2023 (1) TMI 931 - AT - Central Excise

Appeal allowed in CENVAT Credit denial case emphasizing substance over procedure.

M/s. S.L. Polypack Private Limited Versus Commissioner of CGST & CX, Howrah Commissionerate

The appeal was filed against the denial of CENVAT Credit due to technical lapses in invoices. The Member (Judicial) ruled in favor of the Appellant, ... Recovery of CENVAT Credit - ineligible duty paying documents - recovery sought on the ground that the invoices does not mention credit registration number of the consignee, registration number of the carrier vehicle and delivery of the goods was made at a place other than the factory - time limitation - HELD THAT:- It is undisputed that the goods covered under the invoices were actually received at the Appellant’s factory and those goods were used for manufacture of their final products. It is also undisputed that Excise Duty was paid on those goods which are subject matter of the invoices. In view of the documents submitted by the Appellants, it is found that there is no dispute that the goods have been received in the factory and accordingly the impugned order denying the CENVAT Credit in respect of the invoices is not correct. The substantive benefit cannot be denied on procedural grounds and accordingly the impugned orders cannot be sustained. The Appellants have vehemently fought on the issue of limitation. They pleaded that Show Cause Notice was issued on 01.08.2013 whereas the normal period expired much before that date. Further the Show Cause Notice was issued on the basis of audit of records maintained by the Appellant and therefore extended period cannot be invoked by alleging suppression since they are also submitting/filing the statutory returns on a regular basis. The Department was free to further investigate the matter and issue timely Show Cause Notice. The Appellants have a strong case on limitation and the Show Cause Notice is barred by limitation. Appeal allowed. Issues:Appeal against order of Ld. Commissioner of CGST & Central Excise (Appeals) regarding denial of CENVAT Credit on the basis of technical lapses in invoices, specifically related to missing details like credit registration number, vehicle number, and delivery location.Analysis:1. The Appellant, a manufacturer of Plastic Cups and Plates, received Plastic Granules for manufacturing but faced a Show Cause Notice proposing recovery of CENVAT Credit due to missing details in input invoices. The Appellant argued that despite technical lapses, the goods were received, utilized, and duty paid, justifying credit. The Adjudicating authority and Ld. Commissioner upheld the denial, leading to the current Appeal. 2. The Appellant's Advocate contended that minor procedural lapses like non-mention of vehicle number should not hinder credit entitlement. The discrepancy in delivery location on the challans and invoices was highlighted, emphasizing that goods were received at the factory. Reference to a Board Circular and limitation period defense were presented, supported by monthly return filings under CENVAT Credit Rules.3. The Department's Authorized Representative supported the lower orders, claiming the Appeal lacked merit. After hearing both sides, the Member (Judicial) analyzed the case, noting settled precedents favoring the Appellant. The goods were received at the factory, duty paid, and no dispute on these aspects existed. The Circular discouraging Show Cause Notices for procedural lapses without proper enquiry was cited, emphasizing that substantive benefits should not be denied on procedural grounds.4. The Member found the denial of CENVAT Credit unjustified, as the goods' receipt and duty payment were established. Emphasizing the Board's Circular and the Appellant's compliance with return filings, the Member ruled in favor of the Appellant. The issue of limitation was crucial, with the Show Cause Notice deemed time-barred due to the delayed issuance and lack of suppression evidence. Consequently, the impugned orders were set aside, and the Appeal was allowed with consequential relief, respecting the law.5. The judgment, delivered on 20 January 2023, overturned the previous decisions, emphasizing the importance of substantive benefits over procedural lapses and highlighting the significance of timely issuance of Show Cause Notices within the limitation period.