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29 July 2016

Cenvat credit not to be denied for technical lapse

In line with the spirit of upcoming GST law, Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has reiterated that Cenvat credit is not to be denied on technical ground. It has also been held that lack of vehicle number on the invoice is not relevant.

 

Cenvat credit on invoices issued by non-registered input supplier

CESTAT Delhi has held that denial of Cenvat credit for mere technical lapse of not obtaining the registration certificate at the time of issuance of invoice, cannot be a defensible ground to deny Cenvat credit.

Tribunal in this regard, in its decision in the case of South Eastern Coalfields Ltd., was of the view that Cenvat credit, being a beneficial piece of legislation intended to arrest cascading effect of duties/taxes, cannot be denied in view of the fact that the goods had suffered duty and used in the assessee’s factory for production of final product.

 

Lack of vehicle number on invoice not relevant

Observing that the show cause notice did not challenge the receipt of goods, CESTAT Mumbai has held that lack of vehicle number on the invoice was not relevant for the purpose of Cenvat credit on the strength of those invoices. The department had issued SCN seeking reversal of Cenvat Credit availed on the strength of invoices, alleging as being issued by another unit fraudulently.

The Tribunal in its decision in the case of DM Exporters, however noted that the assessee had received the invoices from the registered manufacturers after verifying the registration, and held that it cannot be alleged that the assessee had deliberately suppressed any factual position regarding the closure of the processor.