2008 (11) TMI 517 - AT - Central Excise

Summary

Issues:
Demand of Cenvat credit amount | Disallowance of credit based on Unit-V status | Settlement of Unit-V case by High Court | Eligibility for availing Cenvat credit | Tribunal's consistent stand on credit eligibility

Analysis:
The case involved a demand of Rs. 70,20,324 from the appellant due to alleged wrongful Cenvat credit taken based on invoices from Unit-V, a unit of the appellant's company. The credit was disallowed as Unit-V was deemed neither a manufacturer, dealer, nor importer. The appellant argued that a similar show-cause notice issued to Unit-V was settled by the Gujarat High Court, which emphasized that eligibility for credit did not require complete machinery. The High Court's decision supported the regularity of Unit-V's credit availing, thereby validating the credit passed on to the appellant.

The Tribunal noted that the initial ground for issuing the show-cause notice against the appellant no longer existed. Furthermore, the Tribunal consistently held that if duty was paid and credit taken based on invoices, the issuer's duty liability did not affect the receiver's Cenvat credit eligibility. Consequently, considering the settled Unit-V case and the Tribunal's stance on credit eligibility, the appeal was allowed, indicating the regularity of the credit availed by the appellant.

In conclusion, the judgment addressed the demand for Cenvat credit, the disallowance based on Unit-V's status, the settlement of Unit-V's case by the High Court, the eligibility criteria for availing Cenvat credit, and the Tribunal's consistent position on credit eligibility despite the issuer's duty liability. The decision favored the appellant, emphasizing the regularity of the credit availed and passed on, ultimately allowing the appeal.