Crompton Greaves Ltd. Vs Commissioner of Central Excise (CESTAT Mumbai)
Held that Rule 16 allows the assessee to avail the cenvat credit of duty paid on the goods cleared by them, as if such goods are received as inputs
Facts-
Appellant, engaged in manufacture of excisable goods, had received in their factory excisable goods i.e. transformers along with accessories for repair/rectification without original duty paying documents from their customers. The appellant had filed an intimation with the Range officer about the receipt of the said goods into their factory for repairs. Subsequently, the appellant availed Cenvat credit in their Cenvat account in respect of transformers into their factory on the strength of Xerox/photocopy of triplicate copy of their invoice under which the goods were originally cleared by the appellant on payment of duty.
The assessee was aware that when the customer from whom the goods were received for repairs does not have the original duty paying documents, they were so required to apply for permission under Rule 16(3), of the Central Excise Rules, 2002 and applied the same.
The appellants availed duty credit of Rs. 1,27,611/- on rejected goods based on their original copy of the invoice. The lower authorities held that in as much as in terms of the provisions of Rule 16 of Cenvat Credit Rules, 2002 (sic) the credit on returned goods is admissible as “if such goods are received as inputs” under the Cenvat Credit Rules.
All the show cause notices have been adjudicated by the Commissioner by the impugned order. Aggrieved by the impugned order, appellants have preferred this appeal.
Conclusion-
Held that provisions of Rule 16 allow the assessee to avail the credit of duty paid on the goods cleared by them, as if such goods are received as inputs under the Cenvat Credit Rules, 2002. This is in the nature of deemed provisions where the final products returned by the buyer is deemed to be input by the assessee. The provisions of Rule 7, which specify the documents for the purposes of availment of credit in respect of inputs, would not apply to the provisions of Rule 16.
In the present case the appellant would be entitled to the credit, in terms of the said rules. Accordingly, I set aside the impugned order and allow the appeal with consequential relief to the appellants.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal is directed against order in original No 60-65/COMMR/M-III/PKA/2011-12 dated 20.02.2012/15.03.2012. By the impugned order following has been held:
“ORDER
A. I determine and demand Rs. 2,96,06,162.00 (Rupees Two crores ninety six lakhs six thousand one hundred sixty two only) being the CENVAT credit u/r 14 of CCR, 2004 r/w section 11A of the CEA, 1944 in respect of all the six demand notices. Since the assessee has already reversed/paid the amount of Rs 2,96,06,162/-, being the Cenvat Credit initially taken under rule 16(1), when the goods were cleared after repairs under rule 16(2) of the CER, 2002, the same stands appropriated automatically and no further demand/recovery is required to be made.
B. I order for recovery of interest of Rs.7,38,856/- (Rupees Seven lakhs thirty eight thousand eight hundred fifty six only) under rule 14 of the CCR, 2004 read with the then section 11AB of the CEA, 1944.
C. Since there is no misfeasance on the part of the assessee, the proposal for imposition of penalty under rule 15(1) of CCR, 2004/r/w rule 25 of CER, 2002 is not sustainable and, therefore, I do not impose any penalty.”
2.1 Appellant is engaged in the manufacture of excisable goods falling under chapter sub heading no. 8504.00 of the First Schedule of the Central Excise Tariff Act, 1985 viz. Transformers. The assessee is also availing facility of CENVAT credit.
2.2 The appellant had received in their factory excisable goods i.e. transformers along with accessories for repair/rectification without original duty paying documents from their customers. The appellant had filed an intimation with the Range officer about the receipt of the said goods into their factory for repairs. Subsequently, the appellant availed Cenvat credit in their Cenvat account in respect of transformers into their factory on the strength of Xerox/photocopy of triplicate copy of their invoice under which the goods were originally cleared by the appellant on payment of duty.
3. The assessee had applied for permission under Rule 16(3) of the Central Excise Rules, 2002 to receive back goods for repairs, rectification and were, therefore, aware that when the customer from whom the goods were received for repairs does not have the original duty paying documents, they were so required to apply for permission under Rule 16(3), of the Central Excise Rules, 2002. When the transformers were physically received, it was not accompanied by the duty paid documents and hence the assessee, it appears, was required to take prior permission from the Commissioner of Central Excise before bringing such goods into the factories. Therefore, it appeared that the Cenvat credit availed by them by following the procedure under Rule 16(1), of the Central Excise Rules, 2002 is improper and required to be disallowed and recovered from them under Rule 14 of the Cenvat Credit Rules, 2004 read with Sec, 11(A) of the Central Excise Act, 1944 as the same had been wrongly availed by them by following wrong procedure in contravention of sub rule (1) and sub rule (3) of Rule 16 of the Central Excise Rules, 2002 read with Rule 3 and Rule 9 (1) of the Cenvat Credit Rules, 2004. It has been further alleged that the assessee have rendered themselves liable for penalty and appropriate interest. In all the SCNs under reference the assessee had subsequently reversed/paid the amount of Cenvat credit which is also proposed for appropriation.
2.3 Thus revenue was of the opinion that appellant have contravened the provisions of Rule 16(1) and 16(3) of Central Excise Rules, 2002 read with Rule 9(1) of Cenvat Credit Rules, 2004 in as much as that they have availed of wrong Cenvat credit on the strength of invalid documents under Rule 16(1) of Central Excise Rules, 2002 instead of following the correct procedure as laid down under Rule 16(3) ibid. Six show cause notices as detailed in table below were issued to the appellant.
