2008 (1) TMI 190 - AT - Central Excise

Tribunal rules in favor of Appellant, no purchase requirement for CENVAT credit

The Tribunal allowed the Appeal, ruling in favor of the Appellant, highlighting the absence of a purchase requirement for claiming CENVAT credit under the ... Whether excise duty amounting to Rs. 1,79,55,554.00 was recoverable for the credit of duty taken by the Appellant on the input received on stock transfer from another unit of the Appellant group, without purchase by the appellant or sale by that unit, u/r 57AH - nothing on record to state whether inputs so received were not used in manufacture- Not. 13/03 substituted the word ‘procured’ for the word ‘purchase’ in Rule 7(4), CCR guides to appreciate legislative intention – credit allowed Issues involved: Whether excise duty recoverable for credit of duty taken on input received on stock transfer without purchase or sale under Rule 57AH of Central Excise Rules, 1944.Analysis:1. Claim for CENVAT Credit: The Appellant argued that there is no condition in Rule 57AE requiring inputs to be purchased to claim CENVAT credit. They contended that the inputs in question were purchased by them and first received in their other factories before being used in the Haldia factory, thus not contravening Rule 57AE(3). The Appellant also cited previous decisions in their favor by Hon'ble CEGAT and argued that the extended period of limitation cannot be invoked, and penalty and interest are not imposable.2. Interpretation of Rules: The Appellant's counsel emphasized that Rule 57AC does not impose any condition that inputs must be purchased to claim CENVAT credit. They referred to specific cases and the judgment of the Hon'ble Supreme Court in Commissioner of Central Excise v. M/s. Ballarpur Industries Ltd., stating that the mode of acquisition of input is immaterial for granting CENVAT credit. They highlighted the definition of 'input' under Rule 57AA and argued that the essential condition of purchase is not required to be satisfied.3. Revenue's Argument: The Departmental Representative supported the order of the Authority below, arguing against interference and maintaining that the order was rightly passed.4. Tribunal's Decision: After hearing both sides and examining the record, the Tribunal found that the Appellant was not liable for the recovery sought by the impugned order. They noted that the substitution of 'procured' for 'purchase' in Rule 7 of CENVAT Credit Rules, 2002, and the absence of a requirement of purchase in Rule 57AC supported the Appellant's case. The Tribunal also considered the legislative intention behind Notification No. 13/2003 and previous decisions cited by the Appellant, leading to the conclusion that the Appellant was not liable for the recovery.5. Final Decision: The Tribunal allowed the Appeal and disposed of the stay petition in favor of the Appellant. The judgment highlighted the absence of a purchase requirement in the substantive Rule granting input duty credit, leading to the decision in favor of the Appellant.6. Additional Opinion: Member (T) agreed with the decision to allow the stay petition and the appeal, emphasizing that the word 'purchased' in Rule 57AE(3) pertains to maintaining inventory records and does not apply as a condition for claiming input duty credit.In conclusion, the Tribunal ruled in favor of the Appellant, highlighting the absence of a purchase requirement for claiming CENVAT credit under the relevant rules and previous judicial interpretations. The judgment provided a detailed analysis of the legal provisions and previous decisions, leading to the decision to allow the Appeal and dispose of the stay petition.