2024 (9) TMI 1775 - AT - Central Excise

Entitlement to Cenvat Credit to a job-worker - credit availed on the strength of bill of entry which is in the name of principal M/s. Zydus Animal health Limited which bear declaration for the appellant to take the Cenvat credit - HELD THAT - There is no dispute that the appellant have received the input contained in bill of entry and used in the manufacture of excisable goods. The bill of entry is indeed a duty paying document since the appellant have used the material the bill of entry have been endorsed in their name and on that basis they have availed the Cenvat credit. The original adjudicating authority has held that no Cenvat credit is recoverable from the assessee in respect of the goods received under various Bills of Entry accompanied by the declaration imposable on them under the provisions of Central Excise Act 1944 and the rules made thereunder. However I hereby warn the assessee and direct them to follow the proper procedure for availing Cenvat Credit on imported raw materials. The impugned order is upheld - appeal of Revenue dismissed.

Summary

ISSUES:

Whether a job worker is entitled to avail Cenvat Credit on the strength of a Bill of Entry in the name of the principal, bearing a declaration for the job worker to take the credit.Whether endorsement of a Bill of Entry is mandatory for availing Cenvat Credit under Rule 9 of the Cenvat Credit Rules, 2004.Whether non-compliance with procedural requirements regarding endorsement or declaration on Bills of Entry can lead to denial or recovery of Cenvat Credit and imposition of penalty under Section 22AC of the Central Excise Act, 1944.

RULINGS / HOLDINGS:

The appellant job worker is entitled to avail Cenvat Credit on imported inputs received under Bills of Entry in the name of the principal, accompanied by a declaration, as the inputs were received and used in manufacture of excisable goods. The Bill of Entry, though not in the appellant's name, along with the declaration, constitutes a valid document for Cenvat Credit.Rule 9 of the Cenvat Credit Rules, 2004 does not mandate endorsement of the Bill of Entry in the name of the manufacturer for availing Cenvat Credit, especially after discontinuation of endorsement by Customs Officers as per Public Notice No.16/2006 dated 22.03.2006.Technical or procedural lapses, such as non-endorsement of Bill of Entry in the name of the job worker, do not justify denial or recovery of Cenvat Credit or imposition of penalty where the goods are duty paid, received, accounted for, and used in manufacture of dutiable goods.

RATIONALE:

The Court applied the provisions of Rule 9 of the Cenvat Credit Rules, 2004, which permits Cenvat Credit on specified documents including Bills of Entry, provided all prescribed particulars under the Central Excise Rules, 2002 are present.The Court relied on precedent, notably the decision holding that a separate certificate or declaration issued instead of endorsement of Bill of Entry is to be considered part of the Bill of Entry, making Cenvat Credit admissible; this was supported by the Supreme Court's dismissal of departmental appeal against that judgment.Judicial precedents affirming that endorsement of Bill of Entry does not alter its duty-paying character and that Cenvat Credit is admissible once it is established that goods are duty paid and used in manufacture were followed, including rulings from various High Courts and Tribunals.The Court recognized a doctrinal position that procedural non-compliance should not override substantive entitlement to credit where the imported inputs are duly received and used, emphasizing substance over form.