2009 (7) TMI 621 - HC - Central Excise

Cenvat credit- In respect of this period the assessee had originally claimed Cenvat credit totaling an amount of Rs.86, 607/-. The adjudicating authority found that the assessee had availed of excess credit to the extent of Rs.14, 399/- as on verification it was found that the supplier of the inputs to the assessee had in fact paid duty only for a sum of Rs.72, 222/- in respect of the goods received by the assessee. However the adjudicating authority disallowed a sum of Rs.68, 052/- from out of a sum of Rs.72, 222/- for the reason that the supplier to the assessee did not have registration in terms of rule 9 of the Central Excise Rules 2002 and in terms of sub-rule (2) of rule 9 of Cenvat Credit Rules 2004 for short the rules a credit availed of as duty paid by an unregistered dealer is not allowed as CENVAT credit and therefore a sum of Rs.68, 052/- was disallowed. Commissioner (Appeals) and Tribunal allowed the appeal. Held that- in the present case and as indicated by the appellate commissioner and by the Tribunal the authorities having found as a matter of fact that in respect of the value of the goods amounting to Rs.68, 052/- the duty in fact had been paid at one point or the other and such duty paid goods constitute an input in respect of which assessee had availed of Cenvat credit that in our opinion is substantial compliance of the requirement and does not involve a question of law of general importance either for the assessee or for other assessees and for different periods as in the peculiar circumstances of particular facts of the assessee for the relevant period the question is answered by the appellate commissioner and affirmed by the Tribunal and therefore we do not find this to be a fit case to be admitted for examination within the scope of section 35G of the Act. Accordingly the appeal is dismissed.

Summary

Issues:
Appeal against the Final Order of the Customs, Excise & Service Tax Appellate Tribunal; Disallowance of CENVAT credit by the adjudicating authority; Appeal by the assessee disputing the reversal of CENVAT credit; Disallowance of CENVAT credit due to the supplier's lack of registration; Tribunal's dismissal of the revenue's appeal based on a previous court decision; Interpretation of rule 9 of the Central Excise Rules, 2002.

Analysis:
The judgment involves an appeal by the Commissioner of Central Excise against the Final Order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The appellate tribunal had dismissed the appeal of the revenue and affirmed the order passed by the first appellate authority, the Commissioner of Central Excise [Appeals]. The dispute arose concerning the disallowance of CENVAT credit availed by the assessee based on four specific invoices. The adjudicating authority disallowed a portion of the claimed credit as the supplier did not have registration as required by the rules.

The first appellate authority allowed the appeal of the assessee, stating that the duty had been paid by the manufacturer, entitling the assessee to claim CENVAT credit. The penalty was also scaled down proportionately. The revenue appealed before the Tribunal, which dismissed the appeal, citing a previous decision of the Gujarat High Court. The Tribunal held that goods supplied by a reputed public sector undertaking like IOCL would have necessarily suffered duty, thus upholding the appellate authority's decision.

The appellant argued that the tribunal overlooked the requirement of rule 9(2) of the rules, which restricts CENVAT credit if the manufacturer did not have the benefit of registration. However, the court found that in this case, the duty had been paid for the goods in question, allowing the assessee to claim CENVAT credit. The court concluded that there was substantial compliance with the rules and no significant legal question was involved. Therefore, the appeal was dismissed, as it did not warrant further examination under section 35G of the Act.