2014 (12) TMI 1082 - AT - Central Excise

CENVAT Credit - moulds and dies supplied by M/s. Maruti Udyog Limited were old and had been supplied to the appellant on a price much lower than the price of new moulds and dies, but still M/s. Maruti Udyog Limited paid the excise duty on their original value without any depreciation - whether the cenvat credit in respect of moulds and dies available to the appellant would be restricted only to the duty payable on the transaction value of the moulds and dies or whether they would be eligible for Cenvat credit of the duty actually paid by M/s. Maruti Udyog Limited - Held that - there is no evidence produce by the Department that the assessment of duty in respect of duty payable by M/s. Maruti Udyog Limited on the moulds and dies had been revised by the jurisdictional central excise authorities or that the excess excise duty paid by M/s. Maruti Udyog Limited has been refunded to them. The Cenvat credit available to the appellant can be varied only if the duty paid by M/s. Maruti Udyog Limited had been varied, which is not the case here. In terms of the Apex Court s judgment in the case of MDS Switchgear Ltd. (2008 (8) TMI 37 - SUPREME COURT), the recipient manufacturer who has received the inputs from a supplier is entitled to avail the Cenvat credit of the duty paid by the supplier/manufacturer and the central excise authorities having jurisdiction over the recipient/manufacturer cannot review the assessment of duty at the end of the supplier/manufacturer. This judgment of the Apex Court in the case of MDS Switchgear Ltd. (supra) is squarely applicable to the facts of this case. The impugned order, therefore, is not sustainable. The same is set aside. - Decided in favour of assesse.

Summary

Issues:
1. Cenvat credit eligibility on duty paid by supplier on old moulds and dies supplied to the appellant.
2. Dispute regarding restriction of Cenvat credit to transaction value of moulds and dies.
3. Interpretation of relevant legal precedents in determining Cenvat credit eligibility.

Issue 1: Cenvat Credit Eligibility
The appellant, a manufacturer of motor vehicle parts, received old moulds and dies from another company, which had paid duty on the original value of the items. The appellant claimed Cenvat credit based on the duty paid by the supplier. The Department contended that the credit should be restricted to the duty payable on the transaction value of the moulds and dies, much lower than the value on which duty was paid. The Addl. Commissioner confirmed a Cenvat credit demand against the appellant, imposing penalties. The Commissioner (Appeals) upheld this decision.

Issue 2: Restriction of Cenvat Credit
The dispute centered on whether the appellant's Cenvat credit should be limited to the duty paid on the transaction value of the old moulds and dies or if they could claim credit for the duty actually paid by the supplier. The Tribunal noted that the Department failed to show any revision in the assessment of duty at the supplier's end or refund of excess duty paid. Without such evidence, the appellant's Cenvat credit could only be affected if the duty paid by the supplier had changed, which was not the case. Citing the Apex Court's judgment in the case of MDS Switchgear Ltd., the Tribunal ruled that the recipient manufacturer is entitled to avail Cenvat credit based on the duty paid by the supplier without the jurisdictional authorities reviewing the supplier's duty assessment.

Issue 3: Legal Precedents
The Tribunal referenced the Apex Court's decision in MDS Switchgear Ltd., emphasizing that the recipient manufacturer can claim Cenvat credit based on the duty paid by the supplier, without the central excise authorities revising the supplier's duty assessment. Applying this precedent, the Tribunal found the impugned order unsustainable and set it aside, allowing the appeal and the stay application filed by the appellant.

This judgment clarifies the entitlement of a manufacturer to claim Cenvat credit based on the duty paid by the supplier, even in cases where the supplier paid duty on an original value higher than the transaction value. The decision underscores the importance of legal precedents in interpreting and applying tax laws related to Cenvat credit eligibility.