2019 (7) TMI 1619 - AT - Central Excise

Tribunal overturns order, grants appeal on legitimate Cenvat credit. Invoices compliant, no justification for denial.

M/s Yutaka Autoparts India Pvt. Ltd. Versus The Commissioner of Central Goods and Service Tax

The Tribunal set aside the adjudicating authority's order, allowing the appeal due to the legitimate Cenvat credit availed by the appellant. The invoices ... CENVAT Credit - credit of additional duty of customs - duty paying invoices - denial of credit on the ground that cenvetable invoices to the appellant did not mention the particulars of import documents against which the supplier has availed Cenvat credit and used the same for payment of duty on the auto parts supplied by them to the appellant - period from April 2010 to January 2015 - recovery of credit along with interest and penalty - HELD THAT:- The Adjudicating Authority asked the Jurisdictional Assistant Commissioner to undertake a verification of the invoices produced by the appellant to ascertain as to whether the invoices issued by the car manufacturer namely M/s Honda Cars India Ltd. on the strength of which Cenvat credit of additional duty of customs was availed by the appellant were proper documents or not, in the light of the provisions contained under Rule 11 of the Central Excise Rules, 2002 and Rule 3 (5) of the Cenvat Credit Rules, 2004. The Jurisdictional Assistant Commissioner was also asked to get the necessary verification done from the concerned Assistant Commissioner/Deputy Commissioner of the CGST Division having jurisdiction over the supplier of the goods namely M/s Honda Cars India Ltd. and to report whether the removal of the goods by M/s Honda Cars India Ltd. covered by these invoices were imported goods and duty passed on by them were in accordance with the Rule 3 (5) of Cenvat Credit Rules, 2004. There is no denial of the fact that the supplier of the components/parts to the appellants have imported the same on payment of countervailing duty and the supplier M/s Honda Cars India Ltd. has taken credit of the ADC which was being paid by them at the time of import. These components/parts have been cleared by M/s Honda Cars India Ltd. to the appellant on payment of central excise duty leviable on such components/ parts by debiting the same from the credits of the ADC paid by them at the time of import - It has been verified by the Jurisdictional Assistant Commissioner having jurisdiction over M/s Honda Cars India Ltd. that credits has been availed as per the legal provisions and same has been utilized for payment of central excise duty when inputs or capital goods are removed as such. The invoices on the strength of which the components/parts were cleared to the appellant by M/s Honda Cars India Ltd. have mentioned that “invoice for removal of excisable goods from a factory or warehouse on payment of duty under Rule 11 of Central Excise Rules readwith Rule 3 (5) of Cenvat Credit Rules, 2004. There is complete transparency from both side that is, from the supplier side and on the part of the appellant, on supply of inputs and their utilization as well as in availing of the Cenvat credit and its further utilization - there are no merit in the conclusion which has been reached by the Adjudicating Authority while denying the Cenvat credit to the appellant. Appeal allowed - decided in favor of appellant. Issues Involved:1. Wrongful availment of Cenvat credit by the appellant.2. Non-compliance with Rule 9(2) of the Cenvat Credit Rules, 2004.3. Procedural lapses in the supplier’s invoices under Rule 11 of the Central Excise Rules, 2002.4. Verification of invoices and genuineness of Cenvat credit availed.5. Extended period of limitation under Section 11A(4) of the Central Excise Act, 1944.Issue-wise Detailed Analysis:1. Wrongful Availment of Cenvat Credit by the Appellant:The appellant, engaged in manufacturing auto parts, availed Cenvat credit on additional customs duty paid by M/s Honda Cars India Ltd. (HCIL) on imported parts supplied to the appellant on a free-of-cost basis. The Department alleged wrongful availment of Cenvat credit as HCIL’s invoices lacked particulars of import documents. The adjudicating authority confirmed the charges and demanded recovery of Rs. 4,57,11,221/- along with interest and penalties.2. Non-compliance with Rule 9(2) of the Cenvat Credit Rules, 2004:The Department’s audit revealed that HCIL’s invoices did not mention the particulars of import documents, violating Rule 9(2) of the Cenvat Credit Rules, 2004. This rule stipulates that invoices must contain all particulars prescribed under the Central Excise Rules, 2002 or Service Tax Rules, 1994. The adjudicating authority upheld this non-compliance as a basis for denying Cenvat credit.3. Procedural Lapses in the Supplier’s Invoices under Rule 11 of the Central Excise Rules, 2002:The appellant contended that HCIL’s invoices complied with Rule 11 of the Central Excise Rules, 2002, which requires invoices to be serially numbered and contain specific details such as registration number, consignee’s name, description of goods, and duty payable. The appellant provided sample invoices demonstrating compliance with these requirements. The Tribunal noted that the non-mention of the fact that duty was paid from additional customs duty was a mere procedural lapse and should not deny the substantive benefit of Cenvat credit.4. Verification of Invoices and Genuineness of Cenvat Credit Availed:Following the Tribunal’s remand order, the adjudicating authority verified the invoices through the Jurisdictional Assistant Commissioner, who confirmed the genuineness of the invoices and compliance with Rule 3(5) of the Cenvat Credit Rules, 2004. The verification report indicated that the duty passed on by HCIL was in accordance with the rules, and no major discrepancies were found. The Tribunal emphasized that the adjudicating authority should have considered this verification report and not denied Cenvat credit on flimsy grounds.5. Extended Period of Limitation under Section 11A(4) of the Central Excise Act, 1944:The appellant argued that the demand for Cenvat credit reversal was time-barred as there was no element of suppression, fraud, or misrepresentation to evade duty. The Tribunal noted that the extended period of limitation was invoked without any evidence of such elements, and the demand was therefore not justified.Conclusion:The Tribunal found that the invoices contained all necessary details under Rule 11 of the Central Excise Rules, 2002, and there was transparency in the transactions between the supplier and the appellant. The verification report supported the appellant’s claim of legitimate Cenvat credit availed. Consequently, the Tribunal set aside the adjudicating authority’s order, allowing the appeal and refraining from addressing other issues raised by the appellant. The operative part of the order was pronounced in open court.