2006 (5) TMI 400 - AT - Central Excise

Refund Of duty - Cenvat/Modvat on inputs - Payment of excess duty on inputs by supplier - HELD THAT - From the rule 57A, it is clear that the credit can be taken on duty paid and not duty leviable as contended by Revenue. Even though the Commissioner (Appeals) has referred the Notification No. 21/99-C.E. to deny the Modvat credit on the duty actually paid there is nothing in the notification which indicates that the credit should be only duty leviable. So long as the duty paying documents indicate the duty actually paid there cannot be any objection in availing of the credit. In all the case laws cited by the appellants, it has been held that at the Receiver s end, the credit cannot be restricted. In fact, in the case of CCE, Hyderabad v. Tube Investments of India Ltd. 2003 (12) TMI 236 - CESTAT, BANGALORE , this Bench of the Tribunal has held that the credit taken on duty paid on HR/CR strips cannot be denied to the Respondent on the ground that HR/CR strips were actually not liable to any excise duty. In our view, the denial of credit to the extent actual duty paid is not in accordance with the Rule 57A and Notification No. 21/99. In this view of the rigs, the impugned order has no merit and the same is set aside. We allow the appeal with consequential relief.

Summary

Issues:
- Entitlement to Modvat credit on duty paid versus duty leviable.

Analysis:
The appeal concerns the entitlement of the appellant to Modvat credit on lubricants imported at Chennai. The dispute revolves around whether the appellant can claim credit based on the duty actually paid at 24% or the duty leviable at 16%. The lower authority held that the credit should be restricted to the duty leviable. The appellant challenged this decision, emphasizing that as long as the credit availed is indicated in the duty paying documents, the recipient's jurisdiction should not restrict it. The appellant cited relevant case laws to support their argument.

Regarding the applicable notification, Notification No. 21/99-C.E., it specifies the duties on inputs for which credit can be taken for specified final products. The notification allows credit on duty paid, not duty leviable. Rule 57A also supports this interpretation, stating that credit can be taken on duty paid. The Tribunal highlighted that the denial of credit based on duty actually paid goes against the notification and the rule. Citing precedent cases, the Tribunal emphasized that the credit cannot be restricted at the recipient's end based on the duty leviable. Ultimately, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeal with consequential relief.

In conclusion, the judgment clarifies that Modvat credit can be claimed based on duty actually paid, not duty leviable. The Tribunal's decision emphasizes adherence to the relevant notification and rules, ensuring that the appellant is entitled to the credit as long as the duty paying documents reflect the duty paid. The ruling sets a precedent for similar cases where the duty paid exceeds the duty leviable, affirming the right of recipients to claim the credit without restriction.