2014 (4) TMI 134 - AT - Central Excise

Denial of certain cenvat credit on the basis of debit notes issued against duty paid invoices - less payment was made to supplier of inputs - Held that - It is not disputed by Revenue in their memo of appeal that respondent took the credit of duty paid by the manufacturer and the manufacturer have not claimed refund of any duty. In such a scenario, I am of the view that Commissioner (Appeals) order relying upon Board s Circular is appropriate and no infirmity is found in the order of the appellate authority - Decided against Revenue.

Summary

Issues:
- Availment of Modvat credit on duty paid on inputs
- Denial of cenvat credit based on debit notes
- Interpretation of Board's Circular regarding availment of duty credit
- Applicability of Tribunal precedents
- Commissioner (Appeals) order validity

Analysis:

The case involved a dispute regarding the availment of Modvat credit on duty paid on inputs by a manufacturer engaged in the production of springs and leaves for springs. The issue arose when certain debit notes were raised by the manufacturer, indicating a realization of amounts from the input supplier. The Revenue initiated proceedings proposing the denial of cenvat credit related to these debit notes. The manufacturer contended that they had already availed credit for the full duty paid by the manufacturer-supplier and that the subsequent debit notes did not alter the duty paid. The original adjudicating authority disagreed, leading to an appeal by the Revenue.

The Commissioner (Appeals) set aside the original decision, citing the Board's Circular No. 877/15/2008/CXI, which clarified that the duty paid by the manufacturer, as shown in the invoice, would be available as credit regardless of any subsequent price reductions. The Circular specified that if the duty paid is reduced along with the price, the reduced excise duty would be the available credit. Additionally, the Commissioner relied on a Trade Notice issued by the Commissioner of Central Excise, Rohtak, and various precedent decisions of the Tribunal.

The Tribunal noted that the Revenue did not dispute that the manufacturer had already taken credit for the duty paid by the manufacturer-supplier, and the manufacturer had not claimed any duty refund. In light of this, the Tribunal found the Commissioner (Appeals) order, based on the Board's Circular, to be appropriate and upheld it. Consequently, the Revenue's appeal was rejected, and the decision was pronounced in open court on 16-1-2013.