2019 (8) TMI 482 - AT - Central Excise

CENVAT Credit - Jurisdiction - when duty has been paid by the supplier at a particular rate availing a particular exemption notification and also invoices have been issued accordingly, whether the jurisdictional officers of the recipient assessees can dispute the assessment of duty and say that less duty was payable or no duty was payable and on that ground deny cenvat credit to the recipient? - HELD THAT - With respect to jurisdiction, the officers at the recipient end have no jurisdiction of the assessment done by the supplier-manufacturer. In case they did have the jurisdiction over the supplier-manufacturer, a notice should have been issued to such supplier-manufacturer who is alleged to have wrongly assessed and paid excise duty. By no stretch of imagination can the recipient of cenvat invoices along with the goods be expected to understand or anticipate how much duty was actually to be paid by the supplier and take credit accordingly. A plain reading of the CCR 2004 also provides for credit of duty paid and not credit of duty that should have been paid. Therefore, there is no scope for the credit to be altered from the amount of excise duty which has been paid as shown in the input invoices. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Cenvat credit on inputs, Central Excise duty exemption, Recovery of wrongly availed credit, Jurisdictional dispute over assessment, Denial of cenvat credit, Applicability of previous judgments.

Analysis:
The appellants, manufacturers of matches, availed cenvat credit on inputs including paper board used for packing matches. The department alleged that suppliers paid duty under a different notification than the one exempting them, leading to the appellants wrongly availing cenvat credit. The department sought to recover the credit under Rule 14 of CCR 2004 and impose penalties under Rule 15(1) of CCR. Lower authorities confirmed demands and penalties, upheld by the first appellate authorities, prompting the appeals.

The appellants argued that jurisdictional officers at the recipient's end cannot reclassify or deny cenvat credit based on the assessment done by suppliers in a different jurisdiction. They cited Tribunal cases supporting this principle. The issue centered on whether officers at the recipient's end could dispute the duty assessment done by suppliers and deny cenvat credit. The Tribunal referred to a Supreme Court case, MDS (2008), emphasizing that the duty determined by the supplier's jurisdictional officers cannot be contested by the recipient's officers.

The Tribunal found no merit in the department's arguments, stating that officers at the recipient's end lack jurisdiction over the supplier's assessment. They highlighted that the CCR 2004 allows credit of duty paid, not what should have been paid. The judgment's ratio was followed in several cases, emphasizing that recipients cannot be expected to anticipate the correct duty amount paid by suppliers. Thus, the impugned orders were set aside, and the appeals were allowed, leaving the parties to bear their own costs.