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2015 (1) TMI 938 - AT - Central ExciseCENVAT Credit - Invalidation of advance licenses - Revenue s objection is that the suppliers of the raw material should have availed the benefit of Notification No. 44/2001-C.E. (N.T.) and should have cleared the raw materials without payment of duty, in which case M/s. Balkrishna Industries Limited was not entitled to avail the credit of duty paid on the inputs procured by them from various raw materials suppliers - Duty confirmed along with imposition of penalty - Held that - this is well settled law that a manufacturer is entitled to avail the credit of duty paid by the input manufacturer and the assessments at his end cannot be reopened on the ground that input supplier should not have paid duty in which case the credit of the same would be available to the manufacturer/exporter - Following decision of M/s OLEOFINE ORGANICS (INDIA) PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE, THANE-I 2013 (7) TMI 157 - CESTAT MUMBAI - Decided in favour of assessee.
Issues:
1. Interpretation of Notification No. 44/2001-C.E. (N.T.) regarding duty-free raw materials procurement. 2. Discrepancy in availing Cenvat credit due to invalidated advance licences. 3. Disagreement on the applicability of Notification No. 44/2001-C.E. (N.T.) to input suppliers. 4. Impact of the policy circular issued by DGFT on the Tribunal's decision. 5. Reopening of assessments at the input recipient's end based on duty payment by input suppliers. Analysis: The judgment by the Appellate Tribunal CESTAT New Delhi involved multiple appeals with a common issue of exporters facing proceedings due to invalidated advance licences. The exporters were entitled to duty-free raw materials procurement under Notification No. 44/2001-C.E. (N.T.). The dispute arose when input suppliers cleared raw materials on duty payment instead of availing the duty-free benefit, leading to Cenvat credit discrepancies for the exporters. The Revenue contended that the suppliers should have followed the notification, allowing exporters to avail the credit. However, the Tribunal emphasized the suppliers' option to avail or not avail the benefit, citing Rule 19 of Central Excise Rules and past tribunal decisions. The Revenue raised concerns about the suppliers not utilizing the invalidated licences, hinting at possible malice. Despite acknowledging the Tribunal's previous decision on a similar issue, the Revenue highlighted an ongoing appeal. The Tribunal referenced the Oleofine Organics case, emphasizing the suppliers' right to avail benefits and the absence of revenue loss. The Tribunal also noted the rejection of Revenue's appeal by the Gujarat High Court in a related case, indicating consistency in decisions. The Commissioner's reluctance to follow the Tribunal's precedent, citing a DGFT policy circular, was addressed by the Tribunal. The circular focused on TED refund, not relevant to Cenvat credit availed by exporters. The Tribunal reaffirmed the established principle that manufacturers can claim credit for duty paid by input suppliers, citing various legal precedents supporting this stance. In conclusion, the Tribunal set aside the impugned orders, allowing all appeals with consequential relief to the appellants. The judgment emphasized the exporters' right to avail Cenvat credit based on duty paid by input suppliers, rejecting the Revenue's argument against such credit. The decision provided clarity on the interpretation of Notification No. 44/2001-C.E. (N.T.) and upheld the exporters' entitlement to credit under existing legal principles.
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