Manufacturer entitled to avail Cenvat Credit on Port Charges basis of Invoice issued for Clearance of Inputs from Factory / Depot: CESTAT [Read Order]

The Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), Delhi Bench ruled that the manufacturer entitled to avail cenvat credit on port charges on the basis of the invoice issued for clearance of inputs from factory or depot.

The appellant, M/s Mammon Concast Pvt. Limited is a manufacturer of M. S. Billets, falling under Chapter sub-heading 72071920 of the Central Excise Tariff Act, 1985 and is registered with the Central Excise Range, Bharatpur, vide Registration. The appellant was also availing the cenvat credit facility of input and input services, for the manufacture of their final product.

The appellant has taken cenvat credit of Rs.14,09,763/- during the period 2010-11 to 2012-13. In the course of the audit, it appeared to Revenue that the appellant has wrongly taken cenvat credit on the strength of improper document of input service, mainly for the reason that some of the invoices are not issued in their name but are issued in the name of the high sea seller who sold the goods to the appellant on high sea sale basis. On the demand made by the Superintendent pursuant to audit, the appellant took the stand to vide their letter, that they were eligible to take the credit disputed by the Revenue.

The Counsel for the appellant, Mr. Abhishek Jaju assailing the impugned order urges that the Court below have erred in shutting their eyes due to the flow of transaction and the admitted facts. The appellant is a purchaser of inputs – melting scrap by way of subsequent sales i.e. when the goods are in transit.

The coram of Judicial Member Anil Choudhary found that admittedly the melting scrap purchased by the appellant on high sea sale is their input for manufacture of M.S. billets. Rule 9(1) of Cenvat Credit Rules provides that cenvat credit shall be taken by the manufacturer on the basis of the invoice issued by a manufacturer for clearance of inputs 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.

“The scheme of the Act read with the Rules has to be read harmoniously. If something missing in the rules, the cenvat credit is available under the scheme of the Act, read with Rule 3 read with Rule 2(l) and (k) of the Cenvat Credit Rules, the service tax credit cannot be denied for some gap left in the statute. Such interpretation will defeat the scheme of cenvat credit, leading to an anomalous situation. Accordingly, in the facts and circumstances, I hold that appellant has rightly taken cenvat credit under dispute,” the CESTAT said while deleting the penalty.

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