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TMI Blog2024 (1) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 35,34,992/- not be recovered under Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act as the same was availed on the basis of "diverted invoice" and alleged to be not a proper document for claiming Central Excise refund under Rule 9(1)(a)(i) of the Rules cited supra. During the course of adjudication process, the Learned Additional Commissioner dropped the Show Cause Notice thereby allowing the Cenvat Credit availed by the noticee. The appellant had received sponge iron from M/s N. E. Thermion (P) Ltd. Duliajan on the basis of endorsed invoices issued to M/s. N. E. Thermion (P) Ltd., by the manufacturers of the sponge iron. The Department therefore alleged that the goods in the said invoices were diverted to the noticee. Likewise availment of credit in respect of certain capital goods like C. I. Ingot moulds received from M.s N. E. Thermion (P) Ltd. (who in turn had received them from the manufacturers), on the basis of endorsed invoices were also disputed by the Revenue. As the Revenue in pursuance of their case relied upon Rule 9 (1) (a) of the Cenvat Credit Rules, 2004 the same is reproduced hereunder for sake of ready reference: Rule 9. Documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avail Cenvat Credit. However, in the instant case, the manufacturer of raw material (here in this case the raw material is Sponge Iron) issued the invoices to M/s N. E. Thermion (P) Ltd., Duliajan and received the raw materials by the noticee and used such invoices for the purpose of availment of Cenvat Credit. In Cenvat Credit Rules, 2004, there is of course no mention about the endorsed invoices. However, it is clearly mentioned that Cenvat Credit shall be taken by the manufacturer on the basis of an invoice issued by a manufacturer for clearance of input or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer [Ref. Rule 9(1) of the Cenvat Credit Rules, 2004]. Moreover, a manufacturer of final products shall be allowed to take cenvat credit paid on any input or capital goods received in the manufacture of final product. It is also found that there is no dispute regarding the receipt of input by the noticee in allegation made in the instant Show Cause Notice where it is simply mentioned that the noticee received raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. In appeal proceedings, however the Learned Commissioner (Appeals) while taking cognizance of the plea raised by the appellant and the decision of the Hon'ble Apex Court and the Bombay High Court cited before him, following the law as laid down by the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise & Customs Vs. Marigold Coatings Pvt. Ltd. [2016 (337) E.L.T. 515 (Guj.), held that Cenvat Credit on endorsed invoices was not permissible and the view taken by the Learned Adjudicating Authority was liable to be set aside. 5. The decision of the Hon'ble Gujarat High Court referred in Para 4, was based on the decision of the Larger Bench of Tribunal in the case of Balmer Lawrie & Co. Ltd. Vs. CCE, Kanpur[2000 (116) ELT 364 (Tri.)] and it was held that after issuance of Notification dated 04/07/1994, invoices can only be issued by a registered dealer alone. Notification No. 32/94 dated 04/07/1994 reads as:- Modvat Credit- Invoice of registered dealer acceptable In exercise of the powers conferred by rule 57G of the Central Excise Rules, 1944 and in supersession of notification of the Government of India in the Ministry of Finance, Department of Revenue N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -unit manufacture would stand, unaffected. 7. It may be pertinent to point out that the Hon'ble Rajasthan High Court in the case of Union of India Vs. Rajasthan Spinning & Weaving Mills Ltd.-2004 (174) ELT 427 (Raj.) in an identical situation has held as under:- 11. The trade notices referred to by the Commissioner (Appeals) clearly indicated that it was not imperative for the intermediary purchaser to have issued a separate invoice, when even the material has not actually reached the godowns to the first purchaser and who has sold to the subsequent purchaser. The seller, in such circumstances can only issue an invoice of the goods in transit and endorse the invoice issued by manufacturer to enable the buyer in transit to take delivery of goods covered under invoice. The presentation of his invoice would also satisfy the requirement of Rule 57G. In fact, the requirement was to produce the gate pass and the invoice issued by the manufacturer evidencing payment of duty on such input as proof of payment of duty on such inputs can be covered by the gate pass issued by the manufacturer or the invoice issued by the manufacturer himself. The endorsement put on it does not take away it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se invoices as in the original Notification the last date of registration by the dealer, was not provided. But this relaxation given by the Revenue department, cannot by any logic be interpreted to mean, as contended by the counsel, that the condition of registration of a dealer issuing invoices under Rule 57GG, for claiming Modvat credit, was never intended to make compulsory or mandatory, but only fell within the area of procedure which could even be deviated or violated by the dealer if it was shown by the end user of the goods that the same were intended to be used or had been actually used, in relation to the manufacture of the final product and were duty paid. The words used in Rules 57GG and 174 referred to above are that the dealer of the excisable goods shall get himself registered. Both these rules are thus mandatory in nature, being based on consideration of Policy enacted with a view to eliminate bogus, fictitious, fraudulent, benami traders/dealers and the transactions conducted by them from the commercial market and to avoid misuse of the Modvat scheme not only by them but by the persons deriving title to the goods through them and further to bring transparency in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit of duty, what is required to be established under Rule 57G is that the inputs received are in fact duty paid. The procedure set out in Rule 57G of the Central Excise Rules is to ensure that the credit is taken on the basis of duty paid documents. The bill of entry is one such document set out in Rule 57G. The said rule does not require that the bill of entry should be in the name of the person claiming credit of duty. It is not in dispute that the goods imported and cleared on payment of duty by one person can be used as inputs and credit of duty can be claimed by another person by establishing that the imported duty paid goods have been received as inputs and that the importer has not taken credit of that duty. In the present case, it is established that the duty paid goods are received as inputs, however, the credit is denied on the ground that the Bill of entry is not endorsed in the name of the appellant. Rule 57G does not require that for taking credit of duty, the bill of entry should be endorsed in the name of the claimant. Counsel for the revenue could point out any provision of law in the Act or the Rules regarding the endorsement of bills of entry. In the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & the rules. An invoice depicting payment of duty in law is a substantive and appropriately recognized document. Its endorsement to a third party without availing of credit cannot in any way disentitle the third party to take credit thereon. Also, there is no provision in the statute that holds that credit on endorsed invoices, in situations where the goods are duly received is not available to the third party. 11. Further, respectfully bowing before the decision of the LB of the Tribunal, in the case of Balmer Lawrie & Co. Ltd. [2000 (116) ELT 364(T)] as well as their Lordship in the case of Marigold Coatings Pvt. Ltd. [(2016 (337) ELT 515 (Guj.)], it is to submit that the said decisions do not pertain to a case of Rule 9 of the Cenvat Credit Rules, 2004 and were decided in the context of the old provisions. The ratio of the said law laid down therefore cannot be applied to decide the issue in altogether distinct circumstances and under new provisions of law. The only requirement in law for availment of credit is an "invoice," that is issued by a "manufacturer," "for clearance of" "inputs or capital goods", "from may be "any other premises where the goods are sold..........", an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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