2018 (1) TMI 470 - AT - Central Excise

Tribunal grants Cenvat credit despite bill not in name, supports appellant's claim for Central Value Duty benefit.

The Tribunal allowed the appeal in favor of the appellant, ruling that the procedural conditions for Cenvat credit were met despite the bill of entry not ... Availment of Cenvat credit - receipt of duty-paid inputs in factory for use in manufacture - compliance with Rule 3 of the Cenvat Credit Rules, 2004 - proviso to Rule 9 of the Cenvat Credit Rules, 2004 - discretionary relief for procedural non-compliance - Customs-endorsed Cenvat declaration and consignment notes as evidentiary proof - requirement of application of mind by adjudicating authorityAvailment of Cenvat credit - receipt of duty-paid inputs in factory for use in manufacture - compliance with Rule 3 of the Cenvat Credit Rules, 2004 - proviso to Rule 9 of the Cenvat Credit Rules, 2004 - discretionary relief for procedural non-compliance - Customs-endorsed Cenvat declaration and consignment notes as evidentiary proof - requirement of application of mind by adjudicating authority - Whether Cenvat credit of CVD could be allowed to the contract manufacturer though the bill of entry was not in the name of the manufacturer, on the basis of customs-endorsed Cenvat declaration and consignment documents showing receipt of duty-paid inputs - HELD THAT: - The Tribunal found as fact that the inputs were imported by the principal manufacturer, the assessed consignment was diverted from the port to the appellant's factory, and Customs had endorsed the Cenvat declaration. Transport consignment notes recorded delivery to the appellant's factory on account of the principal. On these materials the Tribunal held that the substantive requirement of Rule 3 - that duty-paid inputs are received and used in manufacture - was satisfied. Although the bill of entry did not name the appellant as consignee (a procedural non-compliance under Rule 9), the proviso to Rule 9 could be invoked where other conditions demonstrate payment of duty and receipt for manufacture. The original adjudicating authority failed to apply mind in a judicious manner when rejecting credit solely on the basis of non-mention of the consignee in the bill of entry. Having examined the customs-endorsed declaration and consignment notes, the Tribunal was satisfied that the goods were received in the appellant's factory for the intended purpose and therefore Cenvat credit in respect of the CVD was allowable.Impugned order disallowing Cenvat credit and imposing penalty set aside; Cenvat credit in respect of CVD allowed to the appellant.Final Conclusion: Appeal allowed. The Tribunal set aside the adjudicating order and permitted Cenvat credit of the CVD on the imported inputs after holding that Customs-endorsed Cenvat declaration and consignment documents established receipt of duty-paid inputs in the appellant's factory and that the proviso to Rule 9 warranted relief from the procedural irregularity. Issues:- Disallowance of Cenvat credit on the grounds of bill of entry not being in the name of the appellant- Appeal against the order disallowing Cenvat credit and imposing penaltiesAnalysis:Issue 1: Disallowance of Cenvat credit based on bill of entry detailsThe appellant, a contract manufacturer for M/s Hindustan Unilever Ltd. (M/s HUL), availed Cenvat credit of Central Excise duty paid on inputs used in manufacturing detergents for M/s HUL. The dispute arose when goods imported by M/s HUL were diverted to the appellant's factory, and the appellant claimed Cenvat credit based on the Central Value Duty (CVD) amount mentioned in the bill of entry. The department disallowed the credit, citing the bill of entry not being in the appellant's name. However, the Tribunal found that the goods were indeed received by the appellant for the intended purpose of manufacturing excisable goods, fulfilling Rule 3 of the Cenvat Credit Rules. Although the bill of entry technically did not mention the appellant as the consignee, the Tribunal held that the procedural condition could be waived under Rule 9 due to the goods being used as intended. The Tribunal concluded that the appellant should be entitled to the Cenvat benefit for the CVD amount.Issue 2: Appeal against the order disallowing Cenvat creditThe appellant appealed against the order disallowing Cenvat credit and imposing penalties. The appellant's consultant argued that the goods were cleared by M/s HUL directly to the appellant's factory, supported by a certificate from M/s HUL stating the intended use of the goods and confirming that no Cenvat credit would be availed by them. The appellant also provided transport documents showing the delivery of goods to their site. On the other hand, the Revenue contended that only the bill of entry, not an endorsed copy or certificate, should be recognized for Cenvat credit. They raised concerns about the lack of endorsement by M/s HUL on the bill of entry and discrepancies in dates. After considering both arguments and examining the case records, the Tribunal found in favor of the appellant, emphasizing that the goods were received and used as intended, justifying the allowance of Cenvat credit.In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant, as the procedural conditions for Cenvat credit were deemed to have been met despite the technical discrepancy regarding the consignee details in the bill of entry.