Cenvat Credit - Bill of Entry bearing Address of Head office instead of factory

PJ/Case Study/2012-13/05

CASE STUDY

Prepared By:
CA Pradeep Jain
Sukhvinder Kaur LLB [FYIC]

Introduction:-

In the case under study, the cenvat credit of duty paid on inputs imported under Bill of entry was sought to be denied on the ground that the address mentioned in the Bill of entry was not the factory address. In fact the address mentioned in the Bill of Entry was that of the head office of the assessee.

In the case of M/s Angel Pipes and Tubes (P) Ltd
[Order-in-Original No. 7/2012/C. Ex/JPR-II Dated: 11.4.2012]

Brief Facts:-

- Noticee are engaged in the manufacture of SS Pipes & Tubes falling under sub-heading no. 73069000 of the First Schedule to the Central Excise Tariff Act, 1985.

- Department alleged that the bill of entries, on the strength of which credit was taken, were issued in the name of M/s Angel Pipes & Tubes Pvt Ltd, 110/112, DR M. G. Mahimtura Marg, 3^rd Kumbharwada Lane, Mumbai (Maharashtra) bearing Central Excise Dealer Registration no. AAFCA9203PXD001. It is alleged that these bill of entries do not fall under the category of proper documents for taking and utilizing cenvat credit as these do not contain the factory address of the assessee.

- Show cause notice was issued to the Noticee alleging that we have wrongly taken and utilized the cenvat credit amounting to Rs. 85, 06, 482/- during the period from Dec, 2007 to June, 2009 on the strength of Bill of Entry which were issued in the name of M/s Angel Pipes & Tubes Pvt Ltd, Mumbai who is registered dealer instead of in the address of our factory at Sanchore in contravention of the provisions of Rule 3 and 9 of Cenvat Credit Rules, 2004 read with Rule 11 of Central Excise Rules, 2002.

Noticee’s Contention:-

- Noticee submitted that the credit is not deniable in such cases as it is set rule by the Tribunals that the credit is allowed to the assessee where the bill is raised in the name of head office whereas goods are used at factory. This decision is given in the following cases:-

·                      INGERSOLL RAND (I) LTD. Versus COMMISSIONER OF C. EX., AHMEDABAD [2006 (205) E.L.T. 937 (Tri. - Mumbai)]:-

Cenvat/Modvat - Duty paying document - Bill of entry in the name of head office - Credit denied on the grounds of impugned document not in the name of appellant and non-receipt of entire quantity covered there under by appellant - Original order upheld on the ground of non-receipt of entire quantity by appellant - Contended by appellant that no allegation of non-receipt of entire quantity in show cause notice - No dispute about duty paid character of inputs and receipt of the same in appellant factory - Credit not deniable - Appeal allowed - Rule 9 of Cenvat Credit Rules, 2004. [paras 1, 2, 3, 4]

·                      SIPANI AUTOMOBILES Versus COMMISSIONER OF C. EX., BANGALORE [2002 (150) E.L.T. 845 (Tri. - Bang.)]

Modvat/Cenvat - Bill of Entry addressed to company and goods consigned to factory, not a ground for denial of Modvat credit - Rule 57G of erstwhile Central Excise Rules, 1944. - The manufacturing activities were carried on in the factory premises leading to clearance of finished automobiles namely passenger cars on payment of duty. All the import transactions were carried out by the office of the company. So the Bill of Entryhappened to be in the name and address of the company’s head office while the manufacturing process was carried out in the factory. The factory is owned and controlled by the company. Their factory at Yeshwantpur was closed because they stopped manufacture of Montana Cars in 1993 itself. For manufacture of Rover cars, they were having new factory at the industrial area in Hosur Road. The old Central Excise licence obtained from the authorities was transferred to the new location, inputs which they imported were only for their sole existing factory at Hosur Road. So the ground that the documents namely Bill of Entrywere addressed to the company and the goods were consigned to the factory cannot be a reason for denial of Modvat credit. [1994 (72) E.L.T.948 (Tribunal) relied on]. [paras 5, 7, 8]

·                      EVEREADY INDUSTRIES INDIA LTD. Versus COMMISSIONER OF C. EX., LUCKNOW [2007 (219) E.L.T. 333 (Tri. - Del.)]

Cenvat/Modvat - Duty paying document - Bill of Entry addressed to head office of company and credit availed at factory, not a ground for denial of Modvat credit - Rule 57G of erstwhile Central Excise Rules, 1944 - Rule 9 of Cenvat Credit Rules, 2004. [2002 (148)E.L.T.325 (Tribunal) and 2002 (150) E.L.T.845 (Tribunal) relied on]. [para 5]

·                      A.S.W.M. SPINNING MILLS Versus COMMISSIONER OF C. EX., CHANDIGARH [2002 (148) E.L.T. 325 (Tri. - Del.)]

Modvat/Cenvat - Modvat on inputs - Modvatable document - Bill of Entry - Denial of Modvat credit on the ground that the address given on the modvatable document, i.e., Bill of Entry is Ram Tirath Road, Amritsar whereas the benefit of credit is availed by the unit at Batala Road, Amritsar not sustainable when it has been proved that the two units are sister concerns, a fact averred by department in a number of proceedings and appellants receiving the entire consignment covered under impugned Bill of Entry - Board’s Circular Nos. 170/13/96-CX. 8, dated 29-2-1996 and 211/45/96-CX., dated 14-5-1996 - Erstwhile Rule 57A of Central Excise Rules, 1944. [para 3]

·                      COMMR. OF CUS. & C. EX., AURANGABAD Versus PERFECT CIRCLE VICTOR LTD. [2002 (149) E.L.T. 678 (Tri. - Mumbai)]

Modvat/Cenvat - Modvat on inputs - Grinding wheel - Bill of entry - Eligibility to Modvat credit as input already decided by earlier decisions of the Tribunal - Board in its Circular No. 211/45/96-CX., dated 14-5-1996 directs where bill of entry shows registered office as recipient but goods are used in factory, Modvat credit should not be disallowed - Revenue appeal dismissed - Rule 57A of erstwhile Central Excise Rules, 1944. [paras 2, 3, 4]

·                      LARSEN & TOUBRE LIMITED Versus COLLECTOR OF C. EXCISE, BHUBANESWAR [1994 (72) E.L.T. 948(Tribunal)]

Modvat credit - Duty paying documents showing address of other unit of same manufacturers - Multi-unit company - Purchase orders for inputs placed on foreign/indigenous suppliers either directly by user factory or through port office of the Company - Inputs received and consumed in user factory - Credit not disallowable just because bill of entry or gate pass showed company’s name as “M/s. L & T Ltd., Calcutta” and not “M/s. L & T Ltd., Kansbahal” - Being office/factory of same Company, no need for Calcutta office to endorse documents in favour of user factory - Similarly, no need for endorsement when order placed on indigenous supplier through supplier’s regional depot or agent and such depot/agent’s name added in the document before user factory/company’s name - Rule 57G(2) of Central Excise Rules, 1944. [paras 23 to 28, 33]

·                      DEPUTY GENERAL MANAGER (TAXATION), BHEL Versus COMMR. OF C. EX., DELHI-III [2007 (211) E.L.T. 135 (Tri. - Del.)]

Cenvat/Modvat - Duty paying document - Rule 57G(3) of erstwhile Central Excise Rules, 1944 does not require that Bill of entry should be in name of manufacturer who receives goods. - Name of BHEL shown as importer and its Bombay address is given. Giving of address will not invalidate document so as to disentitle appellant-manufacturer (BHEL) to take Modvat credit when goods were received at factory of BHEL at Bhopal under cover of triplicate copies of Bills of entry. There was no need for Department to superimpose a requirement of names of units of importer who was manufacturer (BHEL) being shown in bills of entry. [para 8.2]
Cenvat/Modvat - Duty paying document - Document issued in name of importer showing its address whereas credit availed by manufacturing unit - Modvat credit could not have been denied due to non-mention of assessee’s unit in bills of entry, genuineness of triplicate copies of which had never been disputed, nor has the fact about goods having been received under cover of such documents ever been disputed - Requirement of claiming credit under document falling in Rule 57G(3)(c) of erstwhile Central Excise Rules, 1944 duly satisfied. [para 8.3]

·                      GYAN PACKAGING INDUSTRIES PVT. LTD. Versus COMMR. OF C. EX., LUCKNOW [2007 (220) E.L.T. 777 (Tri. - Del.)]

Cenvat/Modvat - Inputs - Duty paying documents - Validity of - Credit denied on the ground that Bill of Entry of relevant inputs not contained name of registered office but only branch office name - Impugned document being a duplicate copy of bill of entry generated on customs EDI system, satisfied requirement of Rule 57G(3)K of erstwhile Central Excise Rules, 1944 as a valid duty paying document - Credit not deniable - Rules 57G and 57-I ibid - Rule 9 of Cenvat Credit Rules, 2004. [para 6]

·                      TATA IRON & STEEL CO. LTD. Versus COMMR. OF C. EX., JAMSHEDPUR [2008 (228) E.L.T. 124 (Tri. - Kolkata)]

Cenvat/Modvat - Documents for availing credit - Bill of entry in the name of Head Office/Registered Office and credit availed by factory - Lower appellate authority recorded that TISCO and TGS got separate registration and hence, TISCO cannot be considered to be Head Office for TGS - However, fact that TGS not separate legal entity but only a division of TISCO - Endorsement made by TISCO to be taken as valid endorsement under paragraph 3 of C.B.E. & C.Circular No. 179/13/96-CX., dated 29-2-1996 - Impugned order denying credit set aside - Matter remanded to lower authority and appellants directed to produce the endorsement in original - Rule 9 of Cenvat Credit Rules, 2004. [para 3]

Thus, in the afore-cited decisions it is held that credit is not deniable in the cases where the invoice/bill of entry is issued in the address of head office and the credit is taken by the factory of the assessee. Since the facts and circumstances of these decisions are squarely applicable in the case of assessee, the benefit of these decisions should be extended to them and the impugned show cause notice should be set aside.

- It was submitted that Rule 3 of the Cenvat Credit Rules, 2002 provides that cenvat credit will be admissible on the inputs and capital goods received in their factory and utilized in or in relation to the manufacture of final product of the assessee. Since the assessee have received the inputs/capital goods contained in these bill of entries at their factory and have used them in the manufacture of our final products; therefore, the credit is duly allowed to them as per provisions of Cenvat Credit Rules, 2004. It has been held by the hon’ble Madhya Pradesh High Court that as long as no dispute is there about receipt of goods, use in manufacture of final product and duty paid character, credit cannot be denied. The verdicts of hon’ble High Court are as follows:-

UNION OF INDIA Versus KATARIA WIRES LTD. [2009 (241) E.L.T. 31 (M.P.)]-

Cenvat/Modvat - Documents for availing credit - Loss of duplicate and original copy of invoice - Credit claimed on certified copy of invoice issued by jurisdictional Superintendent denied by Revenue as requirement of Rule 57G of erstwhile Central Excise Rules, 1944 not fulfilled - No dispute about receipt of goods, use in manufacture of final product and duty paid character of inputs - Merely because original and duplicate copy lost, claim not be defeated especially when certified copy, issued by Superintendent, produced - No question of law - No error in order of CESTAT allowing credit - Rule 9 of Cenvat Credit Rules, 2004. [para 4]

In this case, the invoices were lost and the credit was allowed on the basis of duplicate invoices solely on the grounds that the receipt and use of inputs in the manufacture of final products was not disputed. In the case of assessee also, there is no allegation about receipt and use of inputs in the process of manufacture. Thus, in the light of above decision, credit is allowable to them. Similar decision is given in the following cases:-

·                      MAHALAXMI LAMINATORS (P) LTD. V/s CCE, NOIDA [2007 (213) ELT 714(Tri.-Del.)]:- In this case it was held that:-

“CENVAT/Modvat – Duty paying documents – Invoices issued by stock yard of TISCO containing particulars regarding payment of duty, amount of duty and name of appellant only – Credit not to be denied merely because all particulars not mentioned in invoices as per amendment of Rule 57G of erstwhile Central Excise Rules, 1944 – Rule 9 of CENVAT Credit Rules, 2004.”

·                      Sewak Pharma v/s CCE, Mumbai-III [2004 (175) ELT 645 (Tri. Mumbai)]:-

“Cenvat/Modvat - Benefit of credit - Procedural lapses or technicalities cannot be resorted to deny substantive benefit of Modvat credit - Rule 57A of erstwhile Central Excise Rules, 1944 - Rule 3 of Cenvat Credit Rules, 2004.”

·                      Krishna Cold Rolled Sections Ltd. v/s CCE, Kanpur [1996 (88) ELT 98 (Tri.-Delhi)]:-

“Modvat - Credit taken on endorsed invoice after 1-4-1994 - Substantial compliance of Notification No. 15/94-C.E., and Trade Notice No. 19/94 - No dispute that assessee not utilized the declared inputs in the manufacture of final product - Dispute being restricted to mere technicalities, Modvat credit cannot be denied for procedural lapses and technicalities - Rule 57G of the Central Excise Rules, 1944.”

The analysis of these decisions makes it clear that the Cenvat Credit cannot be denied for the sake of technical errors. In the instant case, the bill of entries were issued in the address of registered office of the assessee which is at Mumbai, while the factory of the assessee is located at Sanchore. The goods were cleared from Customs by the Mumbai office and thereafter these were shifted to factory premises at Sanchore. These goods were duly received, accounted and were used in the manufacture of final products at the factory of the assessee. No doubt has been raised in the entire show cause notice regarding this fact. Thus, there is no doubt about receipt and use of goods in the manufacture of final products and hence credit should be allowed to the assessee and the impugned show cause notice should be set aside.

- It was further submit that CENVAT Credit cannot be denied merely on the ground of mention of the office address of the assessee rather than the factory address. The bill of entries are complete in all respect and duly reflect the duty paid character of the goods. The only thing is that there is address of office rather than the factory address. Further, the receipt of goods at the factory is duly entered and accounted for as evident from the books of accounts maintained at the factory premises. It is reiterated that no dispute has been raised regarding the fact of receipt of goods and their use in the manufacture of final products. Further, proviso to Section 9(2) of the CENVAT Credit Rules, 2004 has granted power to the Assistant/Deputy Commissioner of Central Excise to allow the CENVAT Credit on the invoices which are having the major details like value of taxable service and Service Tax thereon, name and address of service provider, etc. but certain other prescribed details are missing. The proviso to Section 9(2) of the CENVAT Credit Rules, 2004 is produced as follows:-

“Provided that if the said document does not contain all the particulars but contains the details of duty or Service Tax payable, description of the goods or taxable service, assessable value, name and address of the factory or warehouse or premises of first or second stage dealers or provider of taxable service, and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of account of the receiver, he may allow the CENVAT Credit.”

Since it is clearly evident from the records that the assessee has received the goods and used them in the manufacture of their final product and the bill of entries are correct in all respect except the mention of office address instead of factory address; so it is requested to your good honour to kindly exercise the powers under proviso to rule 9(2) of the CENVAT Credit Rules, 2004 and allow the credit. The impugned show cause notice should be set aside.

- It was further submit that in the impugned show cause notice, it is alleged that the Bills of Entry do not contain the address of the assessee as consignee, therefore, such documents are not proper documents for taking cenvat credit in terms of Rule 9 of the Cenvat Credit Rules, 2004 readwith Rule 11 of the Central Excise Rules, 2002. In this regard, we submit that as the substantial condition of receipt of duty paid inputs in assessee’s factory premises has been fulfilled, they were entitled to availing the cenvat credit of the duty so paid on the said inputs. It is submitted that merely because the Bills of Entry do not contain their address as consignee the substantial right cannot be denied to them. It is submitted that the non-mentioning of their address in the Bills of entry is a technical infraction for which substantial right cannot be denied. Thus, the impugned show cause notice is required to be set aside.

- It was further submit that the demand raised in the impugned show cause notice is not sustainable as being time-barred. It is submitted that the credit was taken during the period from December 2007 to June 2009 and the impugned show cause notice is issued on 25.1.2011. Thus, the show cause notice is issued invoking the extended period of limitation which can be invoked only in case of fraud, collusion or wilful misstatement or suppression of facts. It was held in the case of Rainbow Industries v/s. CCE [1994 (74) ELT 3 (SC)] that for invoking the extended period, two ingredients are essential – (i) Wilful suppression, mis-declaration, etc. and (ii) Intention to evade payment of duty. In absence of both of these extended period cannot be invoked. Reliance is also placed on decision of COLLECTOR OF CENTRAL EXCISE Versus CHEMPHAR DRUGS & LINIMENTS [1989 (40) E.L.T. 276 (S.C.)] wherein it was held that mere inaction does not amount to suppression. The verdicts of hon’ble Apex Court are as follows:-

Demand - Limitation - Extended period of five years applicable only when something positive other than mere inaction or failure on the part of manufacturer is proved - Conscious or deliberate withholding of information by manufacturer necessary to invoke larger limitation of five years - Department if had full knowledge or manufacturer had reasonable belief that he is not required to give a particular information - Six months limitation applicable - Section 11A of the Central Excises and Salt Act, 1944. -

In order to make a demand under Section 11A of the Central Excises and Salt Act for beyond a period of six months and upto a period of five years something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required to be established. Where Department had full knowledge about the facts and the manufacturer’s action or inaction is based on their belief that they were required or not required to carry out such action or inaction, the period beyond six months cannot be made applicable. [para 8]

In the light of above decisions, since the show cause notice has not brought any of the positive acts that justify the invocation of extended period; the extended period cannot be invoked against them. Therefore the show cause notice invoking extended period should be set aside.

- Without prejudice to above it is submitted that the AG (Audit), Jaipur was conducted at the assessee’s premises between the period from 21.08.2009 to 14.09.2009. After the audit, a letter no. CE 25 (13) LAR/60/ABR/09 dated 28.10.2009 and letter of even no. 387, dated 13.11.2009 was issued to them asking to reverse the cenvat credit and to provide copies of said Bills of Entries. After this letter dated 13.11.2009, neither any action was taken nor was any letter issued. Thereafter, for one year, the Department has not taken any action eventhough the fact of taking and utilizing of credit was within their knowledge. The Department has issued the show cause notice on 25.01.2011. But it has been held by various appellate authorities that the show cause notice should be issued within reasonable time of completing the investigation. Reliance placed on following decisions:-

·                      M/s Rattan Steel Works Vs CCE, Chennai [2008-TIOL-1454-CESTAT-MAD ] -

Central Excise – clandestine manufacture and clearance of re-rolled Iron and Steel Products – demand based on power consumption - excess consumption of power is an un impeachable evidence -It is not necessary that clandestine clearance has to be established with all possible reasons – But, demand time barred as Show Cause Notice was issued after six months of department knowing about the clandestine clearances. : CHENNAI CESTAT;
·                      RIVAA TEXTILE INDS. LTD. Versus COMMISSIONER OF C. EX. & CUS., SURAT-I [2006 (197) E.L.T. 555 (Tri. - Mumbai)]

Demand - Limitation - Officers visited factory premises on 28-9-1996 for follow-up action and drawn factual panchnama on 20/21-9-1996, detained certain goods on 21-9-1996 and recorded statements during period 16/17-9-1996 to 12-12-1996 - Period in dispute well within knowledge of Department and show cause notice should have been issued within six months from first factual panchnama dated 16/17-9-1996 i.e. latest by 15-3-1997 - Show cause notice issued on 27-3-2001 time-barred - Section 11A of Central Excise Act, 1944. [para 13]

Penalty not sustainable in absence of specific contravention - Rule 173Q of erstwhile Central Excise Rules, 1944 - Rule 25 of Central Excise Rules, 2002. [para 13]

Thus, in the above decisions also it is held that the show cause notice issued after reasonable time of completion of investigation is not legally sustainable. In the instant case the last letter of correspondence in lieu of investigation was issued on 13.11.2009; so the show cause notice would have been issued within reasonable time in the year 2010 only, but the impugned show cause notice has been issued after a period of more than one year of completion of investigation. Therefore, the impugned show cause notice is not tenable in the light of above referred decisions and is liable to be set aside.

- It was further submit that in the impugned show cause notice it is proposed that the assessee is liable for penal action under Rule 15 (2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 for contravening the provisions of Rule 3 & 9 of the Cenvat Credit Rules, 2004 by willfully mis-stating the facts with intent to evade payment of duty. In this regard, it is submitted that the assessee has duly received and accounted for the goods that were duty paid. These goods were used in the manufacture of their final products and the duty paying document was also complete in all respect except mention of wrong address. It has been held by various appellate authorities that where the substantial condition of receipt and use of inputs in the manufacture of final products is not doubted, the credit cannot be denied. A no. of decisions that have been cited hereabove were relied upon by the assessee. Thus, the act of assessee was based on bonafide belief depending upon a no. of judgments as listed hereabove. It has been held in various cases that no penalty is warranted when the assessee has acted on the basis of bona fide belief. Even the highest court of India – Hon’ble Supreme Court has held in the case of COMMISSIONER OF CENTRAL EXCISE, TRICHY Versus GRASIM INDUSTRIES LTD. [2005 (183) E.L.T. 123 (S.C.)]that where the act of assessee is based on the interpretation taken by the Tribunal, penalty cannot be imposed as the act is based on bona fide belief. The verdicts of Apex Court are produced as follows:-

“Penalty - Bona fide belief caused by Tribunal’s decision - Tribunal in a number of cases giving an interpretation as understood by assessee - Penalty not imposable - Rule 173Q of erstwhile Central Excise Rules, 1944 - Rule 25 of Central Excise Rules, 2002. [para 20]”

Therefore, penalty cannot be imposed on them for the charge of suppression of facts. This has also been held in the following cases:-

·                Star Neon Singh vs. Commissioner of Central Excise, Chandigarh [2002 (141) ELT 770 (Tri.-Del.)]
·                Straw Products Ltd. vs. Collector of Central Excise, Indore [1996 (87) ELT 115 (Tribunal)]
·                Johnson & Johnson Ltd. vs. Collector of Central Excise, Bombay [1995 (78) ELT 193 (Tribunal)]
·                Indian Explosives Ltd. vs. Collector of Customs [1992 (60) E.L.T. 111 (Cal.)]
·                Tata Engineering & Locomotive Co. Ltd. vs. Collector of Customs [1991 (56) E.L.T. 812 (Tribunal)]
·                SuratMunicipal Corpn. Vs. Commissioner of C. Ex., Surat [2006 (4) S.T.R. 44 (Tri. - Del.)]

Thus, the impugned show cause notice is not sustainable and is liable to be set aside.
- It was also submit that there was no malafide intention on the assessee’s part as goods were duty paid and the same were used in the manufacture of final products. Thus, in absence of malafide intention penalty cannot be imposed on them. Reliance placed on following decisions:-

Ø                   CST, Bangalore Vs M/s Atria Convergence Technologies Pvt Ltd [2009-TIOL-2020-CESTAT-BANG]

Service Tax - Levy of service tax on activities as cable operator and MSO - No malafide intention to evade tax, penalty not leviable - No infirmity in Appellate Commissioner's order :BANGALORE CESTAT

Ø                   CCE, Ludhiana Vs M/s Supreme Polytubes (P) Ltd [2009-TIOL-554-HC-P&H-CX]

“Central Excise - Section 11AC - There is no discretion vested in the assessing authority, appellate authority or the Tribunal to reduce the penal amount, even if duty is paid before issue of notice - but penalty can be imposed only if the ingredients of 11AC are satisfied: It is obvious that there is no rule of law applicable in blanket manner to the effect that if the amount of duty due has been paid before the issuance of show cause notice then the provision concerning interest or penalty would not be applicable. In the light of the absence of findings of clandestine removal of goods orany fraud, mis -representation, suppression of facts with the intention to evade duty, Section 11 AC of the Act read with Rule 25of the Rules would not get attracted as has been held by the Hon'ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills's case.”

Ø                   M/s Jocil Ltd Vs CC & CCE, Guntur [2009-TIOL-1169-CESTAT-BANG]:-

“Central Excise - Suo moto availment of credit of excess duty paid in PLA - When there is no malafide intent penalty under Rule 25 not leviable :BANGALORECESTAT;”

Ø                   M/s General Motors India (P) Ltd Vs CCE, Vadodara [2009-TIOL-849-CESTAT-AHM]:-

“Central Excise - Credit to be reversed when capital goods are cleared to ancillary units on non-returnable basis - No malafide attributable as non-reversal was not due to any ulterior motive - Duty confirmed but penalties set aside:AHMEDABAD CESTAT;”

Thus, the imposition of penalty on the assessee is not sustainable in the light of above stated decisions.

Reasoning of the Adjudicating Authority:-

- The Adjudicating Authority noted that it is undisputed facts that the assessee has business at two locations: One is a manufacturing unit in the name of M/s Angel Pipes & Tubes (P) Ltd, F 112(A), 113, G 95-96, RIICO Ind. Area, sanchore, District-Jalore and another is a head office in the name of M/s Angel Pipes & Tubes Pvt Ltd, 110/112, DR M. G. Mahimtura Marg, 3^rd Kumbharwada Lane, Mumbai (Maharashtra). It is contended that goods in question have been received in the unit situated at sanchore, however the bills of entry were prepared in the name of their head office situated at Mumbai which happens to be a dealers premises in the name of M/s Angle Pipes & Tubes Pvt Ltd 110/112, DR M. G. Mahimtura Marg, 3^rd Kumbharwada Lane, Mumbai and since the orders are placed from Mumbai in some of the cases even though the goods are supplied to the assessee unit situated at Sanchore, yet the bills of entry are some time issued in the name of their Mumbai office address. The imported goods have been sent from Mumbai to their unit at sanchore. The assessee has contended that the bills of entry forming part of the show cause notice is in the name of the assessee themselves on the basis of which impugned cenvat credit has been availed and it was found that in these bills of entry the name & address of appellant has been mentioned. The assessee has accordingly availed cenvat credit of duty paid on final products in their unit at Sanchore. The Department’s case is that bills of entry in the name of their office address at Mumbai are not prescribed duty paying documents for availment of cenvat credit in terms of Rule 9 of Cenvat Credit rules, 2004. The assessee in the reply to show cause notice has argued that the order for import of the input is placed by their head office situated at Mumbai and therefore inadvertently the address of their head office situated at Mumbai instead of Sanchore is mentioned; that the input/raw material covered by these bills of entry weree duly received by their manufacturing unit at Sanchore and duly accounted for and used in the manufacture of their final product. They accordingly pleaded that there is no case for denial of credit in the present case especially when the defect pointed out in the relevant bills of entry is recitifiable and has since been rectified.

- The Adjudicating Authority found that the assessee has relied upon numbers of the decisions of Hon’ble CESTAT in support of their argument that the credit could not be denied in such facts. It is stated that the Hon’ble CESTAT in the case of M/s Zenith Weaves Pvt Ltd v/s CCE, Surat has held that modvat credit is not deniable to Surat factory when invoices are addressed in respect of assessee’s Kim factory but goods are delivered at the Surat factory. It is also held in para 8 of the above decision based on Larger Bench judgment of the Hon’ble Tribunal in case of M/s Kamakhya Steels Pvt Ltd – 2000 (121) ELT 247 (LB) that minor procedural lapse, if any, should not be made the basis for denial of the modvat credit, if jurisdictional Assistant Commissioner is otherwise satisfied about the receipt of the inputs. It was therefore, observed that bills of entry which were otherwise in order except for the fact that it bore the address of the assessee’s head office situated at Mumbai, the credit on the same should not be denied on the sole ground that it contained the endorsement of their office at Mumbai. Even otherwise it has been held in number of cases including the Larger Bench judgment in case of M/s Kamakhya Steels Pvt Ltd, referred to above, that substantial benefit should not be denied for minor defect in the invoice.

- The Adjudicating Authority further found that proviso to Rule 9 (2) of Cenvat Credit Rules, 2004 permit the DC/AC to allow the cenvat credit of input if he is satisfied that goods covered by these documents have been received and accounted for in the books of accounts of the receiver, even if the document do not contain all the particulars but contain the details of duty payment, description of goods, assessable value, central excise registration of the person issuing the invoice, name & address of the factory. It was found that in this case only the address of the recipient/company was wrongly mentioned although the name was correctly mentioned and all documents contained all the information which is stipulated by Rule 9(2) of the CCR, 2004, hence the jurisdictional DC/AC should have allowed the cenvat credit on these documents. In view of the above facts, it was held that cenvat credit amounting to Rs. 8506482/- is not recoverable from the assessee merely because bills of entry contained the address of head office of the assessee.

- It was held that as the demand is held to be unsustainable on merit, there is no question of any interest and penalty as held by the Hon’ble Supreme Court of India in case of M/s HMM Ltd – 1995 (76) ELT 497 (SC). It was therefore, held that demand of interest is not sustainable and also no penalty was imposable on the assessee.

Decision of the Adjudicating Authority:-

Proceedings initiated by the impugned show cause notice have been dropped.

Conclusion:-

The learned Adjudicating Authority rightly concluded that merely because the Bill of Entry was bearing address of head office of the assesee and not the factory address, the substantial benefit of cenvat credit cannot be denied as the said mistake was only procedural mistake.

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