2012 (10) TMI 946 - AT - Central Excise

Duty demand - Availment of irregular credit - Held that - Undisputedly, the respondent availed credit on the invoices that was issued by the input suppliers for supply of the inputs viz. front cabinet and back cabinet received in packed condition and the value of packing is included in the value of the said inputs. The question of valuation and appropriate amount of duty paid on the input material cannot be raised at the end of the input receiver - issue of classification of the input/raw materials supplied by the input supplier cannot be questioned in the hands of input receiver while allowing Modvat/Cenvat credit - following decision of SARVESH REFRACTORIES (P) LTD. Versus COMMISSIONER OF C. EX. & CUSTOMS 2007 (11) TMI 23 - SUPREME COURT OF INDIA - Decided against Revenue.

Summary

Issues:
- Admissibility of Cenvat credit on old and recycled packing material.
- Jurisdiction over valuation disputes and duty payment on input materials.
- Applicability of relevant case laws and legal precedents.

Admissibility of Cenvat credit on old and recycled packing material:
The case involved a dispute where the appellant, engaged in manufacturing various products, was alleged to have irregularly availed credit on old and recycled packing material received from the input supplier. The Revenue contended that the duty paid on such packing material was wrongly availed by the appellant. The appellant, on the other hand, argued that they had availed the credit based on duty paid documents and that there was no deviation from the Cenvat Credit Rules. The Tribunal noted that the appellant had availed credit on invoices issued by the supplier, and since there was no evidence of variation in duty paid by the supplier, the case laws cited by the appellant were deemed applicable in their defense. The Tribunal upheld the Commissioner (Appeal)'s decision to set aside the impugned order-in-original, emphasizing that the inclusion of packing material cost in the value of inputs, whether recycled or new, falls under the jurisdiction of the authorities where the raw material supplier is located.

Jurisdiction over valuation disputes and duty payment on input materials:
The Tribunal addressed the argument raised by the Revenue regarding the repeated use of old packing material by the input supplier, emphasizing that the recipient of inputs should not be held responsible for valuation disputes or duty payment issues related to input materials. The Tribunal cited the decision in the case of Service Refractory Ltd. by the Hon'ble Supreme Court, which held that the classification of input/raw materials supplied by the input supplier cannot be questioned in the hands of the input receiver while allowing Modvat/Cenvat credit. This underscored the principle that valuation and duty payment matters concerning input materials are primarily the concern of the jurisdictional Central Excise Authorities of the supplier and not the recipient.

Applicability of relevant case laws and legal precedents:
The Tribunal extensively analyzed the arguments presented by both parties, considering the case laws cited, such as the decisions in the cases of CCE v. M/s. Aggarwal Iron Industries and CCE v. M/s. Anand Arc Electronics Pvt. Ltd. The Tribunal concurred with the Commissioner (Appeal)'s findings that the appellant had correctly availed credit based on the invoices issued by the supplier, and there was no basis for the Revenue's appeal. By aligning with legal precedents and emphasizing the limited role of the input receiver in valuation and duty payment matters, the Tribunal dismissed the Revenue's appeal and disposed of the cross objection raised by the appellant, thereby upholding the order-in-appeal passed by the Commissioner (Appeal).