2015 (1) TMI 374 - AT - Central Excise

Denial of CENVAT Credit - appellate authority held that inasmuch as the supplier has paid the duty on the goods supplied and the respondent has borne the incidence of the said duty, he is entitled for the credit of the same under the Cenvat Credit Rules - whether the credit can be denied even if the duty has been paid wrongly by the supplier of inputs - Held that - In the case of Technoweld Industries (2003 (3) TMI 123 - SUPREME COURT OF INDIA), the Hon ble Apex Court had held that the process of drawing wires from wire rods not amount to manufacture. The issue dealt in the said decision is only whether the process of drawing wire from wire rod amounts to manufacture or not. The said decision did not deal with the case relating to availment of credit of duty paid wrongly. Therefore, the ratio of the said decision has no application to the facts before me in the present case. - excise authorities having jurisdiction over the recipient of inputs cannot reopen the classification adopted by the officer having jurisdiction over the input supplier. In the present case, it is not the case of the Revenue that the excise authorities having jurisdiction over the input supplier has questioned the classification and held that the payment of duty was incorrect. If that be so, the authorities at the receiver s end cannot question the classification or payment of duty and deny the Cenvat credit in respect of the duty paid by the supplier of the goods and borne by the receiver. - Decided against Revenue.

Summary

Issues:
- Appeal against denial of Cenvat credit on duty paid on steel and brass wire
- Whether duty paid on steel/brass wire can be considered as deposit or credit under Cenvat Credit Rules

Analysis:
1. The appeal involved a dispute regarding the denial of Cenvat credit on duty paid on steel and brass wire by the appellant, M/s. GKW Pvt. Ltd. The Revenue contended that the duty paid on steel/brass wires during a specific period was incorrectly paid and should be treated as a deposit rather than duty paid, thus seeking to deny the appellant the credit for the same.

2. The lower appellate authority ruled in favor of the respondent, stating that since the supplier had paid the duty on the supplied goods and the appellant had borne the duty incidence, the appellant was entitled to the credit under the Cenvat Credit Rules. The authority cited precedents where it was established that the excise authorities at the receiver's end cannot question the classification or payment of duty made by the supplier of goods. Therefore, the denial of Cenvat credit was deemed unjustified.

3. The Revenue, represented by the Addl. Commissioner, argued that the process of drawing steel/brass wire from wire rods did not amount to manufacture, and thus, the duty paid by the supplier was incorrect. Referring to a Tribunal decision and a circular issued by the CBE&C, the Revenue sought to set aside the lower appellate authority's decision and have the appeal allowed.

4. The Tribunal, after considering the submissions, clarified that the previous decision regarding the process of drawing wires from wire rods not amounting to manufacture did not directly apply to the current case concerning the denial of credit for wrongly paid duty. The Tribunal reiterated that the excise authorities at the receiver's end cannot challenge the classification or duty payment made by the input supplier unless the supplier's jurisdictional authorities question it. Since there was no indication that the input supplier's classification was incorrect, the denial of Cenvat credit by the Revenue was deemed baseless.

5. Consequently, the Tribunal dismissed the appeal filed by the Revenue, stating that there was no merit in the appeal and that it was devoid of merits. The judgment highlighted the importance of adhering to established principles regarding Cenvat credit entitlement based on duty payments made by suppliers and borne by recipients.