2019 (3) TMI 1423 - AT - Central Excise

Appellate tribunal allows appeal on CENVAT credit despite name change

The appellate tribunal ruled in favor of the appellant, allowing the appeal due to the peculiar factual circumstances of the case. The tribunal emphasized ... CENVAT Credit - capital goods - change in constitution of the company - invoice in the name of predecessor entity - period January 2014 to April 2014 - Held that:- This is a rather unusual case where the assessee lost the invoice of capital goods purchased in 2008. Thereafter, they changed the name and constitution of their company twice. Each time, on their request, the department has changed the name of their company in their Central Excise registration certificates, without changing the registration number - Since the name of the company has been changed, the invoice is in a different name and not in the name of the appellant; it was in their former name. There is nothing in the rules which disentitles an assessee to avail CENVAT Credit if they change their name and the invoice is in their former name. In fact, it is also not required for the invoice to be in the name of the assessee as long as the goods in question are received and used. In the case of mergers/acquisitions for instance, the assets and liabilities gets transferred to the successor entity while the invoices will be in the name of the predecessor entity. This itself would not be a ground to deny them CENVAT Credit. Similarly in case of job work, the inputs might have been used by the job worker but the invoice might have been raised in the name of the principal who purchased the goods, which also would not disentitle them to CENVAT Credit - there is no reason to deny the CENVAT Credit on the ground that the invoice is issued in the name of a different company. CENVAT Credit - second objection is that the CENVAT Credit has been taken after a gap of six years - Held that:- There is no limit of demand within which the capital goods credit can be taken or the time within which the goods should be put to use or the extent to which the capital goods must be used for manufacture of dutiable goods. Therefore, this ground also does not sustain. CENVAT Credit - duty paying documents - photocopy of the invoice - Rule 9 of CCR - Held that:- Rule 9 of CCR 2004 indicates that the documents on the strength of which CENVAT Credit can be taken, Rule 9 (a)(i)(I) indicates that an invoice issued by the manufacturer or a service provider for clearance of inputs for capital goods CENVAT Credit. In this case, the original invoice and the duplicate copy of the transporter invoice issued by M/s BHEL Bhopal is lost, hence the appellant could not avail the CENVAT Credit on a photocopy of the invoice duly certified by the supplier M/s BHEL, Bhopal. There is no evidence whatsoever on record that the goods in question were not received by the appellant or were not put to use. There is also no evidence on record to show that the appellant has already availed CENVAT Credit on the strength of the invoice and this is a duplication of credit - appellant was entitled to CENVAT Credit taken by them and the same is not required to be reversed. Time limitation - Held that:- The credit was taken in January 2014 to April 2014 and the audit was conducted the next month i.e. May 2014 during which this issue was pointed out as a discrepancy but the show cause notice was issued only on 29.06.2016 or beyond the normal period of limitation when the department was fully aware of the sequences of events - the entire demand is also hit by limitation. Appeal allowed - decided in favor of appellant. Issues:- Availment of CENVAT credit on capital goods- Change in company name and its impact on credit availment- Time limit for availing CENVAT credit on capital goods- Validity of availing credit on a photocopy of the invoice- Limitation period for issuing show cause noticeAnalysis:1. Availment of CENVAT credit on capital goods:The appellant, engaged in cement manufacturing, availed CENVAT credit on capital goods supplied by M/s BHEL. The department raised objections regarding the credit availed, citing issues with the invoice details and lack of corroborative evidence. The appellant provided supporting documents and explanations, asserting the proper use of the goods in the manufacturing process. The dispute centered around the validity of the credit availed and compliance with CENVAT Credit Rules, 2004.2. Change in company name and its impact on credit availment:The appellant changed its company name, leading to discrepancies in the invoice details. The lower authorities contended that the change in name affected the credit availment process. However, the appellate tribunal noted that as long as the goods were received and used for manufacturing, a mere change in the company name did not disentitle the appellant from claiming CENVAT credit. The tribunal emphasized that invoices in different names due to mergers or acquisitions do not automatically invalidate credit claims.3. Time limit for availing CENVAT credit on capital goods:The tribunal clarified that there is no explicit time limit specified in CENVAT Credit Rules, 2004 for availing credit on capital goods. It highlighted scenarios where delays in availing credit could be justified, such as when goods are procured but not immediately installed or used in manufacturing. The tribunal emphasized that the essential criterion for credit availment is the actual receipt and utilization of the goods, rather than a strict time frame for claiming credit.4. Validity of availing credit on a photocopy of the invoice:The appellant faced objections for availing credit based on a photocopy of the invoice certified by the supplier, as the original invoice was lost. The tribunal examined Rule 9 of CCR 2004, which specifies the documents required for CENVAT credit. It concluded that the certified photocopy of the invoice from the supplier, a Public Sector Undertaking, was credible and valid for credit availment. The tribunal emphasized that the absence of evidence indicating misuse or duplication of credit supported the appellant's claim.5. Limitation period for issuing show cause notice:Regarding the limitation period for issuing show cause notices, the tribunal noted that the demand was raised beyond the normal period of limitation. Despite the discrepancy being highlighted during an audit in May 2014, the show cause notice was issued in June 2016. The tribunal deemed the delay in issuing the notice as a factor impacting the validity of the demand, ultimately ruling in favor of the appellant on both merit and limitation grounds.In conclusion, the appellate tribunal set aside the impugned order, allowing the appeal in favor of the appellant due to the peculiar factual circumstances of the case.