2014 (4) TMI 190 - AT - Central Excise

Tribunal allows Cenvat credit on valid invoices; upholds credit for capital goods under EPCG scheme

COMMISSIONER OF CENTRAL EXCISE, DELHI-IV Versus VENUS INDUSTRIAL CORPORATION LTD

The Tribunal ruled in favor of the respondents, allowing them to avail Cenvat credit based on supplementary invoices issued by M/s Maruti Udyog Ltd. The ... Denial of CENVAT Credit - Availment on the basis of supplementary invoices - Commissioner allowed credit - Held that:- there is no dispute that M/s Maruti Udyog Ltd. had earlier imported the goods under EPCG scheme without payment of duty. The duty became payable subsequently as M/s Maruti Udyog Ltd. could not fulfil the export obligation. Accordingly duty was paid by M/s Maruti Udyog Ltd. in March, 2002 by way of supplementary invoices on the basis of which the respondents has availed the credit. From the said facts, it can be reasonable concluded that there was no suppression, fraud, misstatement etc. with an intent to evade duty. As such the exception carved out in Rule 7(1)(b) is not available in the present case. In the absence of the same, the supplementary invoices raised by M/s Maruti Udyog Ltd. have to be held as eligible document for the purpose of availment of credit - show cause notice was raised on the sole ground that the respondents are not owners of the said capital goods and as such the availment of credit was not justified - Following decision of Maruti Udyog Ltd. [2003 (10) TMI 166 - CESTAT, NEW DELHI] and Pepsi Foods Ltd. reported as [2010 (2) TMI 608 - PUNJAB & HARYANA HIGH COURT] and SGS India P. Ltd. reported as [2011 (3) TMI 759 - CESTAT, MUMBAI] - Decided against Revenue. Issues:1. Denial of Cenvat credit on the basis of supplementary invoices issued by another company.2. Determination of eligibility of Cenvat credit on capital goods received under the EPCG scheme.3. Interpretation of Rule 7(1)(b) of Cenvat Credit Rules, 2002 regarding supplementary invoices for availing credit.4. Ownership of capital goods as a criterion for availing credit.Detailed Analysis:Issue 1: The appeal was filed by the Revenue against the order of the Commissioner (Appeals) denying Cenvat credit of Rs.27,33,254/- availed by the respondents based on supplementary invoices issued by M/s Maruti Udyog Ltd. The original adjudicating authority confirmed the denial, citing that the goods were not transferred in the name of the respondents, and hence, they were not the owners of the goods. The Tribunal examined the facts and held that the denial of credit was not justified as the supplementary invoices were valid duty paid documents under Rule 7(1)(b) of the Cenvat Credit Rules, 2002.Issue 2: The dispute revolved around the eligibility of Cenvat credit on capital goods received by the respondents under the EPCG scheme. The Revenue contended that the credit availed in 2002 for goods received in 1994 was not in accordance with the law. However, the Commissioner (Appeals) noted that since no duty was paid on the imported capital goods initially, and duty was paid later by M/s Maruti Udyog Ltd., the denial of credit was unwarranted. The Tribunal agreed, emphasizing that there was no intent to evade duty, making the supplementary invoices eligible for credit.Issue 3: Rule 7(1)(b) allows the availing of credit based on supplementary invoices issued by a manufacturer or importer, with exceptions for fraud, collusion, or contravention of the law. The Tribunal found that in this case, the duty on the imported goods became payable later due to the failure to fulfil export obligations, and there was no evidence of fraud or suppression. Therefore, the supplementary invoices were deemed valid for availing credit, in line with the provisions of the rule.Issue 4: The Revenue's appeal also raised the issue of ownership of the capital goods as a criterion for availing credit. However, the Tribunal referred to previous decisions where it was established that ownership of the goods is not a decisive factor for claiming credit. Citing precedents such as Maruti Udyog Ltd., Pepsi Foods Ltd., and SGS India P. Ltd., the Tribunal rejected the Revenue's argument, stating that ownership is not a prerequisite for availing Cenvat credit. The appeal was consequently dismissed on this ground as well.