Is endorsed bill of entry a valid document for claiming cenvat credit?
In this case it is not disputed the receipt of the material and duty paid on that.
The appellant is entitled for cenvat credit on the basis of endorsed bill of entry which, according to me, is a valid document for availing cenvat credit
CESTAT, MUMBAI BENCH
Commissioner of Central Excise, Pune-I
ORDER NOS. A/3957-3958/2015/SMB,
APPEAL NOS. E/1935 AND 1936/2010-MUM.
DECEMBER 22, 2015
Mohan Paranjpe, Advocate for the Appellant. H.M. Dixit, Asstt. Commissioner (AR) for the Respondent.
1. These appeals are directed against order-in-appeal No. PI/RKS/120-121/2010 dated 30.7.2010 passed by Commissioner of Central Excise (Appeals), Pune-I, upholding order-in-original.
2. Briefly the facts are that the appellant is the manufacturer of excisable goods viz. ‘mould release agent’ falling under Chapter Heading No. 34031900 and is availing cenvat credit facility as provided in Cenvat Credit Rules, 2004. The appellant received certain imported material through their associated company, M/s. Suyash Enterprises, and availed cenvat credit against bill of entry bearing No. 654296 dated 3.3.2006, 825019 dated 15.11.2006 and 774706 dated 6.2.2009 received by them from M/s. Suyash Enterprises duly endorsed in their favour. The said credit has been disputed by the lower excise authorities on the ground that endorsed bill of entry is not considered as valid document under Rule 9(1) of the Cenvat Credit Rules, 2004. The appellant was issued two show cause notices seeking recovery of a total amount of Rs. 2,41,718/- (Rs. 1,77,358/- + Rs. 64,360/-) under the provisions of Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11A of the Central Excise Act, 1944 and also interest and penalty under Rule 14 and 15 of the Cenvat Credit Rules. The appellant refuted the allegations in the show cause notices, but the adjudicating authority confirmed the demand in both the show cause notices and also imposed interest and penalty. The appellant filed appeal before the Commissioner (Appeals) who vide the common order dated 30.7.2010 upheld the order-in-original. Now these two appeals are before this Tribunal.
3. The learned counsel for the appellant submitted that both the lower authorities have failed to appreciate the fact that status of bill of entry does not change after its endorsement. He further submitted that as per Rule 9(1) of the Cenvat Credit Rules, 2004 and on the basis of various judgments relied upon by them, they are eligible for availment of cenvat credit against endorsed bill of entry. In support of his submission, he cited the following judgments:—
|(i)||Khandelwal Laboratories Ltd. v. CCE 2006 (205) ELT 541 (Tri. – Mum.);|
|(ii)||Akzo Nobel Coatings (India) Ltd. v. CCE 2013 (290) ELT 108 (Tri. – Bang.);|
|(iii)||UOI v. Marmagoa Steel Ltd. 2008 (229) ELT 481 (SC).|
3.1 The learned counsel further submitted that under Rule 9(1)(c) of the Cenvat Credit Rules, 2004, bill of entry is a specified document for the purposes of availing cenvat credit. There is no specification in the said Rule that bill of entry should not be endorsed one. Therefore, the document on the strength of which they have taken the credit, is a valid document. The endorsement in this case has been made for the reason that the entire consignment was transferred to the appellant. He also submitted that there is no dispute about the fact that the appellant has received the inputs on which they have taken credit and duty liability has been discharged in respect of CVD for which credit has been taken.
4. On the other hand, the learned AR reiterated the findings of the Commissioner (Appeals).
5. I have heard the learned counsel for the parties and perused the records.
6. The only question to be decided by me is that whether the appellant is entitled to avail cenvat credit on the basis of the endorsed bill of entry or not. Is endorsed bill of entry a valid document for claiming cenvat credit? Both the authorities below have held that though bill of entry is a valid document under Rule 9(1)(c) of the Cenvat Credit Rules, 2004, the endorsed bill of entry is not. Further, in this case it is not disputed the receipt of the material and duty paid on that. Further, I find that in the case of Akzo Nobel Coatings (India) Ltd. (supra), the Tribunal in para 4 has observed as under:—
“4. In the case of Marmagoa Steel Ltd. (supra), CENVAT credit of CVD paid on certain inputs imported by one M/s. Essar Gujarat Ltd. was claimed by M/s. Marmagoa Steel Ltd. on the basis of three Bills of Entry. The credit was sought to be denied on the ground that the Bills of Entry were not endorsed in favour of M/s. Marmagoa Steel Ltd. The Hon’ble High Court, after finding evidence of payment of CVD on the imported inputs and also evidence of the inputs having been received by M/s. Marmagoa Steel Ltd. and utilized in their factory, took the view that the credit was admissible. In the present case, the Department has no case that the imported capital goods were not received in the appellant’s factory or not used for the purpose of manufacturing excisable goods. The limited ground raised for denying CENVAT credit to the appellant is that the endorsed Bill of Entry is not one of the documents prescribed under Rule 9 of the CENVAT Credit Rules, 2004. It is interesting to note that, in the case of Marmagoa Steel Ltd., the Department wanted the Bills of Entry to be endorsed in favour of that company so that the said company can claim CENVAT credit of the CVD paid thereon. The Hon’ble High Court found no provision of law for such endorsement of Bill of Entry. There is no such provision under the CENVAT Credit Rules, 2004 either. Nevertheless, this was not the relevant consideration for the Hon’ble High Court to take a view in favour of the above company. The Court took note of the fact that the inputs were duly received in the factory and used in the manufacture of excisable products. On this basis, regardless of the nature of the Bills of Entry, the party was held to be eligible for CENVAT credit. In the instant case, it is not even the case of the Department that the capital goods in question were not received in the appellant’s factory and not used for manufacture of excisable products. In these circumstances, I am of the view that the CENVAT credit of the CVD paid on the capital goods cannot be denied to the appellant on the ground alleged in the show-cause notice. In the case of Khandelwal Laboratories Ltd. (supra) cited by the learned Additional Commissioner (AR), the Hon’ble High Court was remanding a case to this Tribunal for taking fresh decision on a similar issue in the light of the Court’s earlier judgment in Marmagoa Steels Ltd. v. UOI. The decision in Khandelwal Laboratories Ltd. case can be seen as a reaffirmation of the view taken in Marmagoa Steels Ltd. case. Nothing in favour of the revenue flows from the decision cited by the learned Additional Commissioner (AR).”
7. In view of the observation cited above, I am of the considered view that the appellant is entitled for cenvat credit on the basis of endorsed bill of entry which, according to me, is a valid document for availing cenvat credit and therefore I allow the appeals by setting aside the impugned order.