2014 (3) TMI 2 - AT - Central Excise

Tribunal allows credit for transfers between sister units, clarifies eligibility criteria

PRIYADARSHINI POLYSACKS LTD Versus CCE

The Tribunal ruled in favor of the appellants, allowing them to take credit on endorsed invoices for transfers between sister units of the same entity. ... Denial of CENVAT Credit - Credit taken on the endorsed invoices - Held that:- Credit was taken on the basis of invoices endorsed by a whole sale dealer wherein in this case the facts are totally different as invoice has been issued on unit No.1 which is a sister unit and the goods have been transferred to Unit NO. 2 therefore the first unit endorsed the invoices of their Unit No.2. In the case of Coimbatore Murugan Mills (2003 (3) TMI 227 - CEGAT, CHENNAI) this Tribunal held that if there is transfer of goods between the same appellant in different units, credit can be taken on the basis of endorsed invoices. In this term, I hold that the appellants are entitled to take credit - Decided in favour of assessee. Issues:- Denial of credit on the premise of endorsed invoices under Rule 7 of CENVAT Credit Rules, 2004.Analysis:The appellants appealed against the denial of credit due to endorsed invoices, where goods were used by a different unit than the one mentioned on the invoice. The Revenue contended that credit cannot be taken on endorsed invoices as per Rule 7 of the CENVAT Credit Rules, 2004. The Counsel for the appellants cited precedents supporting credit on endorsed invoices for transfers between the same appellant in different units. The learned A.R. opposed, arguing that endorsed invoices are not valid for CENVAT Credit, referring to a specific case law.The Tribunal considered both arguments and the case laws cited. It was noted that the case law relied upon by the A.R. was not directly applicable to the current scenario. The Tribunal referenced the case of Coimbatore Murugan Mills, where it was established that credit can be claimed on endorsed invoices for transfers between the same appellant in different units. Given the unique circumstances of the case where goods were transferred between sister units, the Tribunal ruled in favor of the appellants, allowing them to take credit on the endorsed invoices. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief.This judgment clarifies the eligibility of appellants to claim credit on endorsed invoices for transfers between units of the same entity, emphasizing the specific circumstances and precedents supporting such claims.