Tribunal: Discrepancy in nomenclature not a basis to deny credit

The Tribunal found that the discrepancy in nomenclature between the input supply invoices and the appellant's records should not be a basis for denying Cenvat credit. It was clarified that the raw material supplier processed HR sheets by cold rolling before supplying them to the appellant, labeling them as cold rolled, whereas they were indeed HR sheets fulfilling the order requirements. As there was no evidence that the materials received were not utilized for production, the Tribunal held that the revenue's demand was not prima facie sustainable. Consequently, the stay applications were allowed, and recovery was stayed pending appeal disposal.

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Issues:
Dispute over availability of Cenvat credit due to discrepancy in nomenclature between input supply invoices and appellant's records.

Analysis:
The appellant, engaged in manufacturing machinery parts from steel sheets, received steel sheets from suppliers including M/s. Hero Cycles. The appellant availed Cenvat credit for the steel sheets received during the period from November 2002 to August 2005. A dispute arose with the revenue regarding the availability of credit. The revenue contended that the input supply invoices described the material as CR (cold rolled) sheets, whereas the appellant's records described them as HR (hot rolled) sheets. The revenue argued that since the materials supplied were not used in the manufacture of parts by the appellant, credit was not available.

The appellant countered this contention by explaining that although the input supplier described the product as CR sheets due to carrying out cold rolling processes on HR sheets used, what the appellant required and ordered was HR sheets. The appellant asserted that the discrepancy in description should not be a basis for denying credit, as the materials received were indeed used for production and clearance after duty payment. However, this contention was rejected in adjudication, leading to a demand being confirmed. The present stay application pertained to this demand.

Upon hearing both sides and examining the records, it was clarified that the raw material supplier processed HR sheets by cold rolling before supplying them to the appellant, hence labeling them as cold rolled. The sheets supplied were, in fact, HR sheets fulfilling the order requirements. There was no evidence indicating that the materials received were not utilized for production or that they were disposed of in any manner other than manufacturing excisable finished products. The dispute essentially revolved around a discrepancy in the descriptions in the books of accounts of the companies involved. The Tribunal emphasized that a mere nomenclatural difference should not serve as a valid reason for denying Modvat credit, especially when credit availability is independent of the type of sheets used in final product manufacturing.

Consequently, the Tribunal found the revenue's demand not prima facie sustainable. As a result, the stay applications were allowed, and recovery as per the impugned order was stayed until the appeals were disposed of.

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