2015 (11) TMI 1560 - AT - Central Excise

Cenvat credit - PE/PVC compound granules - supplier of inputs have not manufactured the goods - Held that - the supplier has paid the duty on the raw material procured by the appellant and appellant have also paid duty to the supplier of the goods. As per Rule 3 of the Cenvat Credit Rules, 2004 the assessee who procures inputs on payment of duty, is entitled to take Cenvat credit on the same. Therefore, Rule 3 of the Cenvat Credit Rules, 2004 mandates that when appellant has suffered duty, appellant is entitled to take Cenvat credit. Hence, the appellant has correctly availed Cenvat credit on duty paid inputs. Further, the appellant have no concern whether supplier has manufactured the inputs or not and the adjudicating authority cannot proceed against the appellant to deny Cenvat credit in such a case. - Decided in favour of appellant

Summary

Issues: Denial of Cenvat credit on inputs due to supplier not manufacturing goods.

Analysis:
1. The appellants appealed against the order denying Cenvat credit on inputs because the supplier did not manufacture the goods, leading to the contention that the inputs were not duty paid and thus the appellant was not entitled to Cenvat credit.

2. Upon hearing the parties and considering the submissions, the case revolved around the allegation that the supplier did not manufacture the PE/PVC compound granules, the inputs procured by the appellant, and therefore, the duty paid by the supplier was in question, affecting the appellant's Cenvat credit eligibility.

3. The facts established that the supplier had indeed paid duty on the raw material procured by the appellant, and the appellant had also paid duty to the supplier. According to Rule 3 of the Cenvat Credit Rules, 2004, an assessee who procures inputs on duty payment is entitled to take Cenvat credit. Thus, the appellant, having suffered duty, was rightfully entitled to avail Cenvat credit on the duty paid inputs, irrespective of whether the supplier manufactured the goods or not.

4. The judgment emphasized that the appellant should not be penalized for the supplier's actions regarding manufacturing, as the appellant fulfilled their duty payment obligations. It was clarified that the appellant's entitlement to Cenvat credit should not be questioned based on the supplier's manufacturing status, and the adjudicating authority cannot deny Cenvat credit to the appellant in such circumstances.

5. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief, affirming the appellant's correct availing of Cenvat credit on duty paid inputs.