2004 (12) TMI 511 - AT - Central Excise

Summary

Issues: Dispute over taking credit on an invoice due to duty payment, interpretation of Notification No. 58/97-C.E., pending duty demand against the supplier, and the recipient's entitlement to credit.

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the issue revolved around a dispute concerning the appellant's entitlement to credit on an invoice issued by a supplier, M/s. Baba Balak Nath Steel Pvt. Ltd., in November 1998. The appellant's advocate argued that the supplier had paid duty as evidenced by a certificate issued by the Inspector of Central Excise. The supplier's duty payment was contested, and a Tribunal order had set aside letters for duty recovery issued by the Commissioner due to non-compliance with Section 11A of the Act. The Commissioner (Appeals) had followed the Tribunal's order, stating that duty paid by the manufacturer-supplier should be considered appropriate duty on the inputs, thereby supporting the appellant's claim for credit as the dispute primarily concerned the supplier and the department.

On the other hand, the Revenue's representative contended that the credit could not be allowed as the suppliers had declared that duty liability "is to be discharged" under Rule 96ZP(3) of the Central Excise Rules, 1944, while the requirement under Notification No. 58/97-C.E. was that duty must have been discharged, not just to be discharged. Moreover, the Revenue argued that since the duty demand against M/s. Baba Balak Nath Steel Pvt. Ltd. was pending before the High Court, it could not be confirmed that the full duty had been discharged by the supplier, thus challenging the appellant's right to credit based on incomplete duty payment by the supplier.

Upon careful consideration of the arguments presented, the Tribunal found that the duty had indeed been paid by M/s. Baba Balak Nath Steel Pvt. Ltd., a fact not disputed and upheld by the Tribunal. The core issue pertained to the exact duty liability between the department and the supplier, which was under dispute. The Tribunal ruled that the appellant rightfully took credit under Notification No. 58/97-C.E. since duty had been paid by the supplier, despite the ongoing dispute over the duty liability. The Tribunal emphasized that the recipient of the goods should not be denied credit, especially when an undisputed portion of duty had already been paid, and the settlement of any additional duty liability would be addressed once the dispute with the supplier was resolved. Consequently, the Tribunal allowed the appeal, affirming the appellant's entitlement to credit based on the duty paid by the supplier and fulfilling the conditions of Notification No. 58/97-C.E.