2015 (7) TMI 1145 - AT - Central Excise

Disallowance of cenvat credit - condition to be fulfilled for taking cenvat credit - Held that - The only condition to be fulfilled for taking cenvat credit is that the central excise duty has been suffered on the input and that the input has been received in the factory for use in the intended purpose. No prohibitions have been contained in the said rules, providing for denial of cenvat credit, in the eventuality, where the jurisdictional Central Excise Authorities at the supplier s end have disputed the classification of the excisable goods. In the present case, since the central excise authorities at the supplier s end have accepted the payment of duty on the finished product (input for the appellant), there is no justification on the part of the Central Excise Authorities having jurisdiction over the factory of the appellant to deny the cenvat benefit. Further, the Central Excise Authorities having jurisdiction over the factory of the appellant have no locus standi to discuss about the classification of the goods, on which cenvat credit has been taken. It is the responsibility of the jurisdictional authorities at the supplier s end to decide the issue of classification. Since the central excise duty has been paid by the supplier manufacturer and that has been accepted by the jurisdictional central excise authorities, the classification or otherwise of the goods at the recipient s end cannot be questioned, in view of the fact that there is no specific prohibition/ stipulations provided under the Cenvat Credit Rules for the said purpose. Thus denial of cenvat benefit to the appellant is not legal and proper - Decided in favour of assessee.

Summary

Issues:
- Disallowance of cenvat credit upheld by the Commissioner (Appeals)
- Conditions for cenvat credit under the cenvat statute
- Jurisdictional authorities' role in disputing classification of excisable goods
- Applicability of relevant judgments on the case

Analysis:
The appeal in this case challenges the order upholding the disallowance of cenvat credit by the Commissioner (Appeals). The appellant argues that the disputed goods are inputs used in manufacturing final products, and the conditions for cenvat credit have been met. The appellant relies on various judgments to support their claim, emphasizing the fulfillment of conditions for claiming cenvat credit.

Regarding the conditions for cenvat credit under the cenvat statute, Rule 3 of the Cenvat Credit Rules, 2004 allows manufacturers to claim credit for duties and taxes paid on inputs, capital goods, and input services. The key requirement is that the central excise duty must have been paid on the input received in the factory for its intended purpose. The rules do not contain prohibitions for denying cenvat credit based on disputes over classification of excisable goods.

The judgment emphasizes the jurisdictional authorities' role in disputing the classification of excisable goods. It states that if the central excise authorities at the supplier's end have accepted the duty payment on the finished product (input for the appellant), the authorities at the appellant's factory cannot deny cenvat credit. The responsibility for deciding the classification lies with the supplier's authorities, and the appellant's authorities have no standing to question it.

In light of the above analysis, the judgment concludes that the denial of cenvat benefit to the appellant is not legally justified. Citing the relevance of the judgments referred to by the appellant's advocate, the judgment sets aside the impugned order and allows the appeal in favor of the appellant. The decision underscores the importance of adhering to the conditions for claiming cenvat credit and the limited role of jurisdictional authorities in disputing the classification of goods.