2009 (9) TMI 442 - AT - Central Excise

Cenvat Credit- The appellant, are the manufacturer of the Motor Cycles, rickshaws and spares thereof. They are also availing the facility of Cenvat credit of the duty paid on the specified inputs received in their factory premises in terms of the provisions of Cenvat Credit Rules, 2004. The appellants are procuring these specified inputs from various manufacturers against contractual agreements namely purchase orders for the agreed prices/values. Held that- If there is any differential duty then it is the burden on the department to re-assess the duty payable which exercise has not been done by the Jurisdictional range of suppliers end. In these circumstances the appellants have rightly claimed the Cenvat credit on the actual duty paid. There is no provision in the Cenvat Credit Rules that the appellants are not entitled to take the Cenvat credit of such duty paid. We have gone through the reliance placed by the learned Advocate and ratio of those reliance are that the duty has to be determined by the jurisdictional officer of the supplier unit and if it is not done, it cannot be disputed by the officer of the recipient unit. With these observations, we do not find any merit in the impugned order and the same is set aside. The appeal is allowed.

Summary

Issues:
Demand of Cenvat credit under Section 11A(1) of Central Excise Act, 1944 along with penalty and interest.
Admissibility of Cenvat credit on reduced value of inputs.
Interpretation of Cenvat Credit Rules, 2004 regarding availment of credit.
Applicability of self-assessment regime on duty payable by the supplier.

Analysis:
The appellant appealed against the confirmation of demand of Cenvat credit, penalty, and interest under Section 11A(1) of the Central Excise Act, 1944, and Rule 14 of Cenvat Credit Rules, 2004. The appellant, a manufacturer of motor cycles and spares, had availed Cenvat credit on duty paid for specified inputs. The issue arose when the appellant reduced the prices of inputs retrospectively, leading to a demand notice alleging contravention of Rule 3 of Cenvat Credit Rules, 2004. The appellant contended that they lawfully availed credit on the actual duty paid by suppliers, following Section 4(1) of the CEA, 1944. The appellant argued that duty is chargeable at the time of clearance, relying on legal precedents. The appellant raised debit notes post-clearance, and the duty paid by suppliers was final, entitling them to Cenvat credit.

Regarding the admissibility of Cenvat credit on reduced input values, the respondent contended that credit cannot be availed on the reduced portion, remaining as a deposit. The respondent highlighted the self-assessment regime and supplier's duty to reassess, which was not done, thus denying the appellant credit on the differential duty. After hearing both parties, the Tribunal found that the appellant rightfully availed Cenvat credit on actual duty paid at the time of clearance by suppliers. The Tribunal rejected the argument that credit was inadmissible on reduced values, emphasizing that the duty determination by the supplier's jurisdictional officer is conclusive. As the department did not reassess the duty payable, the appellant's claim for Cenvat credit on actual duty paid was upheld.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief. The judgment clarified the entitlement of the appellant to claim Cenvat credit on duty paid for inputs, emphasizing the importance of duty assessment by the supplier's jurisdictional officer and upholding the appellant's right to avail credit based on actual duty paid at the time of clearance.