2010 (7) TMI 227 - HC - Central Excise

Availment of Cenvat Credit in respect of excess duty paid- Court upheld the decision of the Tribunal that cenvat credit can be availed to the full extent of the duty paid even if the duty was paid excessively.

Summary

Issues:
1. Appeal by Revenue under Section 35-G of the Central Excise Act, 1944 against Commissioner (Appeals) and Customs, Excise and Service Tax Appellate Tribunal.
2. Availment of Cenvat Credit by respondent in contravention of Valuation Rules.
3. Dismissal of Revenue's appeal by CESTAT.
4. Justification of availing Cenvat Credit by the respondent.
5. Applicability of judgments and circulars in determining Cenvat Credit availment.

Analysis:

1. The appeal was filed by the Revenue under Section 35-G of the Central Excise Act, 1944, challenging the orders of the Commissioner (Appeals) and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The Revenue raised substantial questions of law regarding the availment of Cenvat Credit by the respondent in contravention of the Valuation Rules.

2. The respondent-assessee had purchased goods from another company and paid excise duty. The Revenue contended that the duty paid was more than due, and hence, the Cenvat Credit should not have been availed to that extent. However, the Tribunal held that once the duty was paid, higher CENVAT Credit could be availed, and there was no justification for recovery or penalty imposition. The Tribunal observed that there was no evidence of intentional evasion, and hence, the respondent should not be debarred from taking credit.

3. The Tribunal dismissed the appeal of the Revenue, stating that there was no material against the respondents to prove any questionable conduct. The Tribunal's decision was based on the lack of evidence showing intentional evasion or misconduct by the parties involved. Consequently, the cross objection in the appeal was also disposed of.

4. During the hearing, the counsel for the appellant argued that the duty paid was more than due due to inclusion of freight charges in the assessable value of goods. However, the Revenue's counsel failed to demonstrate any law stating that even if the duty paid was in excess, the assessee would be debarred from availing CENVAT Credit without the excess amount being refunded.

5. The counsel for the Assessee relied on various judgments and circulars to support the position that credit could be availed to the extent of duty paid. Citing judgments from this Court and the Madras High Court, along with a circular issued by the Central Board of Excise & Customs, the Assessee's counsel argued in favor of availing the Cenvat Credit.

6. The Court upheld the Tribunal's decision, noting that the view taken was consistent with previous decisions. As a result, the proposed substantial questions of law were not considered valid, and the appeal by the Revenue was dismissed based on the Tribunal's decision.