2020 (2) TMI 1605 - AT - Central Excise

CESTAT Mumbai: Appellants Win CENVAT Credit Dispute

CEAT Ltd. AND Mr Umesh Mishra Versus Commissioner of Central Excise Mumbai – III

CEAT Ltd. AND Mr Umesh Mishra Versus Commissioner of Central Excise Mumbai – III - TMI Issues:- Recovery of CENVAT credit, interest, and penalties under the Central Excise Act, 1944.- Availment of credit against documentation not consistent with CENVAT Credit Rules, 2004.- Dispute regarding the eligibility for CENVAT credit on imported goods.- Comparison of decisions by jurisdictional authorities and Tribunal rulings.- Rectification of supplier's invoices and discharge of duty liability.- Competence of jurisdictional authorities to deny credit based on non-leviability.- Applicability of penalties imposed on the assessee and individual employee.Analysis:The judgment by the Appellate Tribunal CESTAT Mumbai addressed two appeals concerning the recovery of CENVAT credit, interest, and penalties under the Central Excise Act, 1944. The dispute arose from the availment of credit against documentation that did not comply with the requirements of the CENVAT Credit Rules, 2004. The jurisdictional excise authorities contended that the credit claimed was inconsistent with the rules, specifically regarding the supplier's invoices and the special additional duty. The appeals challenged the order-in-original that confirmed the non-eligibility for credit and imposed penalties on the assessee and an individual employee.The appellants argued that similar proceedings against credit availment had been dropped for their unit in Nashik, citing a previous order that was accepted without appeal. They also referred to Tribunal decisions favoring other customers in similar disputes. The appellants emphasized the utilization of goods and the discharge of duty liability, arguing that technical lapses should not hinder the substantive application of the CENVAT credit scheme. They relied on various Tribunal decisions and a High Court ruling to support their contention.Additionally, the appellants highlighted that all supplier invoices were rectified to address deficiencies, and the discharge of special additional duty was not in question. They asserted that the jurisdictional authorities lacked the competence to deny credit based on non-leviability, citing Tribunal rulings and a High Court decision to support their position. The Tribunal noted that the controversy had been previously addressed by the Commissioner of Central Excise in Nashik, upholding the eligibility for CENVAT credit despite deficiencies. Rulings from the Tribunal and High Court further supported the eligibility for credit and the inapplicability of penalties.Ultimately, the Tribunal found in favor of the appellants, setting aside the impugned order and allowing the appeals. The judgment concluded that the demand for recovery was unsustainable, leading to the failure of penalties imposed on the assessee and the individual employee.