2015 (10) TMI 2836 - AT - Central Excise

CENVAT Credit - supplier not paying duty on inputs - Revenue is of the view that as the supplier of these inputs namely SE copper wire is not liable to pay duty as SE Copper wire is not dutiable, therefore, the respondent is not entitled to take Cenvat credit - HELD THAT - The facts of the case are not in dispute. As the respondent has paid the duty on SE Copper wire purchased from the supplier and taken the Cenvat credit. Although SE Copper wire is not dutiable but the respondent has paid the duty, they have taken Cenvat credit correctly as per Rule 3 of the Cenvat Credit Rules, 2004. There are no merit in the Revenue s appeal - appeal of Revenue dismissed.

Summary

Issues:
1. Entitlement to Cenvat credit on SE copper wire procurement.

Analysis:
The appeal before the Appellate Tribunal CESTAT New Delhi involved a dispute regarding the entitlement of Cenvat credit on SE copper wire procurement by the respondent, who is engaged in the manufacture of distribution transformers. The Revenue contended that since the supplier of the SE copper wire was not liable to pay duty as the wire was not dutiable, the respondent should not be entitled to take Cenvat credit on these inputs. Consequently, a case was initiated against the respondent, demanding duty along with interest and imposing a penalty. The respondent challenged this before the ld. Commissioner (A), who set aside the adjudication order, leading to the Revenue's appeal before the Tribunal.

During the proceedings, it was established that the respondent had indeed paid the duty on the SE copper wire purchased from the supplier and had correctly taken the Cenvat credit, even though the wire itself was not dutiable. This action was found to be in compliance with Rule 3 of the Cenvat Credit Rules, 2004. As a result, the Tribunal concluded that there was no merit in the Revenue's appeal. The impugned order denying the Cenvat credit on SE copper wire procurement was upheld, and the Revenue's appeal was dismissed accordingly. The judgment emphasized that the respondent had followed the appropriate procedures in paying the duty and claiming the Cenvat credit, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal's decision clarified the correct application of Cenvat credit rules in cases where inputs may not be dutiable but duty has been paid, affirming the respondent's entitlement to claim Cenvat credit on SE copper wire procurement despite its non-dutiable status.