M/S. Aplab Ltd vs Commissioner Of Central Excise, ...

(Arising out of Order-in- Appeal No. BC/345/M-III/2012 dtd. 25/10/2012 and No. BC/369/M-III/2011-12 dated 14/3/2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-III]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

M/s. Aplab Ltd. : Appellants

VS

Commissioner of Central Excise, Mumbai-III : Respondent

Appearance

Ms. Anjali Hirawat, Advocate for the Appellant Shri. Ashutosh Nath, Asstt. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial) Date of hearing: 15/5/2015 Date of decision: 15/5/2015

ORDER NO.

Per : Ramesh Nair

These two appeals are directed against followings orders:- SR. NO. APPEAL NO. AGAINST ORDER ORDERS-IN- APPEAL NOS Vide show cause notice Original order upheld by the Ld. Commissioner(Appeals) 1 E/85528/13-MUM

NO. BC/345/M-III/2012 dtd. 25/10/2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-III F. No. V/Adj/W-I/SCN/15-24/Aplab/11-12 dated 4/1/2012 The demand of Cenvat Credit of Rs. 2,65,805/-, reduced penalty from Rs. 2,65,805/- to Rs. 1 lakh and upheld the demand of interest.

2 E/899/12-MUM No. BC/369/M-III/2011-12 dated 14/3/2012 passed by the Commissioner of Central Excise (Appeals), Mumbai-III F.NO. V. Adj (SCN)15-34/W-I/M-III/2010 dated 29/09/2010 The demand of Cenvat Credit of Rs. 14,44,971/-, ordered recovery of interest, and imposed penalty of equal amount of duty.

F.NO. V. Adj /W-I/SCN/15-78/Aplab/2011-12/1457 dated 6/5/2011 The demand of Cenvat Credit of Rs. 2,14,179/-, ordered recovery of interest, and imposed penalty of equal amount of duty.

The facts of the case is that appellant being manufacturer availed Cenvat credit on the invoices wherein appellant name appearing as consignee and in the column of the buyer, name of the dealer M/s. Somaiya Steel Corporation/ M/s. Hansraj Karsanraj & Co. are mentioned. On this basis, Revenue has alleged that since appellant is not buyer as per the invoices and they are not making payment of the said invoices to manufacturer supplier, therefore documents are invalid documents and credit is not admissible on such documents. Accordingly, it was proposed to disallow Cenvat Credit on such invoices amounting to Rs. 2,65,805/-for the period Jan-2011 to Nov. 2011. After consideration of submission made by the appellant before the adjudicating authority, demand of Cenvat Credit, imposition of penalty of equal amount and interest were confirmed by order in original dated 30/3/2012. Aggrieved by the said order, appellant filed appeals before the Commissioner(Appeals) who vide impugned order dated 25/10/2012 modified the order-in-original inasmuch as maintained confirmation of demand of Cenvat Credit however reduced the penalty to Rs. 1 lakh and maintained demand of interest. Aggrieved by the said order, the appellant filed this appeal.

2. Ms. Anjali Hirawat, Ld. Counsel for the appellant submits that Cenvat credit was denied on the ground that invoices wherein appellants name is appearing as consignee and buyers name as M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., are invalid invoices for taking Cenvat credit. The Revenue has contended that credit can be allowed only on the basis of invoice of first stage and second stage dealer. In the present case M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., have not issued invoices in the capacity of first stage or second stage dealer, on this count credit was denied. She submits that it is general trade practice that sale invoices contains two column which is as per prescribed format that one column for name and address for the buyers and second is for name and address of consignee. In such case appellant being consignee of the goods, they are entitled to credit irrespective of the fact that as per that invoices buyer is same intermediately dealer or distributors. It is her submission that even though the credit was taken on the invoices wherein the appellants name is appearing as consignee but in fact the appellant is buyer of the goods from the M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., who are actual seller of the goods to the appellant. However, manufacturer invoices clearly shows appellant name as consignee. She also submits that it is wrong to say that invoices on which credit was taken is invalid for the reason that it was not issued by first stage or second stage dealer. Since invoices were issued by the manufacturer against payment of duty and that invoices shows the appellant as consignee there is no need of any invoices of first stage or second stage dealer. She also submits that for availment of credit it is not necessary that there should be direct sale purchase transaction under Cenvatable invoices then only Cenvat Credit can be allowed. So long name of the appellant bearing on the invoices as consignee and there is no dispute about the receipt of the material, Cenvat credit can not be denied. She placed reliance on following judgments:

(a) Kunststoff Polymers Ltd. Vs. CCE[2009(247) ELT 546(Tri. Del)]

(b)Malwa Cotton Spg. Mills Ltd. Vs. CCE[2002(144) ELT 645(Tri.Del.)].

(c) CCE Vs. Transformers & Rectifiers (India) Ltd. [Tax Appeal No. 1332 of 2011with Tax Appeal No. 1358 of 2011. She submits that in above judgments similar facts of consignee and buyer was involved and credit was allowed. She submits that in the following judgments it has been held that the payment towards input procurement, purchase of input is not criterion of availment of credit.

(a) Exide Industries Ltd. Vs. CCE [2008(226) ELT 249 (Tri- Kolkata]

(b) CCE Vs. Vishnu Chemicals Pvt. Ltd. [2009(245) ELT 397(Tri- Mum.)]

(c) Hindalco Industries Ltd. Vs. CCE. [Cestat order No. S-248/A-329/KOL/2009 dated 11/6/2009]

3. On the other hand, Shri. Ashutosh Nath, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.

4. I have carefully considered the submissions made by both sides and perused record.

5. Before arriving at my conclusion, I feel it is necessary to go through the provisions which provides documents which are required for allowing availment of Cenvat Credit. In this regard I reproduce Rule 9 of Cenvat Credit Rules, 2004:

9. Documents and accounts.-

(1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely :-

(a) an invoice issued by-

(i) a manufacturer for clearance of -

(I) inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer;

(II) inputs or capital goods as such;

(ii) an importer;

(iii) an importer from his depot or from the premises of the consignment agent of the said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002;

(iv) a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002; or

(b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made there under with intent to evade payment of duty.

Explanation.- For removal of doubts, it is clarified that supplementary invoice shall also include challan or any other similar document evidencing payment of additional amount of additional duty leviable under section 3 of the Customs Tariff Act; or

(c) a bill of entry; or

(d) a certificate issued by an appraiser of customs in respect of goods imported through a Foreign Post Office; or

(e) a challan evidencing payment of service tax by the person liable to pay service tax under sub-clauses (iii), (iv), (v) and (vii) of clause (d) of sub-rule (1) of rule (2) of the Service Tax Rules, 1994; or

(In clause (e) the words, brackets and figures "sub-clauses (iii), (iv), (v) and (vii)" has been amended vide Notification No. 10/2006-CE(N.T.), dated 25/04/2006)

(In clause (e) words ", (iv) and (v)" has been substituted vide Notification No. 28/2005-CE(N.T.), dated 07/06/2005)

(f) an invoice, a bill or challan issued by a provider of input service on or after the 10th day of, September, 2004; or

(g) an invoice, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994.

Provided that the credit of additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) shall not be allowed if the invoice or the supplementary invoice, as the case may be, bears an indication to the effect that no credit of the said additional duty shall be admissible;

[ inserted vide Notification No. 35/2007 - CE(NT), dated 14-09-2007 ]

10/2007 - CE(NT), dated 01-03-2007 ]

From the plain reading of the above Rule 9, which prescribed documents on which Cenvat credit is allowed, it can be seen one of the document as mentioned in clause (a) of subject rule 9 (1) is an invoice issued by manufacturer for clearance of inputs or capital goods from his factory. In the present case, invoices, on which credit was disputed was issued by manufacturer and the appellants name is clearly appearing as consignee therefore the invoices in question squarely covered by clause (a) of sub rule 1 of Rule 9. I do not agree with the Revenues contention that in case of purchase of input from dealer invoices should be issued by first stage dealer or second stage dealer. In my view only in case where the input is purchased directly from a dealer on his invoices and the manufacturer invoices is not indicated the name of the recipient as consignee the first stage dealer or second stage dealer as case may be is registered with Central Excise should issue invoices as provided under Rule 11 of Central Excise Rules, 2002. However, in the present case invoices on which credit was taken issued by manufacturer and appellants name is appearing as consignee, in such cases credit is admissible on these invoices and there is no need of separate invoices to be issued by the registered dealer for taking credit.

As regard the contention of the Revenue that since appellant has not made payment for purchase of the input of the manufacturer supplier therefore Cenvat credit is not admissible, this contention is found absurd for the reason that manufacturer supplier as per the invoices, sold the goods to the dealers M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., and in turn M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., sold the goods to appellant in such transactions obviously there are sale purchase transactions is involved i.e. one from manufacturer supplier to M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., and second from M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., to the appellant therefore appellant made payment to M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., and cannot make payment of the bills to manufacturer supplier. Therefore contention of the Revenue on this count is not acceptable. I have also considered the judgments relied upon by the Ld. Counsel, ratio of these judgments squarely applicable in the facts of the present case.

I also found that for taking Cenvat Credit on input it is not mandatory that payment towards purchase of the input has to be made. There are number of transactions in the trade such as procurement input from group company, sister concern on payment of duty procurement of input for job work etc. in such transaction there is no transaction of any payments towards supply of inputs, despite this position Cenvat credit is admissible and can not be disputed so long input is duty paid, received in the factory and used in the manufacture. In view of my above discussion, I am of the considered view that appellant have correctly and legally availed the Cenvat Credit on the invoices wherein appellant name is appearing as consignee and name of the M/s. Somaiya Steel Corporation and M/s. Hansraj Karsanraj & Co., appearing as buyer therefore I set aside the impugned order and allow the appeals.

(Operative part pronounced in court)

Ramesh Nair Member (Judicial)

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