2016 (9) TMI 1236 - AT - Central Excise

Cenvat credit - wrongly availed on the invoices raised by their unit no. 1 at unbranded goods - Held that - it is found that there is no dispute that the unit no. 1 of the appellant has discharged the duty liability on the said unbranded pickles the same was received by the appellant and repacked into branded goods. If there is no dispute as to the receipt of goods by appellant, discharge of Central Excise duty on the goods received and consumed, CENVAT credit cannot be denied at the recipient unit, only on the ground that manufacturer should not have paid the Central Excise duty. This law is clearly settled in favour of the appellant. Demand - cash discounts were not passed on but claimed as deduction - Held that - the issue is now settled by the Hon ble Apex Court in the case of Purolator India Ltd. Vs. CCE, Delhi-III 2015 (8) TMI 1014 - SUPREME COURT . In the said judgment their Lordship have clearly held that the cash and volume discount between assessee and its buyers is known at or prior to clearance of goods, it can be deducted from the sale price. In the case in hand the appellant had produced evidence in form of Xerox copies of credit notes before first appellate authority, which indicated they have passed on cash discount as contracted between them and their purchaser. In our view they have passed on the cash discount as had been evidenced from the invoice. Hence, respectfully following the above judgment of Hon ble Apex Court, we hold that the appellant is eligible for the cash discount deduction in assessable value. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Availing CENVAT credit on unbranded pickles
2. Denial of cash discount deduction

Availing CENVAT credit on unbranded pickles:
The issue pertains to the appellant availing CENVAT credit on unbranded pickles manufactured by one unit and repacked into branded containers by another unit. The Revenue contended that the unit manufacturing unbranded pickles was not required to pay duty, hence denying the credit. The appellant argued that the duty was paid as per requirement and cited relevant case laws to support their claim. The Tribunal observed that if goods were received, duty was discharged, and CENVAT credit was claimed, it cannot be denied solely on the basis that duty payment was not required. Relying on established law, the Tribunal held in favor of the appellant, setting aside the impugned orders.

Denial of cash discount deduction:
The dispute revolved around the denial of cash discount deduction claimed by the appellant on the grounds of not passing it on to customers. The appellant provided evidence in the form of credit notes to demonstrate passing on the cash discount as agreed with purchasers. Citing a Supreme Court judgment, the Tribunal ruled that if discounts were known at the time of goods clearance and evidence of passing them on exists, deduction is permissible. Therefore, the Tribunal found that the appellant had indeed passed on the cash discount, as evidenced by the invoices. Consequently, the Tribunal allowed the cash discount deduction in the assessable value, following the legal precedent.

In conclusion, the Tribunal addressed the issues of availing CENVAT credit on unbranded pickles and denial of cash discount deduction in a detailed manner. The judgment favored the appellant, setting aside the impugned orders and allowing the appeals with consequential relief. The decision was based on legal principles, case laws, and evidence presented by both parties during the proceedings.