Whether credit of capital goods deniable on grounds that supplier did not have capacity to manufacture the said goods?

PJ/Case Law/2013-14/1696

Case: - M/s ANKIT METAL & POWER LTD V/s COMMISSIONER OF CENTRAL EXCISE, BOLPUR

Citation: - 2013-TIOL-1339-CESTAT-KOL

Brief Facts: - Applicant had purchased machineries from M/s. Saha Industries and installed in their factory. The Applicant had availed CENVAT Credit on the basis of the invoices issued by M/s. Saha Industries treating the same as capital goods defined under Rule 2(a) of the CENVAT Credit Rules, 2004, Enquiry had been initiated against M/s. Saha Industries alleging non-manufacture and non-supply of the goods by M/s. Saha Industries, as they did not have the capacity to manufacture the goods supplied to the Applicant.

Appellant contention: -The Ld. Authorised Representative has submitted that the goods manufactured by M/s. Saha Industries had been supplied to many other assessees who availed CENVAT Credit on the said goods being received and installed in their factory. On identical facts and circumstances, this Tribunal in Sapphire Paper Mills (P) Ltd. vs. CCE & ST, Sitiguri, vide Order No.S-895/KOL/2012 dated 06.08.2012,had granted unconditional stay. The ld. Consultant submitted that the facts involved in the present case are identical to the facts involved in the above-mentioned case, inasmuch as, the assessee in that case also had received the capital goods from M/s.Ashok Stampings Pvt. Ltd. against whom proceedings were initiated like the present case. In this case also, the applicant have availed the CENVAT Credit on supplied goods and payments were made through 'A/C Payee' Cheques. It was not alleged in the present case, by the Department that the goods were neither installed in their factory nor used in the manufacture of finished excisable goods.

Respondent contention: - Ld. Authorised Representative for the Revenue has reiterated the findings of the ld. Commissioner (Appeals).

Reasoning of Judgment:- Heard both sides and perused the records. We find that the issue involved in the present case relates to availment of CENVAT Credit by the Applicant on the machineries supplied by M/s. Saha Industries. Undisputedly, the said machineries were received by the Applicant and installed in their factory and the entire sale proceeds were paid by the Applicant to M/s. Saha Industries through 'A/C Pay Cheques'. We find that in similar situation in Sapphire Paper Mills (P) Ltd.case (supra), this Tribunal had allowed the stay petition. In these circumstances, we find that the applicant has been able to make out a prima facie case for total waiver of predeposit of all dues adjudged. Accordingly, all dues adjudged are waived and its recovery stayed during pendency of the Appeals.

Decision: - Stay Petitions are allowed.

Comment:- The crux of this case is that cenvat credit cannot be denied at the buyer’s end if the proceedings regarding non-manufacture of the said goods have been initiated against the supplier of the goods when the receipt and installation of the capital goods and the payment thereon by the buyer is not disputed.

Comments

abhimanyu on 17 September, 2013 wrote:

Good decision,buyer is not responsible for good manufacturer, suppliers is providing Excise invoice to take cenvat benefit. Department can inquire the manufacturer. Thanking you for presenting good cases regarding excise . Thanks.

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PJ/Case Law/2013-14/1696

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