2004 (11) TMI 252 - AT - Central Excise

Summary

Issues:
Benefit of Cenvat denied due to supplier paying duty under protest.

Analysis:
The appellants filed an appeal against the adjudication order where the benefit of Cenvat was denied because the supplier of the inputs paid duty under protest. The appellants, working under the Cenvat Scheme, were taking credit for inputs used in manufacturing the final product received from Tata Iron & Steel Co. Ltd. (TISCO). TISCO wanted to clear the inputs after availing exemption under Notification No. 6/2002-C.E., but the Revenue denied it. TISCO cleared the goods by paying duty under protest. The appellants argued that they received inputs with valid duty paying documents, so credit cannot be denied.

The Revenue's contention was that since the supplier paid duty under protest, if a refund is made to the supplier, the inputs become non-duty paid, thus denying credit to the appellants. However, the Tribunal found that the appellants received inputs with invoices showing duty payment, and there was no dispute regarding duty payment by TISCO. The Tribunal held that once duty is paid by the manufacturer of the inputs, whether under protest or not, the appellants are entitled to credit for the duty paid on the inputs. Therefore, the credit cannot be denied to the appellants solely based on the ground that the duty was paid by the manufacturer under protest. Consequently, the impugned order denying the benefit of Cenvat was set aside, and the appeal was allowed.