By TIOL News Service

CHANDIGARH, MAY 10, 2018: THE appellant is engaged in the manufacturing of motor vehicles parts and procured inputs such as HR sheets/strips.

In the invoices issued by M/s Hero Cycles Ltd. description of goods is written as CRC sheets, therefore, the Revenue is of the view that as description of goods in the invoice is not as per the purchase order, therefore, no goods have been received and the CENVAT credit availed is inadmissible.

The credit was denied by the adjudicating authority.

In appeal before the CESTAT it is submitted that it is not in dispute that the appellant has received HRC Sheets/Strips in their factory and the only dispute relates to the description of the goods as mentioned in the invoices; that the said goods have been received in the factory and used in manufacturing the final product.

The Member(Judicial) observed –

"7. …, we find that in this case the description in the invoices has been shown as CR sheets-HROP (Hot Rolled Oil Pickled). Moreover, no investigation was done at the end of the transporter to ascertain whether the goods were transported to the factory premises of the appellant. It was not investigated from where the appellant procured the HR sheets in their factory. Moreover, the goods have not been examined. In that circumstances, relying on the decision of this Tribunal Omex Autos Ltd. (Supra), we hold that the appellant has correctly taken the cenvat credit on CR Sheets-HROP. Merely discrepancy in the description cannot be the reason to deny the cenvat credit to the appellant in the facts and circumstances of the case. Therefore, the impugned deserves no merits, accordingly, the same is set aside. The appeal is allowed with consequential relief, if any."

The Member (Technical) did not agree with the order of the Member (J).

Distinguishing the case law relied upon by the appellant, the Member(T) agreed with the following conclusions arrived at by the adjudicating authority viz.-

(i) that M/s Automax, the party, do not require CR sheets, but placed order for CR sheets to the suppliers who are manufacturer/supplier of CR sheets only;

(ii) the supplier prepare the invoice for CR sheets against the purchase order for both CR and HR sheets;

(iii) since the party do not require CR sheet as their manufacturing operation need HR sheets, the supplier did not supply the CR sheets but only supplied invoice.

(iv) since the party requires HR sheets, it arranged the same from some other source for its manufacturing activity as right from receipt till consumption the accounting of HR sheets is mentioned.

(v) the party took credit on the strength of the invoice supplied by the supplier describing goods as CR sheets.

(vi) the party entered into this modus operandi as they know that they cannot avail credit on HR sheets procured from other sources without a duty paying document.

By upholding the impugned order, the appeals were dismissed.

The following point of difference was, therefore, referred to the third Member (T) who heard the appeal recently.

After hearing both sides, the Member (Technical) observed-

"20. …, I do not find any investigation to have been conducted in respect of procuring of inputs for manufacture of final product on which duty was collected by Revenue. I also find that there was no investigation from the transporter and also in respect of payment made to the supplier. Therefore, I do not find the allegation in the show cause notice that the inputs on which Cenvat credit was availed was not received in the factory to be sustainable. It is settled in the law that for taking Cenvat credit on the inputs, the inputs should be received in the factory and they should be duty paid and used in the final product. I, therefore, agree with the view expressed by brother Member (J)."

In view of the majority decision, the appeals were allowed.

(See 2018-TIOL-1477-CESTAT-CHD)