2013 (3) TMI 476 - AT - Central Excise

Cenvat/Modvat - Inputs - Availment of credit - CENVAT credit of the duty paid on their input was denied - No such duty ought to have been paid by the job worker who supplied the goods - Held that - Duty actually paid on input which has been received in the factory of the manufacturer of final product and used in or in relation to manufacture of the final product must be allowed as MODVAT/CENVAT credit to be utilized for payment of duty on the final product As per the Tribunal s decision in Kwality Biscuits Limited v. Commissioner - (2005 (12) TMI 467 - CESTAT, BANGALORE) it was held that MODVAT credit of duty paid on input packing charges was not liable to be denied to the assessee on the ground that such charges were not includable in the assessable value of the goods, it was found that the input supplier chose to pay duty on the packing charges also and that input was used by the assessee in or in relation to manufacture of their final product. Appellant has placed on record a few other decisions also So it can be concluded that benefit cannot be denied to the appellant and the impugned order is set aside and these appeals are allowed.

Summary

Issues:
Denial of CENVAT credit on duty paid by job worker supplying goods to appellant.

The appellant's grievance was that CENVAT credit of duty paid on input was denied as the job worker who supplied the goods to the appellant had paid the duty. The Tribunal noted that the job worker did pay duty on the goods supplied, which were further processed by the appellant to manufacture their final product. It was established that the inputs were covered by a valid document for availing CENVAT credit. The benefit could not be denied to the appellant on the basis that the job worker should not have paid duty on the goods. The respondent did not claim that the duty paid by the job worker was refunded to them. The Tribunal referred to the decision in Kwality Biscuits Limited v. Commissioner, where it was held that MODVAT credit of duty paid on input packing charges should not be denied to the assessee. The appellant also cited other relevant decisions such as Indian Oil Corporation Limited v. Commissioner, Commissioner v. MDS Switchgear Ltd., and Commissioner v. Hylite Cables, which emphasized that any duty actually paid on input used in the manufacture of the final product must be allowed as MODVAT/CENVAT credit. The Tribunal concluded that questions regarding the dutiability of input or the inclusion of any element of cost in the assessable value of the input cannot be raised at the end of the manufacturer of the final product. Consequently, the impugned order was set aside, and the appeals were allowed.

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