Whether the Cenvat Credit is available on the strength of Xerox Copy of Bill of Entry?

We are sharing with you an important judgment of Hon’ble CESTAT-Mumbai in the case of Commissioner of Central Excise, Kolhapur Versus Shah Precicast (P) Ltd. [AIT-2012-292-CESTAT] on the issue:

Issue:

Whether the Cenvat Credit is available on the strength of Xerox Copy of Bill of Entry?

Facts:

In the present case, during the course of scrutiny of the records of M/s Shah Precicast (P) Ltd. (Respondent), it was found that they had taken Cenvat credit on the strength of the Xerox copy of the bill of entry. Therefore, the Revenue issued a show-cause notice for wrong availment of Cenvat credit on the strength of Xerox copy of bill of entry and proposing penalty for suppression of facts with an intention to evade duty. The same was adjudicated, demand was confirmed and penalty was imposed. Against that order, an appeal was filed by the respondent before the Commissioner (Appeals) who set aside the adjudication order and allowed the appeal. Aggrieved from the said order, revenue filed an appeal before the CESTAT-Mumbai.

The contention of the Revenue is that as per the provisions of Rule 9(1)(c) of the CENVAT Credit Rules, 2004, Xerox copy is not a proper document to avail CENVAT credit. Therefore, impugned order is to be set aside.

On the other hand, the respondent submitted that as the original copy of the bill of entry was not available with them, they lodged a police compliant and undertook to produce as and when the original copy would be available with them. Further, they made efforts to obtain certified of copy of the Bill of entry from the office of the Commissioner of Customs, Goa who denied their request. It is admitted that the goods have been received by the respondent, they have paid the duty on them and they have been used in the manufacture of the final product. Therefore, on the technical ground, credit should not be denied. The respondents have relied on the following cases in support of their contention:

• CCE v. Vikrant Tyres [2005 STT 189 (CESTAT)]
• Bombay Goods Transport Association v. UOI [1995 (77) E.L.T. 521 (Bombay HC DB]

Held:

It was held that the respondents are entitled for Cenvat credit availed by them on the strength of Xerox copy of the Bill of entry. The Hon’ble CESTAT observed that the respondents have made efforts to obtain certified copy of the bill of entry which was also denied to them. Further it is not disputed that the goods have suffered duty and they have been used in the manufacture of final product. Hence, the CESTAT concluded that substantial benefit cannot be denied on the basis of mere technical violation and rejected the appeal of the Revenue and decided the case in favor of the respondent.

List of Documents on which Cenvat Credit can be taken:

As specified in Rule 9 of the Cenvat Credit Rules, 2004, 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)        Invoice issued by a Manufacturer or an importer or a first stage dealer or a second stage dealer; or

(b)        Supplementary invoice, issued by a manufacturer or importer or a supplementary invoice, bill or challan issued by a provider of output except where the additional amount of duty/ tax became recoverable from the provider of service on account of non-levy or non-payment or short-levy or short-payment by reason of fraud or collusion or willful mus-statement or suppression of facts, etc.

(c)        Bill of entry; or

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

(e)        Challan evidencing payment of service tax, by the service recipient as the person liable to pay service tax; or

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

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

Precautions while taking the Cenvat Credit:

No CENVAT credit on above mentioned documents 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

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.

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.

The manufacturer of final products or the provider of output service shall maintain proper records for the receipt and consumption of the input services in which the relevant information regarding the value, tax paid, CENVAT credit taken and utilized, the person from whom the input service has 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.

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Bimal Jain
FCA, ACS, LLB, B.Com (Hons)
Mobile: +91 9810604563
E-mail: bimaljain@hotmail.com

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