IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
EASTERN ZONAL BENCH
Appeal No. E/75929/15
(Arising out of Order-in-Appeal No.193/KOL-IV/2015 dated 01.07.2015 passed by the Commissioner(Appeal-II) of Central Excise, Kolkata.)
M/s.BMN Alloy Steels Pvt.Ltd.
Applicant (s)/Appellant (s)
Commissioner of Central Excise, Kolkata-IV
Shri S.P.Siddhanta, Consultant for the Appellant
Shri J.Bose, AC(AR) for the Revenue
Honble Shri P.K.Choudhary, Member(Judicial)
Date of Hearing :- 17.01.2017
Date of Pronouncement :- 15.03.2017
Per Shri P.K.Choudhary.
Briefly stated the facts of the case are that the appellants were engaged in the manufacture of Non-Alloy steel ingot, Non-Alloy steel forged bar, Alloy steel ingot etc. classifiable under Chapter 72 & 73 of Central Excise Tariff Act, 1985. During the scrutiny of the records by the Central Excise officers, it was noticed that the invoices raised by the manufacturer mentioned the appellant as a consignee and the buyers of the goods were someone else. According to the Revenue, the appellant purchased the goods from the non-regd. dealers (appearing as buyers in the invoice) and not from any manufacturer or regd. dealers. A Show Cause Notice dated 22.10.2013 was issued proposing to deny the Cenvat Credit along with interest and to impose penalty. The Adjudicating Authority confirmed the demand of Central Excise duty of Rs.9,06,438/- along with interest and imposed penalty. By the impugned order, the Commissioner(Appeals) rejected the appeal filed by the appellant. Hence, the present appeal.
2. Heard both sides and perused the appeal records.
3. I find from the impugned orders that the main allegation against the appellant is that the appellant failed to submit any documentary evidence to substantiate their claim that the goods have been received from the manufacturer or dealers and used in or in relation to the manufacture of finished goods. The ld.Counsel appearing on behalf of the appellant relied upon various decisions. The ld.A.R. appearing on behalf of the Revenue submitted that there is a violation of Rule 3(4) of the Cenvat Credit Rules, 2004. Rule 9(4) of Cenvat Credit Rules, 2004 provides that the Cenvat Credit in respect of inputs as capital goods purchased from the dealers shall be allowed only if such dealers have maintained records on which duty was paid by the producer of such inputs or capital goods and only an amount of such duty on pro-rata basis has been indicated in the invoice issued by him. For proper appreciation of the case, the relevant portions of Rule 9 are reproduced below:-
RULE 9. (1) The CENVAT Credit shall ., namely :-
* * * * * * * *
(2) No CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document :
[(3) * * * * *]
(4) The CENVAT credit in respect of input or capital goods purchased from a first stage dealer or second stage dealer shall be allowed only if such first stage dealer or second stage dealer, as the case may be, has maintained records indicating the fact that the input or capital goods was supplied from the stock on which duty was paid by the producer of such input or capital goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him .
(5) The manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value, duty paid, CENVAT credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit.
On close reading of Rule 9, it is apparent that the Cenvat Credit shall be taken on the basis of the documents as specified in sub-rule (1) of Rule 9 of Cenvat Credit Rules, 2004. In terms of Rule 9(2), the Cenvat Credit shall be disallowed if all the particulars as mentioned in sub-rule (1) are contained in the said documents. Sub-rule (4) and (5) of Rule 9 respectively are required for maintenance of the records by the dealers and the manufacturers of the final products respectively. The expressions a manufacturer shall be allowed to take credit (hereinafter referred to as the Cenvat credit) of (i) the duty of excise . Paid on any input or capital goods received in the factory of manufacturer of final productsin Rule (3)(1) make it clear that the manufacturer would take the Cenvat credit of the duty of excise paid on any inputs received by the manufacturer of final products. In the present case, there is no dispute that the appellant on the basis of the documents as indicated in Rule 9(1) of Cenvat Credit Rules, 2004 availed the credit. Further, the appellant as manufacturer of the final product, maintained the records as provided in Rule 9(5) of the Rules.
4. In my considered view Rule 9(4) is applicable in respect of maintenance of the records by the dealers. It is a case that the appellant availed the credit on the basis of the documents through a middleman and the inputs were directly received by the appellant from the dealer who was registered with the Central Excise authorities.
5. I find that the Tribunal on an identical issue in the case of Jupiter Alloy & Steel (India) Ltd. v. CCE, Kolkata-IV, vide Order No.FO/75874/2016 dated 23.08.2016 allowed the credit. The relevant portion of the said decision is reproduced below:-
4. Heard both sides and perused the case records. The issue involved in this proceeding is whether the appellant will be eligible to take cenvat credit on documents of the manufacturer when consignee (appellant) is directly receiving the inputs along with the documents but there is an intermediate buyer. First Appellate Authority in paragraph-6 of OIA dated 26.12.2013 has discussed CBEC Circular No. 218/52/96-CX dated 04.06.1996 but has taken a contrary view in paragraph-7 on the grounds that particulars of the invoices are not sufficient to satisfy the conditions of Rule 11 of the Central Excise Rules, 2002.
4.1. It is observed that CBEC vide Circular No. 218/52/96-CX dated 04.06.1996 has clarified as follows:-
The Board vide its Circular No. 96/7/95-CX, dated 13-2-1995 clarified that under the heading Transit salemovement of goods could take place directly on a Rule 52A invoice from the manufacturers premises to the users premises on an order being placed by the dealer of excisable goods without being brought to the latters premises. The duplicate copy of the manufacturers invoice issued under the provisions of rule 52Awill serve as a cover for transport and for availment of Modvat credit.
2. Representations have been received to the effect that the Central Excise field authorities are insisting that such dealers taking part in transit saleshould get themselves registered with the Department.
3. The matter has been examined by the Board. I am directed to say that as the movement of goods in such cases will take place on the manufacturers invoice issued under the Rule 52A which will also be treated as a valid duty paying document and no separate invoice under the provisions of Rule 57G is required to be issued in such cases, such persons taking part in transit sale need not get themselves registered.
4.2 From the above clarification it is clear that such persons who are taking part in transit sale need not get themselves registered as per provisions of Rule 57G of the Central Excise Rules, 1994. In this clarification it is nowhere mentioned that dealer taking part in the transit sale should be a registered dealer. In view of the above procedure followed by the appellant is inconsonance with the procedure prescribed by the department. Secondly, there is no dispute that both the duty paid inputs and the documents indicating payment of duty were received by the appellant and used in the manufacture of finished goods. It is now a well accepted legal proposition that minor procedural lapses cannot be made as a basis for denying credit to the manufacturer.
5. In view of the above observations appeal filed by the appellant is allowed.
6. In view of the above discussion the impugned order is set aside. The appeal filed by the appellant is allowed.
(Pronounced in the open court on 15.03.2017.)