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2022 (7) TMI 10 - AT - Central ExciseQuantification of duty on the transfer of inputs - Applicability of LIFO method - whether the appellant have taken the excess Cenvat Credit which was passed on by the Chennai Unit to the appellant? - Rule 3(5) of Cenvat Credit Rules - HELD THAT - There is no dispute that the appellant have taken the credit of the duty actually paid by the Chennai Unit. The assessment of duty payment by Chennai Unit was not disputed by department. Therefore, at the recipient end the dispute of valuation cannot be raised. This issue is no longer res integra as the same has been decided in various judgments as cited by the appellant - As per the judgment of Hon ble Apex Court in the case of MDS SWITCHGEAR LTD. VERSUS COMMR. OF C. EX., CUS., AURANGABAD 2001 (4) TMI 130 - CEGAT, MUMBAI , it was held that the duty paid on the inputs shall be available as Cenvat Credit to the recipient. Thus, the appellant has correctly availed the credit which cannot be denied - appeal allowed - decided in favor of appellant.
Issues:
1. Dispute over quantification of duty on transfer of inputs under Rule 3(5) of Cenvat Credit Rules. 2. Imposition of penalty under Rule 26 of Central Excise Rules, 2002 on Chennai Unit. Issue 1: Dispute over quantification of duty on transfer of inputs under Rule 3(5) of Cenvat Credit Rules: The case involved the appellant's Chennai Unit availing cenvat credit for inputs used by all three units. The Chennai Unit transferred imported inputs to the appellant's units in Chennai and Pune, paying duty on average price due to practical constraints in assessing the quantity during transfer. The department disputed the quantification of duty under Rule 3(5), calculating cenvat using the Last In First Out (LIFO) method. The department alleged that the appellant had taken excess cenvat credit due to the transfer from the Chennai Unit. The adjudicating authority and Commissioner (Appeals) upheld the demand, leading to the appellant's appeal before CESTAT. Issue 2: Imposition of penalty under Rule 26 of Central Excise Rules, 2002 on Chennai Unit: In Appeal No. E/12951/2019, the Chennai Unit challenged the penalty imposed under Rule 26 of Central Excise Rules, 2002. The appellant argued that they had rightfully taken credit on duty paid by the Chennai Unit, which was not objected to by the department. The appellant cited various judgments to support their position, emphasizing that the duty paid on inputs should be available as cenvat credit to the recipient. The revenue contended that any excess amount paid by the Chennai Unit was not admissible for cenvat credit to the appellant under Rule 3(5). In the judgment, the Member (Judicial) considered the submissions from both sides. It was noted that there was no dispute regarding the appellant taking credit for the duty paid by the Chennai Unit, as the duty payment assessment was not contested by the department. The Member referred to established legal precedents, including the MDS Switchgear Ltd. case, where it was held that duty paid on inputs should be available as cenvat credit to the recipient. Relying on the cited judgments and legal principles, the Member concluded that the appellant had rightfully availed the credit, which could not be denied. Consequently, the impugned order was set aside, and the appeals were allowed.
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