2005 (2) TMI 162 - HC - Central Excise

Summary

Issues:
Appeal under Section 35G of the Central Excise Act, 1944 against disallowance of Cenvat credit on capital goods.

Analysis:
The appeal was filed by the Revenue against the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, regarding the disallowance of Cenvat credit on capital goods by the assessee. The assessee, engaged in manufacturing Texturised Polyester yarn, purchased old machinery and claimed Cenvat credit on it. The Assistant Commissioner disallowed a portion of the credit, stating that only a certain amount of the Excise Duty paid could be considered as Central Excise Duty. The Commissioner (Appeals) upheld this decision. The Tribunal, however, accepted the claim of the assessee, emphasizing that the Excise Duty calculation at the time of sale was accepted by the Department without objection. The Tribunal ruled that the assessee could not be denied credit based on the supplier's alleged excessive payment of duty.

The Tribunal highlighted that the Department had accepted the Excise Duty calculation by the supplier at the time of sale, and the assessee had availed credit following the law based on the invoice provided during the purchase of machinery. The Tribunal concluded that the assessee should not be prevented from claiming credit due to the supplier's duty payment being deemed excessive. Additionally, the Tribunal noted that the Revenue's approach was unclear, seeking to disallow credit against an alleged excess payment without any refund claim by either party. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed it.

In conclusion, the Tribunal's decision favored the assessee, emphasizing the acceptance of the duty calculation by the Department and the adherence to legal procedures in claiming Cenvat credit. The Tribunal rejected the Revenue's grounds for disallowance and found no justification for the appeal, ultimately dismissing it.