TaxTMI 
TaxTMI 
2018 (2) TMI 131
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....lant no.2). M/s Chemicals Sales is not a registered dealer with the Central Excise Department, but is a trader, who issued the invoices to M/s Hindustan Unilever Ltd. The Revenue was of the view that the invoices not having been issued by a registered dealer, are not the proper documents under Rule 9 of Cenvat Credit Rules. Second issue pertains to taking of 100% Cenvat credit of Rs. 53,005/- on the capital goods by M/s Hindustan Unilever Ltd in first year itself claiming them as inputs whereas the Revenue is of the view that the same are the capital goods and hence the appellant no.1 should have taken Cenvat credit to the extent of 50% of the duty paid on such capital goods. Accordingly, a show cause notice was issued on 17.02.2012. In the adjudication order dt. 03.09.2012, the entire demand of Rs. 2,06,028/- was confirmed along with penalty of Rs. 2,06,028/- under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Penalty of Rs. 1,53,023/- was also imposed on M/s Chemicals Sales, Rajpura. Both the appellants went in appeal before the Commissioner (Appeals). In his order dt. 25.04.2013, Ld. Commissioner (Appeals) rejected both the appe....
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.... imposition to penalty under Rule 26(2)(ii). 3.3 On the second issue, the contention is that there is no allegation that the items procured are classifiable as capital goods being spare parts of the machinery used to manufacture of excisable goods. Contention is that as they had reversed the Cenvat credit on 04.03.2011, the credit taken in advance may attract interest liability but the demand was not sustainable. 4. Ld. A.R. submits that the appellant no.2 have to show that they have not issued central excise invoice and he drew attention to pages 63-74 of the appeal filed by the appellant no.2 to contend that they had fraudulently acted as registered dealer during impugned period and also collected central excise duty. He also drew attention to the finding of the adjudicating authority in para 10, 11 and 12 of the adjudication order to argue that the appellant no.2 was complicit in fraudulent availment of inadmissible Cenvat credit by the appellant no.1. He argued that the key issue is whether Chemical Sales, Rajpura, who is not a first or second stage dealer can issue Cenvatable invoices. The question of whether the invoice contains all the details comes after satisfying th....
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....he party no.1 has correctly availed Cenvat credit of Rs. 153023 of the duty paid on Caustic Soda Liquid, on the strength of invoices issued by party no.2 i.e. M/s Chemicals Sales, Rajpura. The Revenue alleged that the party no.2 was a first stage dealer but was not registered with the department during the material period and as such party no.1 was not entitled to avail of Cenvat credit on the basis of invoices issued by the party no.2. On the other hand, the party no.1 in its defence has submitted that although the party no.2 was not registered during the period in dispute but the party no.2 had purchased the said goods from M/s Siel Chemical Complex who were the manufacture of the said inputs. The party no.1 also submitted a table to establish this linkage (refer para 10.4). The party no.1 has further submitted that duty payment character, receipt of impugned goods and utilization thereof in the manufacture of dutiable final products is not in dispute and hence credit is not deniable. In this regard, I observe from the copies of invoices issued by the party no.2 and the invoices issued by M/s Siel Chemical Complex, Rajpura (produced by the party no.1) that the party no.2....
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....ty is established, liberal interpretation should be given. I find that the facts and context of the present case are completely different from the above cited cases. Hence, they are not applicable to the facts of this case. Besides, the requirement that an invoice should be issued by a manufacturer or importer or a registered dealer is a substantive condition, which can not be relaxed as it would be prone to immense misuse. Registration obtained after the detection of the case, would not convert a substantive requirement to a procedural requirement. Hence the above case laws do not come to rescue of the appellants. 8. On the issue of limitation and penalty on the appellant no.1, the appellants have argued that they had declared the availment of Cenvat credit in the ER-1 returns and there was no suppression of the facts or any misstatement. In this regard, they have relied on the various judgments in their pleadings.. The appellants have however not elaborated as to how each of the judgments is applicable to the facts of their case. However, I find that appellants while declaring availement of Cenvat credit in the ER-1 returns have misstated the facts because the invoices, on whi....
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....redit. Thus, they are liable to penalty under Rule 26(2)(ii) of the Rules. The appellants have also contested that their issue was not covered by any of the provisions of Rule 26(1) or 26(2) of the Rules. For reference, Rule 26(2)(ii) is reproduced below: "(ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the Rules made there under like claiming of CENVAT Credit under the Cenvat Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater." I observe that their offence is of the nature mentioned in Rule 26(2)(ii) of the Rules and hence penalty has righty been imposed on the appellants no.2 under Rule 26 of the Rules. In view of the above, on the first issue pertaing to irregular credit of Rs. 1,53,023/-, there is no infirmity in the order of Commissioner (Appeals) and the same is upheld. Penalties on both appellants are also upheld. 10. On the second issue pertaining to Cenvat credit on capital goods, I find that the Commissioner (Ap....