2016 (4) TMI 1194 - AT - Central Excise

CENVAT credit - excess duty paid on inputs procured from Ghaziabad unit - Held that - As per the provision of Rule 3 of CCR, 2004, the assessee is entitled to take the Cenvant Credit duty paid on the inputs - whatever, duty has been paid by the appellant, they are entitled to avail Cenvat Credit if the supplier has paid excess duty, the Revenue is at liberty to take action against the supplier but Revenue has not disputed the duty payment by the supplier. In these circumstances Cenvat Credit can t be denied to the appellant - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of Cenvat Credit by the appellants leading to duty demand, interest, and penalty imposition.
- Interpretation of Rule 3 of the Cenvat Credit Rules, 2004 regarding entitlement to Cenvat Credit for duty paid on inputs.

Analysis:
The appellants contested an order denying Cenvat Credit, demanding duty, interest, and imposing penalties. The case involved the appellants procuring inputs from their Gaziabad Unit, which had paid excess duty on the goods. A show cause notice was issued, leading to the denial of Cenvat Credit and duty demand with penalties. The appellants argued that they were entitled to Cenvat Credit under Rule 3 of the Cenvat Credit Rules, 2004, citing the decision of MDS Switchgear Ltd. vs. Commr. Of C. Ex., & Cus., Aurangabad, affirmed by the Apex Court. The Revenue, however, supported the findings of the impugned order.

The Tribunal noted that the appellant had indeed taken credit for duty paid to the supplier of the goods, as allowed by Rule 3. It emphasized that the appellant was entitled to avail Cenvat Credit for duty paid on inputs, regardless of any excess duty paid by the supplier. The Revenue could take action against the supplier for any excess duty, but the appellant's Cenvat Credit could not be denied. The Tribunal referenced a decision of the Hon’ble Apex Court supporting this view.

The Tribunal ultimately held that the appellants correctly availed Cenvat Credit, setting aside the impugned proceedings and allowing the appeals with any consequential relief. The judgment emphasized the legal entitlement of the recipient manufacturer to benefit from duty paid by the supplier manufacturer, with jurisdictional officers of the supplier unit's duty determination being final and not subject to challenge by the recipient unit's officers.