2012 (10) TMI 948 - AT - Central Excise

CENVAT Credit - Whether the amount of duty shown in the inputs invoices is available as credit to the respondent in the event subsequently - Held that - Receipt and use of inputs in or in relation to manufacture of final product has not been disputed. The amount of duty mentioned in the invoices had only been taken as credit by the respondent. The duty initially defaulted by the input supplier was discharged subsequently also not in dispute - Hence in case of default in payment of duty shown in the respective input invoice the recovery be made from the input supplier and credit cannot be denied to the respondent for the said reason. In these circumstances I agree with the order of the ld. Commissioner (Appeals) which is upheld - Decided against Revenue.

Summary

Issues:
- Admissibility of Cenvat credit on inputs
- Responsibility for duty payment by input supplier
- Recovery of credit availed by the respondent
- Application of Rule 9(3) of Cenvat Credit Rules, 2004

Admissibility of Cenvat credit on inputs:
The case involved the appeal by the Revenue against an Order-in-appeal where the respondent had availed Cenvat credit for inputs purchased for manufacturing road rollers. The Department found that the input supplier had not paid duty on the inputs supplied to the respondent. The Department issued a show cause notice for recovery of the credit availed by the respondent. The adjudicating authority confirmed the amount and imposed a penalty under Section 11AC of the Central Excise Act, 1944. The ld. Commissioner (Appeals) set aside the original order, leading to the Revenue's appeal.

Responsibility for duty payment by input supplier:
The Department argued that the respondent contravened Rule 9(3) of Cenvat Credit Rules, 2004, by not verifying if the duty shown on the invoices was paid by the input supplier. The respondent contended that they had a long-standing business relationship with the supplier, and it was the supplier's responsibility to pay duty. The ld. Commissioner (Appeals) found in favor of the respondent, citing previous tribunal decisions and the bona fide nature of the transaction.

Recovery of credit availed by the respondent:
The key issue was whether the respondent could avail Cenvat credit on inputs where the supplier had not paid duty initially but later discharged the liability. The Tribunal noted that the receipt and use of inputs were not disputed, and the duty mentioned in the invoices was taken as credit by the respondent. Referring to a circular, the Tribunal held that recovery should be made from the input supplier in case of default, and credit could not be denied to the respondent based on this reason.

Application of Rule 9(3) of Cenvat Credit Rules, 2004:
The Tribunal upheld the ld. Commissioner (Appeals) decision, emphasizing that the respondent had taken reasonable steps as required by the rules, considering the long-standing business relationship with the supplier. The Tribunal highlighted that the Department did not dispute the receipt of goods or the authenticity of the invoices. Ultimately, the appeal by the Revenue was dismissed, and the cross-objection was disposed of accordingly.