Whether credit is available on the strength of Bill of entry in the name of sister unit?

PJ/Case Study/2013-14/86

Prepared by: CA Neetu Sukhwani &
Hushen Ganodwala

Case study

Introduction:- M/s Bhansali Engineering Polymers Ltd., (herein after referred to as the assessee) have availed and utilized Cenvat credit in respect of Bill of entry that was not in their name but in the name of their sister concern situated in MP. Consequently, the revenue department issued show cause notice to them for the demand for recovery of wrongly taken and availed Cenvat credit of Rs. 6,09,703/- along with interest and imposing penalty for willfully and knowingly suppressing the facts with intention to evade payment of Central Excise duty in contravention of rule 3 & 9 of Cenvat Credit Rules, 2004.It is submitted that it is very common to observe such kind of cases where the credit is being denied on procedural lapses even when all the substantial conditions for availing the credit stands satisfied by the assessee. This case study also revolves around the issue whether the credit can be denied to an assessee merely because the bill of entry on the basis of which the credit is taken does not mentions the name of the assessee but contains the name of its sister concern.

M/S. BHANSALI ENGINEERING POLYMERS LTD. [OIO No. 03/C.E./JP-II/2014-ADC Dated 04-02-2014]

Relevant legal provisions:

Rule 9(2) of the Cenvat Credit Rules, 2004
Rule 11(2) of Central Excise Rules 2002
Rule 3 & 9 of Cenvat Credit Rules, 2004.
Rule 14 of CENVAT Credit Rules, 2004

Issue Involved:Whether credit is available on the strength of Bill of entry in the name of sister unit?

Brief facts:-

M/s Bhansali Engineering Polymers Ltd., having factory situated at SP-138-143, Ambaji Industrial Area, Abu Road (herein after referred to as the 'assessee also) is holder of the Central Excise Registration No. AAACB3368HXM003 and engaged in the manufacture of SAN & ABS falling under Chapter 39 of the Schedule to the Central Excise Tariff Act, 1985. It has been alleged that they have wrongly taken and availed Cenvat Credit on Bill of entry amounting to Rs.6,09,703/- (BCD + Addl Cus. Duty + Ed. Cess +Sh Ed. Cess) which is not in the name of the assessee as per the facts given below:

During the course of audit of record of the assessee for the period from April 2011 to March 2012 it was noticed that the assessee had wrongly availed the CENVAT credit of Rs. 609703/- on the basis of Bill of Entry No. 5635235 dated 02.01.2012 pertaining to their sister unit situated at Satnoor in Madhya Pradesh, bearing Central Excise Registration no. AAACB3364HXM002. Thus, it appeared that the assessee had wrongly availed Cenvat Credit of Rs. 6,09,7031- vide credit entry No- 2217-18 dated-31.01.2012 on the basis of Bill of entry which does not fall under the category of valid CENVAT document for the purpose of availing and utilizing Cenvat Credit in terms of rule 9(2) of CENVAT Credit Rules-2004.

As per Rule 9(2) of the Cenvat Credit Rules, 2004, no Cenvat Credit under sub rule (1) shall be taken unless all the particulars prescribed under the Central Excise Rules, 2002 are contained in the said document. As per Rule 11(2) of Central Excise Rules 2002, an Invoice should necessarily contain the registration number, name of the consignee, description, classification, time and date of removal, mode of transport, vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon. In the instant case, the document on the basis of which the Credit was availed and utilized was a Bill of entry containing the name of the party other than the assessee. Therefore such BOE is not a proper document for availment of CENVAT Credit in terms of Rule 9(2) of the CENVAT Credit Rules, 2004 read with rule 11(2) of Central Excise Rules, 2002. Thus, it appeared that the assessee was not entitled to avail and utilize CENVAT Credit on the basis of such improper document. The assessee themselves have to take all reasonable steps to ensure that the documents on the basis of which they have availed CENVAT Credit, is a proper document.

As per rule 9(5) of Cenvat Credit Rules, 2004 the manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value, duty paid, Cenvat Credit taken and utilized, the person from whom the input or capital goods have procured, are recorded and the burden of proof regarding admissibility of the CENVAT Credit shall lie upon the manufacturer or provider of output service.

In the instant case the assessee did not bring to the notice of the department the very vital fact of availing and utilizing Cenvat Credit on such document which was not in the name of the assessee and which did not contain the basic requirement of Rule 9 (1) & 9 (2) of Cenvat Credit Rules, 2004 and Rule 11(2) of Central Excise Rules 2002. This vital fact came to the notice of the department only during audit of the records and documents of the assessee by the Departmental Audit Party. Thus, it appeared that the assessee had willfully and knowingly suppressed the facts with intention to evade payment of Central Excise duty in contravention of rule 3 & 9 of Cenvat Credit Rules, 2004.

The assessee were requested by the Audit to deposit such amount with interest but the assessee did not reverse /deposit Cenvat credit amounting to Rs. 6,09,703/- + interest as stated above, appearing to have been availed and utilized wrongly.

Therefore, it appeared that the assessee had wrongly taken and utilized CENVAT Credit on improper document which was not in the name of assessee with intent to evade payment of duty amounting to Rs. 6,09,703/- in contravention of rule 3 & 9 of CENVAT Credit Rules, 2004, which appeared recoverable along with interest in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944. The assessee also appeared to be liable for penalty in terms of Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11 AC of the Central Excise Act, 1944 for contravention of provisions of Rule 9 (1) &(2) of the Cenvat Credit Rules 2004.

Assessee’s contention:-The assessee made following submissions before the adjudicating authority-

They submitted that they are manufacturer of SAN and ABS falling under Chapter 39 of the First schedule to the Central Excise Tariff Act, 1985. They are holder of Central Excise Registration no. AAACB3368HXM003. They submitted that the show cause notice issued to them proposing to deny Cenvat credit on the said Bill of Entry is wholly and totally erroneous and is liable to be set aside.

They submitted that in the impugned show cause notice it is alleged that Bill of Entries were not in their name but were in the name of M/s Bhansali Engineering Polymers Ltd, Bhansali Nagar, Taluka Suasar, Distt Chhindwara (M.P.) bearing Central Excise Registration No. AAACB3364HXM002 and therefore Cenvat credit could not be availed by them. In this regard, it is submitted that the Bill of Entries were wrongly issued in address of another factory of M/s Bhansali Engineering Polymers Ltd. situated at M.P. It is further submitted that although the Bill of Entries were having the address of their factory situated at MP., the goods imported vide the said Bills of Entries were received and utilized in their factory situated at Abu Road in the manufacture of excisable goods. It has been decided in many cases that where the duty paid nature of the goods is not disputed and so long as the goods are used in or in relation to the manufacture of final products, credit is not deniable on grounds of technical lapses. Reliance is placed on the following decisions:-

·         INGERSOLL RAND (If LTD, Versus COMMISSIONER OF C. EX., AHMEDABAD 12006 (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 Entry happened 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 addressed to the company and the goods were consigned to the factory cannot be a reason the 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 (Ti. – 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 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. [pare 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. [pares 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. [pares 23 to 28, 33]

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

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 failing 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 of registered office but only branch office name - Impugned document being a duplicate copy of bill of entry generated on customs ED/ system, satisfied requirement of Rule 57G(3)K of erstwhile Central Excise Rules. 1944 as a valid duty paying document - Credit not deniable - 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]

·         M/s Life Long India Ltd v/s CCE, Delhi [2011-TIOL-832-CESTAT-DEL] -

Credit on Invoices in the name of Registered Office: this is a matter which has been decided in many cases by the Tribunal and credit cannot be denied for that reason. The provision relating to input service distributor is not applicable here because credit is not getting distributed to many locations. If at all applicable, it is only a procedural requirement and credit cannot be denied so long as there is no case of misuse of credit: DELHI CESTAT;

In all of the above cases, it was held that the credit cannot be denied on the grounds that the duty paying document is issued in the name of the head office or sister concern when there no dispute about the receipt and use of the inputs received under the cover of those invoices. In their case also, the bill of entries contained the address of their M.P. unit, however, the consignment was received and utilized in their Abu road factory. Thus, the ratio of the above cited cases is equally applicable in their case and extending its benefit to them, the credit should be allowed and the impugned show cause notice should be set aside.

It is further submitted that the goods imported under Bill of Entries were received in their factory at Abu Road and therefore, the cenvat credit of duty is available to them. The fact that the goods were received and utilized here is not disputed anywhere in the show cause notice. Merely because the Bills of Entries is not issued in the address of their factory but in the address of their sister concern situated at M.P. cannot alter the fact that goods imported under Bill of Entries were received and utilized in their factory at Abu Road. This fact is clarified by the accounts maintained by them where the receipt and consumption of these inputs have duly been entered. No objection has been raised on this. Since the address in the bill of entries was incorrect, they have given declaration to the fact that the said material was received and utilized in the manufacture of dutiable goods at their Abu road factory. Since the receipt and utilization of the inputs in the manufacture of dutiable goods is not disputed, the credit cannot be denied to them on account of procedural lapses. Further, credit has been allowed on the basis of endorsement in the case of M/s AAR Kay Forge (P) Ltd v/s CCE, Delhi-IV [2011-TIOL-1485-CESTAT-DEL] wherein it was held that

Eligibility of credit on endorsed copies of input invoices– Goods for which invoices were issued in the name of head office diverted to factory in packed condition after endorsement on invoices – When it is admitted fact that appellants have received goods against duty paid invoices in their factory and the same were used in manufacture of final products which were cleared on payment of duty, credit not deniable – Impugned order not sustainable, set aside.

Further, it has been held by hon’ble High Court of Ahmedabad that even if a certificate is issued in the name of the buyer it has to be accepted to be part of the Bill of entry on which credit is admissible. This is decided in the case of CCE & C, Vadodara-II v/s EUPEC-Welspun Pipe Coatings India Ltd [2009-TIOL-777-HC-AHM-CX] as under:

Central Excise – Eligibility of CENVAT Credit on Bill of Entry – Instead of endorsing Bill of Entry in name of buyer, importer issued separate certificate – Tribunal held that certificate to be considered as part of Bill of Entry and credit not to be denied if document gives details of payment, description of goods, assessable value, name and address of factory of receiver – All details except name and address of factory available on Bill of Entry – Credit allowed by Tribunal after recording finding of facts, in consonance with Rule 9(2) of CENVAT Credit Rule – No substantial question of law to be answered.
Since they have also made the declaration that the goods have been received and utilized by them at their Abu Road unit, as such, the credit should be allowed. Also, since the substantial condition of duty paid inputs utilized in manufacture of dutiable goods have been satisfied, the mentioning of wrong address, being a procedural lapse should be condoned and the credit should be allowed to them. The impugned show cause notice should therefore be set aside. A copy of declaration was also enclosed for reference.

They further submitted that mentioning of the name and address of their sister concern is merely a procedural mistake and for this the substantial benefit of availment of credit should not be denied when it can be clearly established that the imported goods were received and used by them in the manufacture of final products. Moreover, such a technical lapse has already condoned earlier in their case on similar facts vide Order in Original No. 62/2012/C.EX/JPR-ll dated 28-09-2012 by the learned commissioner that cenvat credit cannot be denied on the basis of procedural lapses when duty paid character of the inputs & their utilization in the manufacture of dutiable final goods is not disputed. In the present show cause notice also, the duty paid character and its utilisation in the manufacture of dutiable final products is not disputed. Therefore, the benefit of the above cited decision should also be extended to them and the impugned show cause notice should be set aside.

They further submitted that to provide further evidence to the fact that the said imported material was received and used by them in the manufacture of dutiable final products, they had also enclosed the copy of RG-23 A Part-II maintained by them and verified during the audit conducted for the period April, 2011 to March, 2012 wherein it is clearly established that the duty paid in respect of said material has been duly accounted for by them. Further, if this bill of entry pertained to their sister unit located in Madhya Pradesh, the said entry would have been accounted for in the RG-23 A Part-II of their sister concern, which is not the case. This truly substantiates their submission that the credit taken on the said bill of entry is correct and warrants no interference. Therefore, the impugned show cause notice should be quashed.

Aligning with the above, they submitted that to correlate the fact that the material pertaining to the bill of entry in question was being utilised in their factory situated at Abu Road, they also enclosed a copy of the transport bilty/ Consignment note clearly indicating that the said goods were being transported from the Kandla Port to their factory situated at Abu road. On perusal of this consignment note, it can be very well established that the material is the same, named as ACN and is pertaining to the bill of entry in question having the net weight as 47 MTS. They further clarify the fact that the total of net weight as mentioned in the consignment note comes out to 47.34 MTS for the only reason that 0.34 MTS pertain to the Bill of Entry no. 5635182 dated 02.01.2012 of the quantity of 54.5 MTS of the said bill of entry. A copy of the said consignment notes along with details pertaining to bill of entry no. 5635235 dated 02.01.2012 was also enclosed for reference.

They further submitted that in the impugned show cause notice it is said that it is up to the assessee to take all reasonable steps to ensure that the input or capital goods or input service in respect of which he has taken the cenvat credit should contain all basic information as per Rule. It was alleged that they have not taken reasonable steps while taking credit on said Bill of Entry which do not contain basic information and therefore are not entitled to take and utilize cenvat credit of duty on the basis of the said document. In this regard, they submit that the Rule 9 (3) prescribing that reasonable steps are to be taken by the assessee has been omitted since 2007. It is submitted that even the omitted Rule prescribed taking reasonable steps were required to be taken to ensure that the input or capital goods or input service in respect of which they have taken the CENVAT credit are goods or services on which the appropriate duty of excise or service tax as indicated in the documents accompanying the goods or relating to input service, has been paid. The Explanation to the said Rule 9(3) also indicated towards ensuring the identity of the service provider issuing documents evidencing the payment of duty or service tax.

It is submitted that in the impugned show cause notice also, no allegation has been raised doubting the receipt of goods in their factory premises and of their use in their finished goods. It is submitted that for procedural infractions, the substantial benefit of cenvat credit cannot be denied to the assessee. Therefore, the impugned show cause notice is not tenable and is liable to be quashed.

They further submit that merely because the alleged discrepancies in the said Bill of Entry was noted during the Audit does not by itself mean that they have acted with mala fide intention to avail cenvat credit wrongly. It is also submitted that the facts have come to light during the audit and not in any anti-evasion raise etc. At the time of Audit, they themselves have submitted all the records and the said Bill of Entries for scrutiny. No documents were suppressed. Therefore, the allegation of deliberate suppression is not sustainable. In this regard, reliance is placed on the following judgments: -

·         Pushpam Pharmaceuticals Company Vs. CCE, Mumbai reported in (2002-TIOL-235-SC-CX ) -

“Central Excise – Demand – Suppression of facts – Words and phrases – Where facts are known to both the parties the omission by one to do what he might have done and not he must have done, does not render it suppression – Suppression of facts must be deliberate to escape from payment of duty.”

·         M/s Neptune Equipment Pvt Limited v/s CCE, Ahmedabad [2011-TIOL-1069-CESTAT-AHM]it was held as under:

Limitation – Merely because the appellant did not inform the department, by itself cannot be made a ground to attribute them with any mala fide or deliberate suppression with an intent to avoid payment of duty. When the said trading activities being reflected in the statutory records and in the returns filed with the sales tax authorities, it cannot be held that there was any intent to evade payment of duty, on the part of appellants.

They further submitted that on the basis of decisions cited here above they were under bonafide belief that credit is allowed to them as for minor discrepancies in the invoices, substantial benefit of credit is not deniable. 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 as they have acted under bonafide belief based on certain decisions.

They further submit that the hon’ble Supreme Court has decided that penalty should not be ordinarily imposed unless there is deliberate in defiance of law. This has been held in the case of Hindustan Steel v. State of Orissa [1978 2 ELT J 159 (Supreme Court)]. In this case it was held that an order imposing penalty for failure to meet statutory obligation is a result of proceedings which are quasi judicial in nature and penalty should not ordinarily be imposed unless the person acted deliberately in defiance of law or was guilty of misconduct or dishonest or acted in conscious disregard of his obligation. It is further held in the case of Orient Ceramics and Industries [1987 (32) ELT 218] that words ‘with intent to evade payment of duty’ are very significant and unless and until the intention to evade payment is proved on part of assessee, no penalty can be imposed. In the light of these decisions also, the impugned show cause notice proposing to impose penalty is not tenable and is liable to be set aside.

Reasoning of the judgment:-It was observed that the issue for decision is whether the assessee is eligible to avail Cenvat credit on the strength of Bill of Entry pertaining to their other unit situated at Satnoor in Madhya Pradesh or not.

Before examining the issue involved, it is essential to discuss the activities under taken by the assessee. It is apparent that the assessee is engaged in the manufacture of SAN polymer & ABS

It is evident from the above clarification that in the case a Bill of Entry in the name of the head office/ registered office are diverted, the credit shall be allowed if the entire consignment covered by the said bill of entry is received in the factory and concerned bill of entry is endorsed to the fact that the consignment covered by the bill of entry are diverted to a particular manufacturing unit. It is also been held by CESTAT in the case of CCE Baroda-II Vs EUPEC- Welspun Pipe Coatings India Ltd, that a separate certificate alongwith the bill of entry given by the party is also a valid endorsement for taking Cenvat Credit.

In the instant case, it was found that the impugned BOE in the name of M/s Bhansali Engineering Polymers Ltd. (a sister unit of the assessee) situated at Satnoor in Madhya Pradesh along with the undertaking to the effect that the entire quantity covered under the impugned Bill of Entry No. 5635235 dated 02.01.2012 had been transferred to the assessee having Central Excise Registration No. AAAGB3368HXM003 and the assessee had availed and utilized the cenvat credit in respect of the impugned Bill of Entry only after the receipt of inputs in their factory premises i.e. on 31-01-2012 as has been reflected from the photocopies of RG23Part-II (Entries no 2217&2218). Further, there are catena of judgments passed by different appellate authorities vide which it has been held that the Cenvat credit on inputs/capital goods should not be denied if the payment of central excise duty has been established particularly when the goods are found receipted in the factory premises of the manufacturer. It was also observed that the Commissioner, Central Excise Commissionerate-ll, Jaipur vide Order in Original No. 62/2012/C.EX/JPR-II dated 28-09-2012 has dropped demand of identical nature in the case of the same assessee which has been accepted by the department on merit. Thus, it was concluded that the Cenvat credit is admissible to the assessee as the same has been availed and utilized after the receipt of inputs in their factory premises.

Accepting the ratio of judgment made by the Commissioner, Central Excise Commissionerate-II, Jaipur vide Order in Original No. 62/2012/C.EX/JPR-II dated 28-09-2012, it was held that the cenvat credit is admissible when the duty paid character of the inputs is not denied and the inputs have been used in the manufacture of finished goods. Once the case does not stand on merits there is no ground for charging interest or imposing penalty upon the assessee.
Accordingly, the following order was passed:-

ORDER

The proceedings initiated vide show cause notice C. No. V (39)ADJ-II/JPR-ll/422/12/280 dated 15-01-2013 issued against M/s Bhansali Engineering Polymers Ltd are dropped.

Decision:-SCN discharged.

Conclusion:-The gist of this case is that cenvat credit cannot be denied as far as the substantial condition of receipt of goods under the cover of proper invoice and its use in the manufacture of final products is not disputed. In the present case also, from the evidences produced it was crystal clear that although the bill of entry mentioned the name of the sister concern but actually the goods were received and utilised by the assessee themselves. Consequently, it was decided that when the duty paid nature, receipt and use of the goods by the assessee was not disputed, the denial of cenvat credit on the allegation that the bill of entry did not mention the name of the assessee was not proper. This case study depicts that procedural infractions cannot become hurdle in claiming the intended benefit when the other aspects have been satisfied by assessee.

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15 February 2014

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PJ/Case Study/2013-14/86
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