998. Therefore, credit cannot be denied to them. He further submitted that as the fact of availment of credit was in the knowledge of the department, therefore, extended period of limitation is also not invocable as in this case, show cause notice issued came to be issued on 25-9-2002.

Respondents Contention:-On the other hand, the ld. AR reiterated the finding of the impugned order.

Reasoning of Judgement:-Heard both sides. Considered the submissions. It is admitted fact that the goods have been returned back to the appellant although after a gap of 3 days and same has been cleared on payment of duty. Therefore, the only lapse on the appellant is that they have not followed the proper procedure. For not following the proper procedure, credit cannot be denied. Accordingly, tribunal hold that the appellant are entitled to credit as said goods have been cleared on payment of duty. Therefore, impugned order for denial of CENVAT credit is set aside to the extent only. Appeal is allowed with consequential relief, if any.

Decision:- Appeal allowed.

Comment:- The gist of the case is that as the goods have been returned back to the appellant and the same has been cleared on payment of duty, there was no default in availment of credit. Hence, as there was only a procedural lapse in receiving the goods in the factory, the cenvat credit cannot be denied according to Rule 16 of Central Excise Rules, 2002.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2824

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