2014 (9) TMI 979 - HC - Central Excise

Denial of CENVAT Credit - Credit on scrap - Prima facie the Tribunal has proceeded on the footing that even if scrap has been brought in by the appellants that has specific identity and description. It ought to tally with description of the same in the invoices and then alone the credit was admissible. Apart therefrom the Tribunal found that there were 26 heaps of goods received at site but it is the Revenue s case that 8 heaps were inspected and this inspection revealed that what is at site does not match with the description given in the invoices. - Appeal admitted on the following substantial question of law Whether in the facts and circumstances of the case the conclusion of the impugned order of the Appellate Tribunal that the goods covered by the invoices have not been received by the appellants is sustainable in law? Whether in the facts and circumstances of the case the Appellate Tribunal is justified in holding that Cenvat credit on the invoices issued by the dealers is not available in spite of the admitted fact that the scrap were received by the appellants in their factory? Whether on the facts and circumstance of the case the Appellate Tribunal is correct in holding that the extended period of limitation is correctly invoked where the appellants have taken credit on the bona fide belief and also paid the excise duty to the dealer?

Summary

Issues:
1. Whether the conclusion of the impugned order by the Appellate Tribunal regarding the receipt of goods covered by the invoices is sustainable in law?
2. Whether the Appellate Tribunal was justified in holding that Cenvat credit on the invoices issued by the dealers is not available despite the receipt of scrap by the appellants?
3. Whether the Appellate Tribunal correctly invoked the extended period of limitation when the appellants took credit in good faith and paid excise duty to the dealer?

Analysis:

1. The High Court, after considering arguments from both parties, found that the appeal raised substantial questions of law. The Tribunal's approach in considering the matter was questioned, especially regarding the matching of scrap descriptions in invoices and actual goods received. The Court admitted the appeal based on the substantial question of law related to whether the goods covered by the invoices were actually received by the appellants.

2. The Court raised a second substantial question of law concerning the availability of Cenvat credit on invoices issued by dealers, despite the receipt of scrap by the appellants in their factory. The Tribunal's decision on this matter was brought into question, indicating a discrepancy in the Tribunal's findings and the actual receipt of goods by the appellants.

3. The third substantial question of law involved the correctness of the Appellate Tribunal's decision to invoke the extended period of limitation. This question arose from the appellants taking credit in good faith and paying excise duty to the dealer. The Tribunal's decision to invoke the extended period of limitation was challenged, questioning the justification for such action in the given circumstances.

In conclusion, the High Court admitted the appeal based on the substantial questions of law raised regarding the receipt of goods covered by invoices, the availability of Cenvat credit despite receiving scrap, and the correctness of invoking the extended period of limitation. The Court directed the Registrar to ensure the original record is summoned for inspection and further proceedings.