2014 (9) TMI 105 - AT - Central Excise

Tribunal grants CENVAT credit for endorsed invoices, emphasizes lease agreement over sale

M/s KAILASH STEELS, ASMOLI Versus COMMISSIONER OF CENTRAL EXCISE

The Tribunal ruled in favor of the appellant, allowing the appeal and granting CENVAT credit of Rs. 10,26,070. The decision overturned the lower ... Availability of CENVAT credit - endorsed invoices - invoices issued by the supplier of the inputs are in the name of M/s. DSM Sugars, Asmoli, though there is no dispute that the said capital goods were received by the appellant and were duly erected and installed in their premises and were used for the manufacture of dutiable and excisable goods - Held that:- this is not a case of sale of capital goods from one manufacturer unit to another. It is a case where the capital goods are bought by the lesser and transferred to the lessee's factory, under lease agreement for further manufacture of the final product. As such, I am of the view that the certificate given by M/s. DSM Sugars, Asmoli on the invoices indicating that are being transferred and in the absence of any dispute to the factual aspect, I find that the appellant is entitled to the CENVAT credit involved in the present appeal - Decided in favour of assessee. Issues: Availability of CENVAT credit on endorsed invoicesAnalysis:The appellant, engaged in manufacturing mould steel ingots and runners and risers under a lease agreement with M/s. DSM Sugar Asmoli, sought CENVAT credit of Rs. 10,26,070 on invoices issued by the supplier in the name of M/s. DSM Sugars. The dispute arose as the lower authorities deemed the endorsed invoices improper for claiming credit. However, the appellant argued that the goods were transferred under the lease agreement, not sold, citing relevant tribunal decisions. Notably, the Tribunal in previous cases held that endorsed invoices can be valid for credit in scenarios like inter-unit transfers within the same parent company. The appellant received and used the capital goods for manufacturing without any duty payment issues, supporting their claim for CENVAT credit.Conclusion:The judgment favored the appellant, setting aside the lower authorities' decision and allowing the appeal with consequential relief. The Tribunal found the endorsed invoices acceptable for claiming CENVAT credit due to the transfer of goods under the lease agreement and the absence of any sale transaction. The certificate from M/s. DSM Sugars, Asmoli confirming the transfer further supported the appellant's entitlement to the credit amount. The judgment emphasized the distinction between sale and transfer in the context of claiming CENVAT credit, aligning with precedents and relevant legal principles.