Tribunal overturns denial of cenvat credit for input discrepancy.

The Tribunal overturned the denial of cenvat credit to M/s. Transformers & Rectifiers (India) Ltd. for wrongly availed credit on inputs. The denial was based on the discrepancy between the invoices from dealers and the actual supplier. The Tribunal held that Rule 9 of the Cenvat Credit Rules, 2004, does not require ownership of inputs for credit eligibility. As the appellant received and utilized the goods for manufacturing as per valid invoices, and there was no evidence of non-receipt or fraud, the denial of credit was deemed unjustified. The demand for central excise duty was set aside, and the appeal was successful.

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Issues involved: Central excise duty demand on wrongly availed cenvat credit, interpretation of Rule 9 of Cenvat Credit Rules, 2004.

Summary:
The case involved M/s. Transformers & Rectifiers (India) Ltd. availing cenvat credit on inputs through invoices from certain dealers. However, it was found that the goods were actually purchased from a different supplier, M/s. Darmin Steel Suppliers, and not from the dealers on the invoices. This led to proceedings being initiated, resulting in a demand for central excise duty, interest, and penalty under Section 11AC of the Central Excise Act.

Upon appeal, the issue was whether the denial of credit was justified due to the discrepancy in the source of the goods as per the invoices and the actual supplier. The appellant argued that the credit was based on valid invoices from the 1st/2nd stage dealers, meeting the requirements of Rule 9 of Cenvat Credit Rules, 2004. The invoices correctly identified the appellant as the consignee, contained all necessary details, and were in compliance with the rules.

The Tribunal noted that the denial of credit was solely based on the fact that M/s. Darmin Steel Suppliers issued their own invoices and received payment, even though the credit was claimed based on invoices from the 1st/2nd stage dealers. It was emphasized that Rule 9 does not mandate payment to the dealer for availing credit, but rather requires the receipt and utilization of goods for manufacturing purposes.

Referring to a relevant circular issued by the Board and a previous Tribunal decision, it was established that the ownership of inputs is not a legal requirement for availing cenvat credit. As there was no evidence to suggest non-receipt of goods or any fraudulent transactions, and all invoices correctly identified the appellant as the consignee, the Tribunal concluded that the denial of credit was unjustified. The impugned order demanding central excise duty was set aside, and the appeal was allowed.

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