Cenvat credit on railway receipts linked to consolidated STTG cannot be denied on a hyper-technical reading of the circular.
Railway receipts containing the particulars required under Rule 9 of the Cenvat Credit Rules, 2004 remained valid documents for taking Cenvat credit even before issuance of the final STTG certificate, so interest for the intervening period was unsustainable. Where the railway receipts were specifically linked through annexures to a consolidated STTG, credit could not be denied merely because the STTG was not issued individually in the appellant's name. The circular was held not to warrant a hyper-technical approach when the linkage was established, and the substantive credit demand and connected penalty were set aside.
Issues: (i) Whether Cenvat credit taken on railway receipts, pending issuance of the final STTG certificate, could be denied and interest demanded for the intervening period; and (ii) whether Cenvat credit could be disallowed on the ground that the STTG was not issued individually in the appellant's name where the railway receipts were linked through annexures to a consolidated STTG.
Issue (i): Whether Cenvat credit taken on railway receipts, pending issuance of the final STTG certificate, could be denied and interest demanded for the intervening period.
Analysis: Railway receipts containing the particulars prescribed under Rule 9 of the Cenvat Credit Rules, 2004 remained valid documents for availment of credit even after the STTG certificate procedure was introduced. The earlier decision of the same Bench on identical facts was followed to hold that the appellant's credit claim on railway receipts was supported by proper documents.
Conclusion: The interest demand for the intervening period was unsustainable and was set aside.
Issue (ii): Whether Cenvat credit could be disallowed on the ground that the STTG was not issued individually in the appellant's name where the railway receipts were linked through annexures to a consolidated STTG.
Analysis: The railway receipts issued to the appellant were found to be specifically linked to the annexure accompanying the consolidated STTG, and the annexure in turn covered the relevant railway receipts. The requirement in Circular No. 1048/36/2016-CX dated 20.09.2016 was not to be applied in a hyper-technical manner when the linkage between the receipts and the STTG was established.
Conclusion: The demand of Rs. 5,94,24,913/- and the connected penalty were unsustainable and were set aside.
Final Conclusion: The appellant's credit entitlement was upheld in full, both the interest demand and the substantive demand were annulled, and the appeal succeeded with consequential relief.
Ratio Decidendi: Where railway receipts contain the particulars required under Rule 9 of the Cenvat Credit Rules, 2004 and are demonstrably linked to a consolidated STTG, Cenvat credit cannot be denied on a rigid or hyper-technical reading of the departmental circular.
TaxTMI 
AI Drafter ✕
TaxTMI 
