2018 (7) TMI 1050 - AT - Central Excise

CENVAT Credit - re-assessment of the inputs can be done or not? - Held that - The provisions of Cenvat Credit Rules allow credit of entire duty paid on the inputs and capital goods and it is settled position of law that assessment cannot be done at the end of the receiver of the inputs - Hon ble High Court of Punjab & Haryana in the case of Commissioner of Central Excise, Ludhiana Versus Perfect Synthetics 2005 (2) TMI 162 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH has held that the assessee is not prevented from taking credit on the ground that excess duty was paid by the supplier. There is no case for Revenue to reverse the CENVAT credit availed by the appellants or to recover interest or to impose penalty on any of them - appeal allowed - decided in favor of appellant.

Summary

Issues:
Common issue in two appeals arising out of Order-in-Appeal regarding Cenvat credit availed by a company on inputs and capital goods, duty paid by the supplier, and subsequent reversal of credit.

Analysis:
The appeals arose from a common impugned Order-in-Appeal passed by the Commissioner of Customs & Central Excise (Appeals), Noida. The issue revolved around M/s K. Three Electronics Pvt. Ltd. availing Cenvat credit on inputs and capital goods under the Cenvat Credit Rules, 2004. The company procured Moulds from M/s L. G. Electronics India Pvt. Ltd., who paid Central Excise duty, and M/s K. Three Electronics Pvt. Ltd. claimed Cenvat credit for the same. Revenue alleged that M/s K. Three Electronics Pvt. Ltd. availed higher inadmissible Cenvat credit and needed to pay interest. Further, it was contended that M/s L. G. Electronics India Pvt. Ltd. did not reduce the assessable value while paying duty, resulting in higher duty paid. The Revenue sought to recover the alleged higher credit from both companies and impose penalties.

The appellants contested the issue in the appeals before the Tribunal. The Counsel for M/s K. Three Electronics Pvt. Ltd. argued that there is no provision for re-assessment of inputs at the receiver's end and highlighted that the company had already reversed a significant Cenvat credit. Reference was made to a ruling of the Hon'ble High Court of Punjab & Haryana to support the argument that excess duty paid by the supplier does not prevent the recipient from claiming credit.

After hearing both parties, the Tribunal analyzed the facts and legal provisions. It noted that the duty paid by M/s L. G. Electronics India Pvt. Ltd. was availed as Cenvat credit by M/s K. Three Electronics Pvt. Ltd. The Tribunal emphasized that the Cenvat Credit Rules allow credit for the entire duty paid on inputs and capital goods and that re-assessment at the receiver's end is not permissible. Referring to the precedent set by the Hon'ble High Court of Punjab & Haryana, the Tribunal found no fault in the transaction between the companies. Consequently, the Tribunal ruled in favor of the appellants, setting aside the impugned Order-in-Appeal and allowing both appeals.

In conclusion, the Tribunal's decision favored M/s K. Three Electronics Pvt. Ltd. and M/s L. G. Electronics India Pvt. Ltd., emphasizing the legality of the Cenvat credit availed and rejecting the Revenue's claims for reversal of credit, interest payment, and penalties.